Debt Collection Practices (Regulation F), 76734-76907 [2020-24463]

Download as PDF 76734 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1006 [Docket No. CFPB–2019–0022] RIN 3170–AA41 Debt Collection Practices (Regulation F) Bureau of Consumer Financial Protection. ACTION: Final rule; official interpretation. AGENCY: 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: TKELLEY on DSKBCP9HB2PROD with RULES3 SUMMARY: I. Summary of the Final Rule The Bureau is finalizing amendments to Regulation F, 12 CFR part 1006, which implements the FDCPA.1 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. 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 1 15 U.S.C. 1692 et seq. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 consumers against debt collection abuses.2 The statute was a response to ‘‘abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.’’ 3 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.’’ 4 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 disclosurefocused 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.5 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 2 15 3 15 U.S.C. 1692(e). U.S.C. 1692(a). 4 Id. 5 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. PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 intend to codify existing case law or judicial interpretations of the statute. 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 E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 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 thirdparty disclosure if the debt collector follows the procedures identified in the rule when communicating with a consumer by email or text message.6 • Defines a new term related to debt collection communications: Limitedcontent 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. TKELLEY on DSKBCP9HB2PROD with RULES3 Additional Provisions The final rule addresses certain other consumer protection concerns in the 6 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. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 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 disclosurefocused 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 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 76735 consumers.7 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.8 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.9 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 thirdparty debt collector for several reasons, including because the third-party debt collector possesses capabilities and expertise that the creditor lacks. Thirdparty 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.10 Contingency debt collectors compete with one another to secure business from creditors based on, among other factors, the debt collectors’ effectiveness in obtaining recoveries.11 7 See Bureau of Consumer Fin. Prot., Fair Debt Collection Practices Act: CFPB Annual Report 2013, at 9 (Mar. 20, 2013), https://www.consumer finance.gov/data-research/research-reports/annualreport-on-the-fair-debt-collection-practices-act/ (2013 FDCPA Annual Report). 8 See id. 9 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). 10 Id. at 8. 11 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), E:\FR\FM\30NOR3.SGM Continued 30NOR3 76736 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations B. Debt Buyers TKELLEY on DSKBCP9HB2PROD with RULES3 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.12 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.13 Debt buyers generated about one-third of debt collection revenue, or about $3.5 billion, in 2017.14 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. 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.15 https://www.ftc.gov/sites/default/files/documents/ public_events/life-debt-data-integrity-debtcollection/understandingthemodel.pdf. 12 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-debtbuying-industry/debtbuyingreport.pdf (FTC Debt Buying Report). 13 Id. at 7 (citing Credit Card Debt Sales in 2008, 921 Nilson Rep. 10 (Mar. 2009)). 14 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 onethird 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. 15 FTC Debt Buying Report, supra note 12, at 23– 24. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 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 B. Debt Collection Methods consumer reporting agencies or other third parties indicates that the consumer The debt collection experience is a has started a new job. A debt owner also common one—approximately one in may ‘‘warehouse’’ a debt and cease three consumers with a credit record collection efforts for a significant reported having been contacted about a 16 debt in collection in 2014. Of those, 27 period. A new debt collector may later be tasked with resuming collection percent reported having been contacted efforts because, for example, the debt about a single debt over the prior year, owner has sold the account, detected a 57 percent reported having been possible change in the consumer’s contacted about two to four debts, and financial situation, or, as part of their 16 percent reported having been 17 portfolio management strategy, makes contacted about more than four debts. periodic attempts at some recovery. A creditor typically stops Each time a new debt collector obtains communicating with a consumer once responsibility for an account has moved responsibility for collecting the debt, the consumer likely will be subject to to a third-party debt collector. Active communications or communication debt collection efforts typically begin attempts from the new debt collector. with the debt collector attempting to For the consumer, this may mean locate the consumer, usually by identifying a valid telephone number or contact from a series of different debt collectors over a number of years for a mailing address, so that the debt single debt. During this time, the collector can establish contact with the consumer may make payments to consumer. To obtain current contact multiple debt collectors or may receive information, a debt collector may look communication attempts from multiple to information that transferred with the account file, public records, data sellers, debt collectors that may stop and restart at irregular intervals, until the debt is or proprietary databases of contact paid or settled in full or collection information. A debt collector may also activity ceases for other reasons. attempt to obtain location information for a consumer from third parties, such C. Consumer Protection Concerns as family members who share a Each year, consumers submit tens of residence with the consumer or thousands of complaints about debt colleagues at the consumer’s workplace. collection to Federal regulators; 18 many Once a debt collector has obtained contact information for a consumer, the 18 See, e.g., 2020 FDCPA Annual Report, supra debt collector typically will seek to note 9, at 13; Fed. Trade Comm’n, 2019 Consumer communicate with the consumer to Sentinel Network Databook, at 7 (Jan. 2020), https:// obtain payment on some or all of the www.ftc.gov/system/files/documents/reports/ consumer-sentinel-network-data-book-2019/ debt. The debt collector may tailor the consumer_sentinel_network_data_book_2019.pdf; collection strategy depending on a Bureau of Consumer Fin. Prot., Fair Debt Collection variety of factors, including the size and Practices Act: CFPB Annual Report 2020, at 15–16 age of the debt and the debt collector’s (Mar. 2019), https://files.consumerfinance.gov/f/ documents/cfpb_fdcpa_annual-report-congress_03assessment of the likelihood of 2019.pdf (2019 FDCPA Annual Report); Fed. Trade obtaining money from the consumer. Comm’n, 2018 Consumer Sentinel Network 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. 16 Bureau of Consumer Fin. Prot., Consumer Experience with Debt Collection: Findings from CFPB’s Survey of Consumer Views on Debt, at 5 (2017), https://files.consumerfinance.gov/f/ documents/201701_cfpb_Debt-Collection-SurveyReport.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. 17 Id. PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 Databook, at 4, 7 (Feb. 2019), https://www.ftc.gov/ system/files/documents/reports/consumer-sentinelnetwork-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-sentinelnetwork-data-book-2017/consumer_sentinel_data_ book_2017.pdf; Bureau of Consumer Fin. Prot., 2017 Fair Debt Collection Practices Act: CFPB E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 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.19 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. D. FDCPA and Dodd-Frank Act Protections for Consumers TKELLEY on DSKBCP9HB2PROD with RULES3 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.20 When Congress enacted the FDCPA in 1977, it found that ‘‘[e]xisting laws and procedures for redressing . . . injuries [were] inadequate to protect Annual Report 2017, at 15–16 (Mar. 2017), https:// files.consumerfinance.gov/f/documents/201703_ cfpb_Fair-Debt-Collection-Practices-Act-AnnualReport.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-bookjanuary-december-2016/csn_cy-2016_data_ book.pdf. 19 See, e.g., Stipulated Final Judgment and Consent Order, Consumer Fin. Prot. Bureau v. 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), https://files.consumerfinance.gov/f/ 201509_cfpb_consent-order-encore-capitalgroup.pdf; Consent Order, In re Portfolio Recovery Assocs., LLC, 2015–CFPB–0023 (Sept. 9, 2015), https://files.consumerfinance.gov/f/201509_cfpb_ consent-order-portfolio-recovery-associates-llc.pdf; Complaint, Consumer Fin. Prot. Bureau v. Nat’l Corrective Grp., Inc., 1:15–cv–00899–RDB (D. Md. Mar. 30, 2015), https://files.consumerfinance.gov/f/ 201503_cfpb_complaint-national-correctivegroup.pdf. 20 15 U.S.C. 45. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 consumers.’’ 21 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.’’ 22 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.’’ 23 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. 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.’’ 24 21 15 U.S.C. 1692(b). U.S.C. 1692(a). 23 15 U.S.C. 1692(e). 24 FDCPA section 814(d), 15 U.S.C. 1692l(d). 22 15 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 76737 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.25 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, 2019.26 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.27 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. 25 See 84 FR 23274 (May 21, 2019). FR 37806 (Aug. 2, 2019). 27 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. 26 84 E:\FR\FM\30NOR3.SGM 30NOR3 76738 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 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).28 Time-barred debts are debts for which the applicable statute of limitations has expired. The February 2020 proposal provided a 60day 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, 2020.29 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. B. Other Outreach 30 In November 2013, the Bureau began the rulemaking process with the publication of an Advance Notice of Proposed Rulemaking (ANPRM) regarding debt collection.31 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. 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).32 In 2017, the Bureau contracted with ICF International, Inc. (ICF) to conduct a 28 See 85 FR 12672 (Mar. 3, 2020). 85 FR 17299 (Mar. 27, 2020) (first extension) and 85 FR 30890 (May 21, 2020) (second extension). 30 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). 31 78 FR 67848 (Nov. 12, 2013). 32 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. TKELLEY on DSKBCP9HB2PROD with RULES3 29 See VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 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.33 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).34 The Operations Study focused on understanding how debt collection firms obtain information about delinquent consumer accounts and attempt to collect on those accounts. 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).35 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),36 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 33 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_debtcollection-quantitative-disclosure-testing_report.pdf (CFPB Quantitative Testing Report). 34 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). 35 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)). 36 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. PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 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.37 The Bureau considered these findings and recommendations in preparing the proposals and this final rule. 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 38 and its Request for Information Regarding the Bureau’s Inherited Regulations and Inherited Rulemaking Authorities; 39 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. 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 37 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). 38 83 FR 12286 (Mar. 21, 2018). 39 83 FR 12881 (Mar. 26, 2018). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 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.40 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.’’ 41 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.42 ‘‘Federal consumer financial law’’ includes title X of the Dodd-Frank Act and the FDCPA.43 No provisions in this final rule are based on section 1031 of the Dodd-Frank Act. 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).44 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.’’ 45 Then, ‘‘[w]ithout limiting the general application of the foregoing,’’ it lists six examples of conduct that violate that section.46 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.’’ 47 Then, ‘‘[w]ithout limiting the general application of the foregoing,’’ section 807 lists 16 examples of conduct that violate that section.48 Finally, FDCPA section 808 prohibits a debt collector from ‘‘us[ing] unfair or unconscionable means to collect or attempt to collect any debt.’’ 49 Then, ‘‘[w]ithout limiting the general application of the foregoing,’’ FDCPA section 808 lists eight examples of conduct that violate that section.50 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.51 44 15 U.S.C. 7001 et seq. U.S.C. 1692d. 46 15 U.S.C. 1692d(1)–(6). 47 15 U.S.C. 1692e. 48 15 U.S.C. 1692e(1)–(16). 49 15 U.S.C. 1692f. 50 15 U.S.C. 1692f(1)–(8). 51 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. TKELLEY on DSKBCP9HB2PROD with RULES3 45 15 40 15 U.S.C. 1692l(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. 41 12 U.S.C. 5512(a). 42 12 U.S.C. 5512(b)(1). 43 12 U.S.C. 5481(12)(H), (14). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 76739 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,52 as are opinions by courts that have addressed this issue.53 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. 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; 54 (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.55 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.’’ 56 For example, courts have held that violating a consumer’s privacy interest through public exposure of a debt violates the FDCPA, noting that 52 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 v. FCI Lender Servs., Inc., 797 F.3d 219, 226 (2d Cir. 2015). 53 See, e.g., Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443, 450 (6th Cir. 2014) (‘‘[T]he listed examples of illegal acts are just that—examples.’’). 54 15 U.S.C. 1692d(3). 55 15 U.S.C. 1692f(7)–(8). 56 Currier v. First Resolution Inv. Corp., 762 F.3d 529, 534 (6th Cir. 2014) (citing Limited, Inc. v. Comm’r, 286 F.3d 324, 332 (6th Cir. 2002)). E:\FR\FM\30NOR3.SGM 30NOR3 76740 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations violating a consumer’s privacy is a type of conduct prohibited by several specific examples.57 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.58 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 808.59 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.60 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.61 Similarly, a debt collector could violate FDCPA section 807 by, for example, giving ‘‘a false impression of the character of the 57 See id. at 535. U.S.C. 1692d–1692f. 59 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 v. 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. 60 See, e.g., Hosseinzadeh v. 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). 61 See, e.g., Ferrell v. 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 v. 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 v. J.J. Mac Intyre Co. of Nev., Inc., 969 F. Supp. 609, 612–13 (D. Nev. 1997) (denying debt collector’s motion to dismiss claims under sections 807 and 808 where debt collector allegedly attempted to collect fully satisfied debt). TKELLEY on DSKBCP9HB2PROD with RULES3 58 15 VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 debt,’’ 62 such as by failing to disclose that an amount collected includes fees.63 Several courts have applied an objective standard of an ‘‘unsophisticated’’ or ‘‘least sophisticated’’ consumer to FDCPA sections 807 64 and 808 65 and an objective, vulnerable consumer standard to FDCPA section 806.66 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 belowaverage sophistication or intelligence’’ or who are ‘‘especially vulnerable to fraudulent schemes.’’ 67 62 Fields v. 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’’). 63 Id. 64 Jensen v. 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 v. Great Seneca Fin. Corp., 569 F.3d 606, 613 (6th Cir. 2009) (applying least sophisticated consumer standard to section 807 claim); Bentley v. Great Lakes Collection Bureau, 6 F.3d 60, 62 (2d Cir. 1993) (same); Swanson v. S. Or. Credit Serv., Inc., 869 F.2d 1222, 1227 (9th Cir. 1988) (per curiam) (same). 65 See, e.g., Crawford v. 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 v. Unifund CCR Partners, 601 F.3d 1185, 1200–01 (11th Cir. 2010) (per curiam) (applying least sophisticated consumer standard to section 808 claim); Turner v. 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 v. Quadramed Corp., 225 F.3d 350, 353 (3d Cir. 2000). 66 For example, in Jeter v. 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.’’ 67 See, e.g., Brief for the Consumer Financial Protection Bureau in Support of Appellee and Affirmance at 13, DeGroot v. Client Servs., Inc., 2020 WL 5951360 (7th Cir. 2020) (No. 20–1089), https://www.consumerfinance.gov/documents/ 8865/cfpb_amicus-brief_degroot-v-clientservices.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 v. Gillie, 136 S. Ct. 1594 (2016) (No. 15–338), 2016 WL 836755, at *29 (quoting Gammon v. GC Servs. Ltd. P’ship, 27 F.3d 1254, 1257 (7th Cir. PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 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.68 Courts have further reasoned that section 807’s prohibition on false, deceptive, or misleading representations incorporates an objective, ‘‘unsophisticated’’ consumer standard.69 This standard ‘‘protects the consumer who is uninformed, naive, or trusting, yet it admits an objective element of reasonableness.’’ 70 The Bureau agrees with the reasoning of courts that have applied this standard or a ‘‘least sophisticated consumer’’ standard.71 The Bureau uses the term unsophisticated consumer to describe the standard it applies when assessing the effect of conduct on consumers. 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.72 In particular, FDCPA section 802 delineates certain specific harms that the general and specific prohibitions in sections 806 1994) (quoting Clomon v. Jackson, 988 F.2d 1314, 1319 (2d Cir. 1993))). 68 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.’’). 69 See Brief for the United States as Amicus Curiae Supporting Respondents, supra note 67, at *10, 27–30. 70 Gammon, 27 F.3d at 1257. 71 See, e.g., Rosenau v. 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 leastsophisticated-consumer standard protects these consumers in a variety of ways.’’). 72 15 U.S.C. 1692(e). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 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.’’ 73 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 DoddFrank Act section 1031. TKELLEY on DSKBCP9HB2PROD with RULES3 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.’’ 74 Under DoddFrank 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.’’ 75 The Bureau is finalizing §§ 1006.6(e) and 1006.38 based in part on its authority under Dodd-Frank Act section 1032. D. Other Authorities Under the DoddFrank 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.’’ 76 ‘‘Federal consumer financial laws’’ include the FDCPA and title X of the Dodd-Frank Act.77 Section 1022(b)(2) of the Dodd-Frank Act prescribes certain standards for rulemaking that the Bureau must follow in exercising its authority under DoddFrank Act section 1022(b)(1).78 See part VII for a discussion of the Bureau’s standards for rulemaking under DoddFrank Act section 1022(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 sectionby-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 and Coverage 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.79 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,80 title X of the Dodd-Frank Act,81 and section 104(b)(1) and (d)(1) of the E– SIGN Act.82 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. 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-bysection 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.83 The Bureau did not receive comment on proposed § 1006.1(b) and is finalizing it FR 23274, 23286 (May 21, 2019). U.S.C. 1692l(d), 1692o. 81 12 U.S.C. 5481 et seq. 82 15 U.S.C. 7004(b)(1), (d)(1). 83 84 FR 23274, 23286 (May 21, 2019). 80 15 76 12 74 12 77 12 U.S.C. 5512(b)(1). U.S.C. 5481(14). 78 12 U.S.C. 5512(b)(2). U.S.C. 1692(a). U.S.C. 5532(a). 75 12 U.S.C. 5532(c). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00009 Fmt 4701 Authority, Purpose, 1(a) Authority 79 84 73 15 Sfmt 4700 76741 E:\FR\FM\30NOR3.SGM 30NOR3 76742 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations as proposed pursuant to its authority under FDCPA section 814(d). 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 1006.84 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.85 Proposed § 1006.1(c)(2) stated that certain provisions that were proposed only under sections 1031 or 1032 of the Dodd-Frank Act,86 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.87 Proposed § 1006.1(c)(2) did not propose to expand coverage to any party not covered by the FDCPA. 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. 84 Id. at 23286–87. 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. 86 12 U.S.C. 5531(b), 5532. 87 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. TKELLEY on DSKBCP9HB2PROD with RULES3 85 This VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 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.88 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 DoddFrank 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. 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. 88 12 PO 00000 U.S.C. 5531(b). Frm 00010 Fmt 4701 Sfmt 4700 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,89 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. Section 1006.2 Definitions Existing § 1006.2 describes how a State may apply for an exemption from the FDCPA as provided in FDCPA section 817.90 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 803,91 which defines terms used throughout the statute, and to define additional terms that would be used in the regulation.92 The Bureau proposed to move existing § 1006.2 to paragraph II of appendix A of the regulation. 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 (l) (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). 89 See the section-by-section analysis of § 1006.34. 90 15 U.S.C. 1692o. 91 15 U.S.C. 1692a. 92 See 84 FR 23274, 23287–93 (May 21, 2019). E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 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.93 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. 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. 93 See id. at 23287. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 76743 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).94 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. 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.’’ 95 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 94 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. 95 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. PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 76744 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations section-by-section analyses provide more information about the operation of these provisions.96 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. TKELLEY on DSKBCP9HB2PROD with RULES3 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.97 The Bureau proposed § 1006.2(d) to restate the statutory definition of communication, with only minor changes for clarity.98 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 96 See the section-by-section analyses of §§ 1006.6(b)(1) and (d)(2)(ii) and 1006.14(h)(2)(iii). 97 15 U.S.C. 1692a(2). 98 See 84 FR 23274, 23287–88 (May 21, 2019). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 proposed, with minor revisions for clarity. 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 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 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.99 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. 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). 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, 99 See the section-by-section analyses of §§ 1006.2(j), 1006.6(b)(1), and 1006.14(h)(2)(iii). 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. 101 15 U.S.C. 1692a(3). 102 See 84 FR 23274, 23288 (May 21, 2019). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations as part of the Bureau’s disclosurefocused final rule.103 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). 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. TKELLEY on DSKBCP9HB2PROD with RULES3 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 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. 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 103 See the section-by-section analysis of § 1006.34. 104 See the section-by-section analysis of § 1006.14(h)(1). 105 84 FR 23274, 23288–89 (May 21, 2019). 106 12 U.S.C. 5531(b). 107 12 U.S.C. 1692a(5). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 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 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 108 See 109 15 PO 00000 84 FR 23274, 23289 (May 21, 2019). U.S.C. 1692a(6). Frm 00013 Fmt 4701 Sfmt 4700 76745 several exclusions from the general definition. 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 v. 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 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 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 v. McCarthy & Holthus LLP, 139 S. Ct. 1029 (2019). And the Third Circuit provided in Barbato v. 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. E:\FR\FM\30NOR3.SGM 30NOR3 76746 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 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 DoddFrank Act section 1027(e)(1),114 licensed attorneys engaged in litigation activities or the practice of law. 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 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). 115 See Heintz v. 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, litigationrelated exemption to fill the void.’’ Id. at 294–95. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 its 2012 final rule defining larger participants of the consumer debt collection market.116 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 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 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’’). 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 sectionby-section analysis of § 1006.2(j)(1) and (2). PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 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 limitedcontent 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 sectionby-section analysis of final § 1006.2(j)(1) and (2), respectively. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 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 v. J.C. Christensen & Assocs., Inc.121 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 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.’’). 122 See 84 FR 23274, 23290 (May 21, 2019). 123 15 U.S.C. 1692e(11). See also the section-bysection analysis of § 1006.18(e). 124 15 U.S.C. 1692c(b). See also the section-bysection analysis of § 1006.6(d). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 purpose, while avoiding disclosure of the debt to third parties. As explained in the proposal, many debt collectors state that they err on the side of caution and make repeated telephone calls instead of leaving messages for a consumer or sending text messages.125 Such repeated telephone calls may frustrate many consumers. Indeed, consumers often complain to the Bureau about the number of collection calls they receive and, to a lesser degree, about debt collectors’ reluctance to leave voicemails.126 And, as noted in the proposal, the FTC and the U.S. Government Accountability Office also have previously noted the need to clarify the law regarding debt collectors’ ability to leave voicemails for consumers.127 The Bureau determines that defining the content of a message that debt collectors may leave without engaging in an FDCPA communication will decrease uncertainty and benefit both debt collectors and consumers by reducing the need for debt collectors to rely on repeated telephone calls without leaving messages to establish contact with consumers. This, in turn, may benefit consumers by increasing their ability to learn whether they are being asked to pay the right debt, in the right amount. And debt collectors will benefit from the ability to leave certain messages without risking exposure to liability for violating the FDCPA while consumers will benefit from receiving messages that do not disclose information about a debt. Therefore, the Bureau is finalizing a definition of the limited-content message. At the same time, having considered commenters’ concerns, the Bureau is finalizing certain changes to the definition, as discussed below. Permissible Communication Media Proposed § 1006.2(j) would have enabled a debt collector to transmit a limited-content message by voicemail, by text message, or orally.128 However, the proposal would not have allowed a debt collector to transmit a limitedcontent message by email because emails typically require additional information (e.g., a sender’s email address) that may in some circumstances convey information about a debt, and consumers may be unlikely to read or respond to an email 125 See 84 FR 23274, 23290 (May 21, 2019). id. 127 See id. 128 Proposed § 1006.2(j) did not directly address social media; however, proposed § 1006.22(f) would have prohibited a debt collector from sending any message to a consumer, including a limited-content message, by publicly viewable social media. 126 See PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 76747 containing solely the information included in a limited-content message (e.g., consumers may disregard such an email as spam or a security risk). The Bureau received many comments on the communication media through which debt collectors could send limited-content messages. The majority of these comments concerned email. Most industry commenters recommended allowing limited-content messages by email.129 These commenters made various arguments in support of their recommendation. Some commenters asserted that email was more private than other communication media because email accounts are password-protected, unique to a consumer, and generally not reassigned to other consumers. One commenter believed that the sender’s email address revealed no more information than would be disclosed by caller ID, while other commenters stated that debt collectors could configure their email services to omit information from the sender’s email address and signature line that might result in a prohibited third-party disclosure. Other commenters claimed that limitedcontent email messages would benefit consumers because consumers might prefer communicating by email, could research the debt collector before responding, and could decide when and how to respond. One commenter stated that limited-content email messages could help compensate for what the commenter viewed as barriers to electronic communication under proposed § 1006.6(d)(3). Another commenter argued that, although the proposed limited-content message would closely resemble a spam or scam message if delivered by email, future technology might enable consumers to verify the legitimacy of email messages, and for this reason, the Bureau should allow limited-content email messages. Relatedly, a State government commenter asserted that email and text messages were the only appropriate communication media for leaving limited-content messages because of the relatively low risk of third-party disclosure, but only after a consumer had opted in to receiving electronic communications from a debt collector. A few consumer advocates stated that limited-content messages should not be permitted to be sent by email, with one suggesting that the Bureau incorporate this restriction into regulation text or commentary. Another stated that limited-content email messages may be 129 Several industry commenters misunderstood proposed § 1006.2(j) and claimed that they would use email to send limited-content messages. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76748 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations inappropriate because they include other content that might convey information about a debt, but argued that the same was true of telephone numbers, which a third party could look up using online search engines. Several commenters also addressed limited-content text messages. Industry commenters generally supported allowing limited-content text messages. Some of these commenters stated that many consumers prefer to use written communication media, such as text messages, that give them time to compose their thoughts, and these commenters explained that the opt-out notice under proposed § 1006.6(e) would effectively prevent debt collectors from sending too many limited-content text messages. One industry commenter recommended also allowing limited-content messages by mobile communication applications because they are similar to text messages. One consumer commenter stated that, of all the permissible limited-content message communication media, text messages have the greatest chance of being viewed only by the consumer. But most individual consumers and consumer advocates who addressed limited-content text messages opposed them. One consumer advocate argued that allowing limited-content text messages would subject consumers to unsolicited text message scams that could install malware on a consumer’s mobile telephone or lead to identity theft. Another consumer advocate stated that limited-content text messages may be more likely to lead to prohibited third-party disclosures than limitedcontent voicemail messages because of the text message preview that often appears automatically on a smart phone screen. And one consumer advocate and one government commenter noted that, because the proposed frequency limits for telephone calls would not apply to text messages, debt collectors could send numerous limited-content text messages to consumers that, the commenters explained, would increase the chances of a prohibited third-party disclosure. A few commenters addressed limitedcontent social media messages. One industry commenter recommended allowing limited-content social media messages in general, while another industry commenter suggested allowing only direct messages sent privately to the consumer. A consumer advocate and a group of State Attorneys General, however, opposed all limited-content social media messages. The consumer advocate stated that any limited-content social media messages would be overly VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 invasive and that debt collectors have demonstrated a willingness to abuse social media platforms to harass consumers. The group of State Attorneys General asserted that limitedcontent social media messages would contain information about the sender similar to limited-content email messages. This commenter also suggested that advertising algorithms could identify limited-content social media messages as debt collection messages, and then target the consumer for debt collection advertisements on social media or across the internet. Two industry commenters asked the Bureau to clarify that debt collectors may send ‘‘ringless voicemail’’ limitedcontent messages, or voicemail messages sent directly to a consumer’s voicemail service provider without interacting with the consumer’s mobile telephone. Finally, one industry commenter recommended allowing limited-content mail messages because they would be less costly than validation notices. In contrast, consumer advocates believed the proposal would allow limitedcontent postcard messages, which, the commenter asserted, would violate FDCPA section 808(7)’s prohibition on communicating with a consumer regarding a debt by postcard. After considering the comments received, the Bureau is finalizing only limited-content voicemail messages. As explained in the proposal, uncertainty regarding debt collector’s obligations and consumer’s rights under FDCPA sections 805(b) and 807(11) arose in the context of voicemail messages.130 With this medium of communication, debt collectors face the dilemma of either repeatedly calling a consumer and hanging up, or leaving a voicemail message that might convey too much information in violation of FDCPA section 805(b) or too little information in violation of FDCPA section 807(11). And the Bureau understands that voicemail messages have been the subject of most litigation surrounding the intersection of these provisions. Accordingly, the need to define a specific message that is not a communication may be less pressing for other communication media, such as text messages, emails, or social media messages. Apart from the absence of uncertainty and litigation comparable to voicemail messages, other communication media differ from voicemail messages in ways 130 See 84 FR 23274, 23290 (May 21, 2019). See also Foti v. NCO Fin. Sys., Inc., 424 F. Supp. 2d 643, 655–56 (S.D.N.Y. 2006); Hosseinzadeh, 387 F. Supp. 2d at 1104. PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 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 For these reasons, final § 1006.2(j) limits the definition of limited-content messages to voicemail messages for a consumer.133 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 131 Fed. Trade Comm’n, How to Recognize and Avoid Phishing Scams (May 2019), https:// www.consumer.ftc.gov/articles/how-recognize-andavoid-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-smishingscams. 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/newsevents/blogs/business-blog/2016/03/debt-collectorsyou-may-social-media-texts-are-you-complying. 133 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. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 may follow to obtain a safe harbor from civil liability for unintentional thirdparty 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 limitedcontent 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 limitedcontent 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 limitedcontent 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 limitedcontent messages in multiple live conversations with the same third party. Second, some of these commenters expressed concern with limited-content VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 messages left with particular third parties. For example, commenters, including many consumer advocates, expressed concern that a limitedcontent 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 limitedcontent 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 limitedcontent 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 PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 76749 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 thirdparty 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 limitedcontent 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 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76750 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 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- VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 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 limitedcontent 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 limitedcontent 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. PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 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 limitedcontent 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 limitedcontent messages to include a business name for the debt collector that does not indicate that the debt collector is in the debt collection business.134 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 134 See the section-by-section analysis of § 1006.2(j)(1)(i). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 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 limitedcontent 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 limitedcontent 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 limitedcontent 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 limitedcontent message, are so familiar to consumers that the message itself VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 automatically creates a prohibited thirdparty 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-bysection 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) 135 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 limitedcontent text messages. 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. 135 Public PO 00000 Law 102–243, 105 Stat. 2394 (1991). Frm 00019 Fmt 4701 Sfmt 4700 76751 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 limitedcontent 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 sectionby-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 limitedcontent message. Without additional content, these commenters asserted, consumers would view the limitedcontent message as uninformative, confusing, or suspicious. Most of these commenters asked the Bureau to allow debt collectors to disclose their business E:\FR\FM\30NOR3.SGM 30NOR3 76752 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 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.136 Including the debt collector’s business name will enable consumers to verify the debt collector’s legitimacy and make a betterinformed decision about what action, if any, to take in response to the limitedcontent 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.137 136 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-telldifference-between-legitimate-debt-collector-andscammers/ (‘‘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/howrecognize-and-avoid-phishing-scams#suspect (‘‘[C]ontact the company using a phone number or website you know is real. Not the information in the VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 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. 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; 138 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 email.’’); Fed. Commc’ns Comm’n, Avoid the Temptation of Smishing Scams (Nov. 9, 2018), https://www.fcc.gov/avoid-temptation-smishingscams (‘‘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.’’). 138 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. PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 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. 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 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 v. 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 v. 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 v. 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 v. 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 v. 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. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 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. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 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 limitedcontent 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 limitedcontent 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 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 76753 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 thirdparty 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 E:\FR\FM\30NOR3.SGM 30NOR3 76754 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 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.141 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 limitedcontent 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 141 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. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 approach, some commenters asserted, would allow debt collectors to maintain consistency with other Federal rules that provide more flexibility in identifying the individuals with whom a consumer might communicate. The Bureau finds that the name of a natural person to whom a consumer may reply is an important element of the limited-content message.142 Such information helps efficiently direct the consumer’s reply call to a person who is able to discuss the consumer’s debt. But the Bureau agrees with commenters that some flexibility regarding this information would benefit consumers and debt collectors. If someone other than the natural person identified in the limited-content message answered their reply call, consumers likely would not be confused or frustrated, and large debt collectors could more easily employ the limited-content message. Certain references to a debt collector’s groups or offices, such as the ‘‘credit card receivables group,’’ however, might heighten the risk of a prohibited thirdparty disclosure. A general reference to other ‘‘representatives or associates,’’ on the other hand, would minimize such risk while achieving the purposes identified by commenters. Accordingly, final § 1006.2(j)(2)(iv) defines the limited-content message to include an optional statement that, if the consumer replies, the consumer may speak to any of the company’s representatives or associates. For the reasons discussed above, final § 1006.2(j)(2) permits a limited-content message to include the following content: A salutation, the date and time of the message, suggested dates and times for the consumer to reply to the message, and a statement that, if the consumer replies, the consumer may speak to any of the company’s representatives or associates. Comment 2(j)(2)–1 clarifies that a message that includes a more detailed description of a company’s representative or associate group is not a limited-content message and provides an illustrative example. Comment 2(j)(2)–2 provides an example of a limited-content message that includes all of the information required under § 1006.2(j)(1) and all of the content permitted under § 1006.2(j)(2). 2(k) Person The FDCPA frequently uses, but does not define, the term person. The Bureau proposed § 1006.2(k) to define person, consistent with the definition of that term in 1 U.S.C. 1, to include ‘‘corporations, companies, associations, firms, partnerships, societies, and joint 142 See PO 00000 84 FR 23274, 23292 (May 21, 2019). Frm 00022 Fmt 4701 Sfmt 4700 stock companies, as well as individuals.’’ 143 Three industry associations stated that the proposed definition was overly expansive and would impermissibly expand standing to bring an FDCPA claim to artificial entities even though the purpose of the FDCPA is to protect consumers. The commenters requested that the proposed definition either be deleted or limited to natural persons. The Bureau is finalizing the definition of person as proposed. Including this definition will clarify who is subject to provisions of the regulation that use the term person. The Bureau declines to delete the definition of person or to narrow it to include only natural persons because the plain language of the FDCPA illustrates that Congress did not intend to limit the term person, as used in the FDCPA, to natural persons. For example, the definition of debt collector in the FDCPA uses the phrase ‘‘any person’’ repeatedly, and there is no doubt that Congress intended to include non-natural persons in the definition of debt collector. Where the statute was intended to be limited to natural persons, Congress achieved that intent by using the term consumer. For example, FDCPA section 803(5) defines the term debt to include obligations of a consumer, and FDCPA section 803(3) limits the term consumer to a natural person. As a result, the Bureau concludes that the proposed definition of person would not expand the scope of the FDCPA beyond the scope that Congress intended. However, the Bureau is clarifying in the definition of debt at § 1006.2(h) that debt subject to the FDCPA is limited to debt incurred by a natural person. See the section-bysection analysis of § 1006.2(h) for additional discussion. Subpart B—Rules for FDCPA Debt Collectors 144 Section 1006.6 Communications in Connection With Debt Collection FDCPA section 805 generally limits how debt collectors may communicate with consumers and third parties when collecting debts.145 The Bureau proposed § 1006.6 to implement and interpret FDCPA section 805, and to 143 See 84 FR 23274, 23293 (May 21, 2019). 1 U.S.C. 1 states that ‘‘in determining the meaning of any Act of Congress, unless the context indicates otherwise,’’ the term person includes ‘‘corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.’’ 144 As proposed, the final rule moves existing §§ 1006.3 through 1006.8 regarding applications for State exemptions from the FDCPA to appendix A of the regulation. See the section-by-section analysis of § 1006.108 and appendix A. 145 15 U.S.C. 1692c. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 interpret FDCPA sections 806 and 808 to provide certain additional protections regarding debt collection communications. As discussed in more detail below, § 1006.6, among other things, specifies and clarifies a debt collector’s obligation to abide by a consumer’s preferences when communicating in connection with the collection of any debt. Section 1006.6 also interprets FDCPA sections 805, 806, and 808 with respect to newer communication technologies. And to protect consumer privacy, § 1006.6 identifies procedures reasonably adapted to avoid a violation of FDCPA section 805(b)’s prohibition on thirdparty disclosures when communicating by email or text message. Pursuant to its authority under FDCPA section 814(d) to write rules with respect to the collection of debts by debt collectors, the Bureau is finalizing § 1006.6 with certain changes to address feedback and other consumer protection concerns. Electronic Communications in Debt Collection As proposed, § 1006.6 would have clarified how various provisions in FDCPA section 805, such as the prohibitions against communications at inconvenient times and places and the prohibition against communicating about a debt with a third party, would have applied to electronic communications such as emails and text messages. The proposal would not have prohibited any particular methods of electronic communication or established an opt-in framework for such communications. The Bureau received a large number of comments in response to the particular proposed interventions, and the Bureau addresses those comments in the section-bysection analysis below. In addition, the Bureau received many comments addressing the risks and benefits of electronic communications in debt collection. In general, industry commenters supported the use of electronic communications, noting that, compared to non-electronic communications such as mail and telephone calls, electronic communications are faster and more cost effective; enable debt collectors to reach consumers who do not answer the telephone or who change addresses frequently; provide consumers with more privacy and greater control over the time and place of engagement; and create a digital record of a consumer’s interactions with a debt collector. Many industry commenters asserted that, because of these benefits, consumers wish to communicate electronically, and several industry commenters VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 reported receiving such requests from consumers. But industry commenters also generally stated that they refrain from communicating electronically because they fear liability under FDCPA section 805(b) for an unintentional third-party disclosure, such as if they send an email or a text message to an email address or telephone number that does not belong to the consumer. A few individual consumers expressed a general interest in communicating with debt collectors electronically. But most individual consumer and consumer advocate commenters, as well as consumer attorney, academic, and government commenters, raised concerns about the Bureau’s proposals and either opposed electronic communications in debt collection, or supported them only if the consumer had first explicitly consented, or opted in, to receiving them. These commenters argued that an opt-in approach would enable consumers, before agreeing to electronic communications, to: (1) Weigh any risks due to irregular internet or cellphone access; (2) confirm the addresses and telephone numbers to which electronic communications may be directed, ensuring that, particularly for consumers who regularly change telephone numbers or email addresses, communications are sent to the consumer rather than to a third party; (3) weigh the financial cost, if any, of electronic communications; (4) familiarize themselves with the sender and weigh any security risks, helping to ensure that consumers actually open emails and minimizing the chance that such emails are blocked by spam filters and other screening devices; 146 and (5) weigh any privacy-related risks, including the risk that emails and text messages could be viewed by a consumer’s telephone or email provider, could appear on a publicly visible computer or telephone screen, or could be coming from a phony, rather than legitimate, debt collector.147 The Bureau determines that electronic communications can offer benefits to consumers and debt collectors. Technologies such as email and text messaging allow consumers to exert greater control over the timing, frequency, and duration of communications with debt collectors, 146 As the Bureau noted in the proposal, several Federal agencies advise consumers not to open emails from senders they do not recognize. See 84 FR 23274, 23363 n.578 (May 21, 2019). 147 Many commenters raised specific concerns about the frequency with which consumers might receive emails and text messages from debt collectors. Those comments are addressed in the section-by-section analysis of § 1006.14(a). PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 76755 including by choosing when, where, and how much time to spend responding to a debt collector’s email or text message. For debt collectors, these technologies are a more effective and efficient means of communicating with some consumers. The Bureau declines to categorically prohibit the use of these potentially beneficial communication media where Congress has not amended the FDCPA to prohibit their use. As to commenters’ specific concerns regarding privacy and the risks of thirdparty disclosure, § 1006.6(d)(3) through (5) sets forth procedures that a debt collector may follow to obtain a safe harbor from civil liability for a thirdparty disclosure when sending an email or a text message to a consumer. The Bureau expects that most debt collectors will use the procedures, which are designed to protect consumers against the risk of third-party disclosure, when communicating by email and text message. As to commenters’ other concerns, the Bureau notes that, as discussed in the section-by-section analyses of §§ 1006.6(b) and (e) and 1006.14(h), the Bureau is finalizing provisions that will require debt collectors to provide consumers with a reasonable and simple method of opting out of electronic communications and that will permit consumers to control the time, place, and media through which debt collectors may communicate. In addition, as discussed in the section-by-section analysis of § 1006.42, the Bureau is finalizing a general standard for electronic delivery of required disclosures. The Bureau determines that the final rule’s overall approach to electronic communications addresses commenters’ concerns. Consumer and consumer advocate commenters, some members of Congress, a group of State Attorneys General, and other State and local government commenters also expressed specific concern about the costs of text messaging.148 For consumers who lack unlimited text messaging plans, sending and receiving text messages may not be free. Some consumers with limited text messaging plans may pay for each text message; others may pay for each text message above a cap. Consumer advocate commenters noted that many of their clients maintain limited text messaging plans. The prevalence of such plans among the general public, or among consumers with debts in collection, is not clear, although some information suggests that most 148 Although a few commenters noted that, for consumers with limited data plans, sending and receiving emails may not be free either, most commenters focused on the costs of text messaging. E:\FR\FM\30NOR3.SGM 30NOR3 76756 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 consumers in general have unlimited text messaging plans.149 Consumer and consumer advocate commenters, some members of Congress, a group of State Attorneys General, and other State and local government commenters urged the Bureau to address the costs associated with text messaging by requiring debt collectors to obtain affirmative consent before sending text messages. These commenters argued that an opt-in system would enable consumers to weigh the costs of text messages before agreeing to receive them from a debt collector. As discussed in detail below, § 1006.6(d)(5) specifies procedures that, when followed, provide a debt collector with a safe harbor from civil liability for an unintentional third-party disclosure when sending a text message to a telephone number. These procedures effectively create an opt-in system for the use of text messages, and, as noted, the Bureau expects that most debt collectors will use them. Several consumer advocate commenters, some members of Congress, a State Attorney General, and other government commenters suggested that the Bureau address the costs associated with text messaging by requiring debt collectors to use free-toend-user (FTEU) text messaging or otherwise require debt collectors to pay for text messages. The Bureau believes that the limitations in final § 1006.6(d)(5)—which, as noted, effectively create an opt-in system for text messages—offer a more practical solution than requiring debt collectors to use FTEU text messaging. Consumers who do not wish to incur the cost of text messages are unlikely to opt into a debt collector’s use of text messages, and, as discussed in the section-by-section analysis of § 1006.6(e), a consumer who no longer wishes to receive text messages from a debt collector must be provided with a reasonable and simple way to opt out of such communications. Further, as the Bureau noted in the proposal, because FTEU text messaging may only be supported by certain wireless platforms, requiring debt collectors to use FTEU text messaging may not offer a solution for all consumers—a concern that commenters generally did not address.150 For these 149 In 2015, a company that develops text message surveys estimated that between 83 and 92 percent of U.S. mobile telephones had unlimited text messaging plans. See Josh Zagorsky, Almost 90% of Americans Have Unlimited Texting, Instant Census (Dec. 8, 2015), https://instantcensus.com/blog/ almost-90-of-americans-have-unlimited-texting. 150 According to one industry website, FTEU is supported by six carriers (AT&T, Boost, Sprint, TMobile, Verizon Wireless, and Virgin Mobile). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 reasons, and in light of the other provisions in the final rule addressing debt collectors’ use of text messages, the Bureau declines to finalize a requirement that debt collectors use FTEU technology. 6(a) Definition FDCPA section 805(d) provides that, for purposes of section 805, the term consumer includes certain individuals other than the person obligated or allegedly obligated to pay the debt. These individuals include the consumer’s spouse, parent (if the consumer is a minor), guardian, executor, or administrator.151 Accordingly, the protections in FDCPA section 805 apply both to these individuals and to the person obligated or allegedly obligated to pay the debt. Also, debt collectors may communicate with these individuals in connection with the collection of any debt without violating the FDCPA’s prohibition on third-party disclosures.152 The Bureau proposed § 1006.6(a) to implement and interpret FDCPA section 805(d) and to define consumer for purposes of § 1006.6. Proposed § 1006.6(a) generally mirrored FDCPA section 805(d), except that proposed § 1006.6(a)(5) would have interpreted the term to include a confirmed successor in interest, and proposed comments 6(a)(1)–1, 6(a)(2)–1, and 6(a)(4)–1 would have clarified how the term applied when the consumer obligated or allegedly obligated on the debt had died. For the reasons discussed below, the Bureau is finalizing § 1006.6(a) largely as proposed, but is making minor changes for clarity.153 6(a)(1) and (2) FDCPA section 805(d) defines the term consumer for purposes of section iVision Mobile, Free to End User (FTEU), https:// www.ivisionmobile.com/text-messaging-software/ free-to-end-user-fteu.asp (last visited Sept. 23, 2020); Mobile Mktg. Ass’n, U.S. Consumer Best Practices for Messaging: Version 7.0, at 43 (Oct. 16, 2012), https://www.mmaglobal.com/files/ bestpractices.pdf (describing FTEU ‘‘Cross Carrier Guidelines’’ as providing that ‘‘[c]ontent providers must obtain opt-in approval from subscribers before sending them any SMS or MMS messages or other content from a short code’’). 151 15 U.S.C. 1692c(d). 152 See 15 U.S.C. 1692b, 1692c(b). A debt collector may communicate with third parties to seek location information about consumers, but the debt collector may not state that the consumer owes any debt. For additional discussion of these provisions, see the section-by-section analyses of §§ 1006.6(d) and 1006.10(c). 153 The Bureau received no comments regarding proposed § 1006.6(a)(3), which would have implemented FDCPA section 805(d)’s definition regarding a consumer’s guardian. The Bureau is finalizing § 1006.6(a)(3) as proposed and does not address it further in the section-by-section analysis below. PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 805 to include the consumer’s spouse and (if the consumer is a minor) parent.154 Proposed § 1006.6(a)(1) and (2) would have implemented these aspects of the definition.155 In addition, the Bureau proposed comments 6(a)(1)– 1 and 6(a)(2)–1 to clarify that deceased consumers’ surviving spouses and deceased minor consumers’ parents, respectively, are consumers for purposes of § 1006.6. This interpretation was consistent with the Bureau’s proposal to interpret the general definition of consumer in § 1006.2(e) to include deceased persons.156 A group of consumer advocates objected to proposed comments 6(a)(1)– 1 and 6(a)(2)–1. These commenters argued that the language of the FDCPA forecloses the proposed interpretation because it includes present-tense language in describing the consumer’s parent and avoids the term surviving spouse, which Congress used elsewhere in the U.S. Code. These commenters further argued that no legitimate reason existed for a debt collector to communicate with consumers’ surviving spouses or parents of deceased minor consumers because the FDCPA permits (as would a final rule) location communications and communications with executors or administrators of a deceased consumer’s estate. Finally, the commenters urged the Bureau to expressly prohibit debt collectors from communicating with anyone in the decedent debt context unless the debt collector had determined that the person owed a debt or was the executor or administrator of a deceased consumer’s estate. On several issues related to decedent debt, the Bureau is finalizing an approach consistent with the FTC’s Policy Statement on Decedent Debt.157 The FTC stated that it would decline to take enforcement actions against debt collectors who communicated with ‘‘the decedent’s spouse [or] parent (if the decedent was a minor at the time of death).’’ 158 The FTC rejected the same legal arguments that the commenter raised against proposed comments 6(a)(1)–1 and 6(a)(2)–1 for reasons that 154 15 U.S.C. 1692c(d). 84 FR 23274, 23293 (May 21, 2019). 156 See the section-by-section analysis of § 1006.2(e). 157 Fed. Trade Comm’n, Statement of Policy Regarding Communications in Connection with the Collection of Decedents’ Debts (July 27, 2011), https://www.ftc.gov/sites/default/files/documents/ federal_register_notices/statement-policy-regardingcommunications-connection-collection-decedentsdebts-policy-statement/110720fdcpa.pdf (FTC Policy Statement on Decedent Debt). 158 FTC Policy Statement on Decedent Debt, supra note 157, at 44918. 155 See E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations the Bureau finds persuasive here.159 In addition, the Bureau finds that legitimate reasons exist for communications between debt collectors and a deceased consumer’s surviving spouse or the parents of a deceased minor consumer, especially if they had previously communicated with a debt collector while the consumer was alive. For example, such individuals may wish to obtain information from, or continue conversations with, the debt collector about the consumer’s financial condition. Accordingly, the Bureau is finalizing comments 6(a)(1)–1 and 6(a)(2)–1, as proposed, to clarify that surviving spouses and parents of deceased minor consumers, respectively, are consumers for purposes of § 1006.6. TKELLEY on DSKBCP9HB2PROD with RULES3 6(a)(4) FDCPA section 805(d) defines the term consumer for purposes of section 805 to include executors and administrators.160 Proposed § 1006.6(a)(4) would have implemented this aspect of the definition and, in commentary, interpreted it to include the personal representative of the deceased consumer’s estate, i.e., any person ‘‘authorized to act on behalf of the estate.’’ 161 Several commenters supported the description of personal representative. One trade group commenter stated that the proposal’s accommodation of informal estate resolution processes would help prevent consumers from experiencing frustration when trying to contact debt collectors to resolve a deceased consumer’s estate. Federal government agency staff commented that the proposal largely mirrored the FTC’s Policy Statement on Decedent Debt and expressed support for the goals of the proposal. A few commenters suggested modifications to proposed comment 6(a)(4)–1. Three trade group commenters stated that the interpretation regarding personal representative was so important that the 159 Id. at 44918 n.29 (explaining that Congress created an omnibus definition for ‘‘spouse’’ to apply in determining the meaning of any Act of Congress, and ‘‘[t]he only court to address whether a surviving spouse is a ‘spouse’ within the omnibus definition held that a surviving spouse remains a ‘spouse’ in determining the meaning of any Act of Congress’’). 160 15 U.S.C. 1692c(d). 161 See 84 FR 23274, 23293–94 (May 21, 2019). The Bureau adapted this phrasing from Regulation Z and explained that it encompassed the same individuals as those recognized by the FTC’s Policy Statement on Decedent Debt (i.e., persons with the ‘‘authority to pay the decedent’s debts from the assets of the decedent’s estate’’). See 12 CFR 1026.11(c), comment 11(c)–1; FTC Policy Statement on Decedent Debt, supra note 157, at 44918. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 Bureau should add it to the regulation text rather than describing it in commentary. One trade group commenter suggested that the Bureau expand the description of personal representative to encompass anyone that a debt collector ‘‘has reason to believe’’ is authorized to act on behalf of the deceased consumer’s estate. Another trade group commenter recommended incorporating a reference to State law in proposed § 1006.6(a)(4) because the commenter believed that the term personal representative would not accommodate States that use different language to describe such individuals. Similarly, an industry commenter suggested that the Bureau should expand proposed § 1006.6(a)(4) by adding several terms that might refer to individuals handling a deceased consumer’s estate. A group of consumer advocates stated that the description of the term personal representative would be overly broad unless the Bureau limited it to individuals ‘‘authorized under State probate or estate law’’ to act on behalf of the deceased consumer’s estate. For example, these commenters explained that many people might dispose of a deceased consumer’s assets extrajudicially by selling or donating personal possessions and that such people should not be considered personal representatives. As described in the proposal and in the FTC’s Policy Statement on Decedent Debt, the ability to resolve the debts of estates outside of the formal probate process through informal processes benefits consumers and debt collectors.162 If a debt collector does not communicate with an estate because no executor or administrator exists, the debt collector might force the estate into probate, which could substantially burden the resources of the estate and the deceased consumer’s heirs or beneficiaries. These burdens may be particularly acute for small estates and for individuals of limited means. Probate also adds costs and delays for debt collectors. Accordingly, the Bureau is finalizing § 1006.6(a)(4) and its commentary largely as proposed. The Bureau finds that certain changes requested by commenters are unnecessary. First, it is unnecessary to incorporate comment 6(a)(4)–1, which describes other persons authorized to act on behalf of the deceased consumer’s estate, into the regulation text. The commentary to Regulation F is issued under the same authority as the corresponding provisions of the regulation and has been adopted in accordance with the notice-andcomment procedures of the Administrative Procedure Act (APA).163 Second, the Bureau declines to expand the description of personal representative to encompass anyone that a debt collector ‘‘has reason to believe’’ is authorized to act on behalf of the deceased consumer’s estate. This revision is unnecessary because, as the FTC explained, debt collectors have a variety of tools available to locate persons authorized to act on behalf of the deceased consumer’s estate, including public record searches and location communications, which are discussed in the section-by-section analysis of final § 1006.10.164 Furthermore, such a standard would be inconsistent with the FDCPA’s treatment of the other persons included under section 805(d)’s definition of consumer. Finally, commenters are mistaken in asserting that proposed § 1006.6(a)(4) and comment 6(a)(4)–1 failed to accommodate State laws that use terms other than personal representative. As comment 6(a)(4)–1 explained, the proposal would have included anyone who performs the functions of an executor, administrator, or personal representative, and does not require that such persons be identified by a specific term in State law, such as personal representative. Thus, an explicit reference to State law is not necessary. In response to consumer advocates’ concern that the proposed definition of personal representative was too broad, the Bureau revises comment 6(a)(4)–1 to clarify the description of persons who dispose of the deceased consumer’s assets extrajudicially. The Bureau understands that, although many individuals might sell or dispose of a deceased consumer’s property extrajudicially, these individuals would not necessarily ‘‘be authorized to act on behalf of the deceased consumer’s estate,’’ as the commentary requires. The Bureau is also unaware of any attempts by debt collectors to interpret the FTC’s Policy Statement on Decedent Debt in such a manner. Nevertheless, to increase clarity, final comment 6(a)(4)– 1 refers to ‘‘financial assets or other assets of monetary value’’ in describing such individuals. For the reasons discussed above, the Bureau is finalizing § 1006.6(a)(4), which defines the term consumer for purposes of § 1006.6 to include executors and administrators. Final comment 6(a)(4)–1 clarifies that the 163 5 U.S.C. 551 et seq., 701 et seq. FTC Policy Statement on Decedent Debt, supra note 157, at 44919–20. 164 See 162 See PO 00000 84 FR 23274, 23294 (May 21, 2019). Frm 00025 Fmt 4701 Sfmt 4700 76757 E:\FR\FM\30NOR3.SGM 30NOR3 76758 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations terms executor or administrator include the personal representative of the consumer’s estate. A personal representative is any person who is authorized to act on behalf of the deceased consumer’s estate. Persons with such authority may include personal representatives under the informal probate and summary administration procedures of many States, persons appointed as universal successors, persons who sign declarations or affidavits to effectuate the transfer of estate assets, and persons who dispose of the deceased consumer’s financial assets or other assets of monetary value extrajudicially. TKELLEY on DSKBCP9HB2PROD with RULES3 6(a)(5) The Bureau proposed to interpret FDCPA section 805(d)’s definition of the term consumer to include confirmed successors in interest, as defined in Regulation X, 12 CFR 1024.31, and Regulation Z, 12 CFR 1026.2(a)(27)(ii).165 As the Bureau has previously explained, while many mortgage servicers are not subject to the FDCPA, mortgage servicers that acquired a mortgage loan at the time that it was in default may be subject to the FDCPA with respect to that mortgage loan.166 As discussed in the proposal,167 a successor in interest under those regulations is, in general, a person to whom an ownership interest either in a property securing a mortgage loan subject to subpart C of Regulation X, or in a dwelling securing a closedend consumer credit transaction under Regulation Z is transferred under specified circumstances including, for example, after a consumer’s death or as part of a divorce.168 A confirmed successor in interest, in turn, means a successor in interest once a mortgage servicer has confirmed the successor in interest’s identity and ownership interest in the property that secures the mortgage loan 169 or in the dwelling.170 The Bureau proposed to include such persons in the definition of consumer under § 1006.6 because, given their relationship to the individual who owes or allegedly owes the debt, confirmed successors in interest are—like the narrow categories of persons enumerated in FDCPA section 805(d)— the type of individuals with whom a debt collector needs to communicate about the debt.171 165 12 CFR 1024.31, 1026.2(a)(27)(ii). FR 71977, 71978 (Oct. 19, 2016). 167 84 FR 23274, 23294–95 (May 21, 2019). 168 See 12 CFR 1024.31; 1026.2(a)(27)(i). 169 12 CFR 1024.31. 170 12 CFR 1026.2(a)(27)(ii). 171 84 FR 23274, 23295 (May 21, 2019). 166 81 VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 One industry commenter stated that the Bureau cannot include a confirmed successor in interest in implementing FDCPA section 805(d)’s definition of consumer because the Bureau lacks authority to include persons not contemplated by Congress. The commenter also questioned how the Bureau expects a debt collector to become aware of the confirmed successor in interest. One trade group commenter identified both benefits and risks to the proposal, including the risk presented by failing to have adequate policies and procedures in place to confirm the successor in interest. Another industry commenter stated that it identified no risk to permitting communications between a debt collector and a confirmed successor in interest, and that it supported the Bureau’s proposal to include a confirmed successor in interest in § 1006.6(a)’s definition of consumer on the basis that an individual with an ownership interest in a particular asset will desire open communication regarding the debt. A group of consumer advocates also supported proposed § 1006.6(a)(5) as ensuring consistent communications with surviving relatives regarding a mortgage on a home under Regulations X and Z. The commenter requested that, to avoid expanding communications unnecessarily to include the collection of other unrelated debt that the successor in interest may not have authority to manage, the Bureau clarify that an individual who qualifies as a confirmed successor in interest for one debt (e.g., a home mortgage) is not a confirmed successor in interest for other types of debt (e.g., a credit card debt) and that communications with such an individual must be limited to the mortgage loan that qualified the individual to be confirmed as a successor in interest. The Bureau disagrees that it lacks authority to include a confirmed successor in interest in implementing FDCPA section 805(d)’s definition of consumer because, as the Bureau explained in the Amendments to the 2013 Mortgage Rules under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) (2016 Servicing Final Rule),172 and the concurrently issued FDCPA interpretive rule (2016 FDCPA Interpretive Rule),173 the word ‘‘includes’’ in FDCPA section 805(d) indicates that section 805(d) is an exemplary, rather than an exhaustive, list of the categories of persons who are 172 81 173 81 PO 00000 FR 72160 (Oct. 19, 2016). FR 71977 (Oct. 19, 2016). Frm 00026 Fmt 4701 Sfmt 4700 consumers for purposes of FDCPA section 805. The Bureau explained that FDCPA section 805 recognizes the importance of permitting debt collectors to communicate with a narrow category of persons other than the individual who owes or allegedly owes the debt who, by virtue of their relationship to that individual, may need to communicate with the debt collector in connection with the collection of the debt. The Bureau further explained that, given their relationship to the person who owes or allegedly owes the debt, confirmed successors in interest are— like the narrow categories of persons enumerated in FDCPA section 805(d)— the type of persons with whom a debt collector needs to communicate about the debt. The Bureau therefore interpreted the term consumer for purposes of FDCPA section 805 to include a confirmed successor in interest as that term is defined in Regulation X, 12 CFR 1024.31, and Regulation Z, 12 CFR 1026.2(a)(27)(ii).174 In response to the industry commenter’s question regarding how the Bureau expects a debt collector to become aware of a successor in interest, the Bureau notes that Regulation X § 1024.38(b)(1)(vi) and comment 38(b)(1)(vi)–1 clarify that a mortgage servicer is not required to conduct a search for potential successors in interest if the mortgage servicer has not received actual notice of their existence.175 Comment 38(b)(1)(vi)–1 further explains that a mortgage servicer may be notified of the existence of a potential successor in interest in a variety of ways. The comment provides a non-exclusive list of examples of ways in which a mortgage servicer could be notified of the existence of a potential successor in interest, including that a person could indicate that there has been a transfer of ownership or of an ownership interest in the property or that a borrower has been divorced, legally separated, or died, or a person other than a borrower could submit a loss mitigation application. The comment also explains that a mortgage servicer must maintain policies and procedures reasonably designed to ensure that the mortgage servicer can retain this information and promptly facilitate communication with potential successors in interest when a mortgage servicer is notified of their existence.176 Nothing in this final rule is intended to 174 Id. at 71979; 81 FR 72160, 72181 (Oct. 19, 2016). 175 12 CFR 1024.38(b)(1)(vi); comment 38(b)(1)(vi)–1. 176 81 FR 72160, 72211 (Oct. 19, 2016). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations alter the successor in interest provisions in Regulations X and Z or to impose additional requirements. In response to the request from a group of consumer advocates for further clarification, the Bureau determines that the text of proposed § 1006.6(a)(5) was sufficiently clear that a person who meets the definition of a confirmed successor in interest under § 1006.6(a)(5) is a confirmed successor in interest with respect to a property securing a mortgage loan or a dwelling securing a closed-end consumer credit transaction as described above, and that such person is not also a confirmed successor in interest for other purposes. As indicated by § 1006.6(a)(5)’s specific citations to Regulations X and Z, a successor in interest is a person to whom an ownership interest either in a property securing a mortgage loan subject to subpart C of Regulation X, or in a dwelling securing a closed-end consumer credit transaction under Regulation Z, is transferred, provided that the transfer meets one of several enumerated conditions.177 The Bureau therefore declines to revise the proposed regulation text as requested. For these reasons, and consistent with the 2016 Servicing Final Rule and FDCPA Interpretive Rule, the Bureau is finalizing § 1006.6(a)(5) as proposed with technical revisions as an interpretation of FDCPA section 805(d). Final § 1006.6(a)(5) provides that, for purposes of § 1006.6, the term consumer includes a confirmed successor in interest, as defined in Regulation X, 12 CFR 1024.31, or Regulation Z, 12 CFR 1026.2(a)(27)(ii). TKELLEY on DSKBCP9HB2PROD with RULES3 6(b) Communications With a Consumer—In General FDCPA section 805(a) restricts how a debt collector may communicate with a consumer in connection with the collection of any debt and provides certain exceptions to these prohibitions.178 The Bureau proposed § 1006.6(b) to implement and interpret FDCPA section 805(a) to specify circumstances in which a debt collector is prohibited from communicating with a consumer in connection with the collection of any debt, and to interpret FDCPA sections 806 and 808 to prohibit a debt collector from attempting to communicate with a consumer if FDCPA section 805(a) would prohibit 177 See 12 CFR 1024.31; 1026.2(a)(27)(i). U.S.C. 1692c(a). Specifically, FDCPA section 805(a)(1) prohibits certain communications at unusual or inconvenient times and places, section 805(a)(2) prohibits certain communications with a consumer represented by an attorney, and section 805(a)(3) prohibits certain communications at a consumer’s place of employment. 178 15 VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 the debt collector from communicating with the consumer.179 For the reasons discussed below, the Bureau is adopting § 1006.6(b) generally as proposed but with certain revisions designed principally to address commenters’ requests for clarification in the commentary to proposed § 1006.6(b).180 Attempts To Communicate The Bureau proposed to clarify in § 1006.6(b) that a debt collector is prohibited from attempting to communicate with a consumer in the same circumstances in which FDCPA section 805(a) prohibits the debt collector from communicating with the consumer. The phrase attempt to communicate 181 thus appeared throughout proposed § 1006.6(b)(1) through (4).182 One consumer commenter supported the Bureau’s proposal to include attempts to communicate within the prohibitions proposed in § 1006.6(b) on the basis that the attempt to communicate at the inconvenient place and time is, in fact, a concrete harm. A group of consumer advocates supported the addition as necessary if the Bureau were to finalize proposed § 1006.2(j) to allow limitedcontent messages, and as especially important to prevent debt collectors from sending limited-content messages after a cease communication request or refusal to pay from a consumer pursuant to proposed § 1006.6(c). One industry commenter did not oppose the Bureau’s proposal to include attempts to communicate within the prohibitions under § 1006.6(b) but questioned the Bureau’s reliance on FDCPA sections 806 and 808 to achieve that result on the basis that the Bureau would be adding to the conduct that is a violation of section 808. Instead, this commenter suggested the Bureau rely only on interpretations of FDCPA sections 805(a) and 806. After considering the comments, the Bureau is finalizing § 1006.6(b) as 179 84 FR 23274, 23295–98 (May 21, 2019). Bureau proposed introductory language to § 1006.6(b). The Bureau received no comments on that language and considers it largely repetitive of the provisions that follow in § 1006.6(b)(1) through (3). The Bureau therefore is not adopting that language in the final rule. 181 As discussed in the section-by-section analysis of § 1006.2(b), the final rule defines an attempt to communicate as 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. For example, a debt collector who places a telephone call to discuss a consumer’s debt that goes unanswered by the consumer has attempted to communicate with the consumer. 182 The phrase attempt to communicate also appears in § 1006.14(h), as discussed below. See the section-by-section analysis of § 1006.14(h). 180 The PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 76759 proposed to limit attempts to communicate as well as communications based on interpretations of FDCPA sections 806 and 808. FDCPA section 806 prohibits a debt collector from engaging in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.183 Specifically, FDCPA section 806(5) provides that causing a telephone to ring repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number is an example of conduct the natural consequence of which is to harass, oppress, or abuse. FDCPA section 806(5) thus recognizes that telephone calls may have the natural consequence of harassment, oppression, or abuse if the consumer answers the telephone call or even if no conversation ensues. 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. For this reason, the Bureau adopts its interpretation of FDCPA section 806 as prohibiting a debt collector from attempting to communicate at times when and places where a communication would be prohibited as inconvenient. FDCPA section 808 prohibits a debt collector from using unfair or unconscionable means to collect or attempt to collect any debt.184 A debt collector who places a telephone call without any legitimate purpose may injure persons at the called number even if the call goes unanswered (and, therefore, is not a communication), and thus may be engaging in a prohibited unfair or unconscionable act under FDCPA section 808. Additionally, section 808 targets practices that pressure a consumer to pay debts the consumer might not otherwise have paid. A debt collector’s attempts to communicate at a time when or a place where a communication would be prohibited could pressure the consumer to pay the debt to avoid further intrusions on the consumer’s privacy, and the Bureau interprets such conduct as unfair or unconscionable under FDCPA section 808. In response to the industry commenter’s suggestion that the Bureau’s interpretation to include attempts to communicate within the prohibitions under § 1006.6(b) not rely on FDCPA section 808, the Bureau 183 15 184 15 E:\FR\FM\30NOR3.SGM U.S.C. 1692d. U.S.C. 1692f. 30NOR3 76760 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations concludes that its interpretation is wholly consistent with FDCPA section 808’s prohibition on a debt collector using unfair or unconscionable means to collect or attempt to collect a debt. The section itself states, ‘‘without limiting the general application of the foregoing, the following conduct is a violation of this section,’’ meaning that the general principles of unfairness and unconscionability under the FDCPA are not limited by the specific examples listed in FDCPA section 808(1) through (8). Consistent with that interpretation, and pursuant to its authority under FDCPA section 814(d) to write rules with respect to the collection of debts by debt collectors, the Bureau adopts its interpretation of FDCPA section 808 as prohibiting a debt collector from attempting to communicate at times when and places where a communication would be prohibited as inconvenient. 6(b)(1) Prohibitions Regarding Unusual or Inconvenient Times or Places TKELLEY on DSKBCP9HB2PROD with RULES3 FDCPA section 805(a)(1) prohibits a debt collector from, among other things, communicating with a consumer in connection with the collection of any debt at any unusual time or place, or at a time or place that the debt collector knows or should know is inconvenient to the consumer, subject to certain exceptions. And, as discussed further in the section-by-section analysis of § 1006.6(b)(1)(i), FDCPA section 805(a)(1) establishes certain times that, in the absence of knowledge to the contrary, a debt collector shall assume are convenient for debt collection communications. The Bureau proposed § 1006.6(b)(1) and comment 6(b)(1)–1 to generally implement and interpret FDCPA section 805(a)(1)’s time and place restrictions, with proposed comment 6(b)(1)–1 clarifying how a debt collector knows or should know that a time or place is inconvenient based on information received from the consumer, i.e., based on a consumer’s designation of that time or place as inconvenient. Proposed § 1006.6(b)(1)(i) and its commentary specifically addressed time restrictions. Proposed § 1006.6(b)(1)(ii) specifically addressed place restrictions.185 185 In this section-by-section analysis, the Bureau addresses feedback regarding inconvenience and the ‘‘know or should know’’ standard generally, or that focused on proposed comment 6(b)(1)–1 regarding a consumer’s designation of time or place as inconvenient. To the extent that comments focused on specific aspects of either the proposed time restrictions or the proposed place restrictions, those comments are addressed in the section-bysection analysis of § 1006.6(b)(1)(i) or (ii), respectively. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 A number of industry commenters supported the proposed prohibitions on contacting a consumer at an inconvenient time or place as consistent with the statutory prohibitions under FDCPA section 805(a), and one industry commenter stated that consumer requests must be respected when it comes to inconvenient times to communicate. Some industry commenters requested that the Bureau generally provide further clarity regarding inconvenience. For example, one industry commenter stated that FDCPA section 805(a) and proposed § 1006.6(b)(1) are very broad and leave too much room for interpretation and requested that the Bureau make § 1006.6(b)(1) more specific. Other industry commenters went further to suggest that the Bureau not incorporate certain language from FDCPA section 805(a) in § 1006.6(b)(1) regarding inconvenient time and place. Some such commenters took issue with the Bureau’s incorporation of the statutory language in FDCPA section 805(a) regarding a time or place ‘‘which should be known to be inconvenient to the consumer,’’ 186 with some commenters stating that ‘‘should be known’’ is too high a standard, creates unreasonable expectations, is unnecessary, and should be removed from the rule. One trade group commented specifically on the ‘‘should know’’ standard for times and suggested that the rule should omit any reference to consumer-designated inconvenient times and rely only on statutorily presumptive convenient times. Similarly, one industry commenter suggested that, because FDCPA section 805(a)(1) provides presumptively convenient hours of contact (i.e., after 8:00 a.m. and before 9:00 p.m.), further limiting this timeframe by adopting a rule that would permit a consumer to also designate inconvenient times that a debt collector ‘‘should know’’ are inconvenient would unduly limit the ability of a debt collector to reach a consumer to discuss the account. Another industry commenter stated that the requirement to keep track of what times are inconvenient to a consumer will increase costs to debt collectors. With respect to place, one industry commenter stated that, given the difficulties presented by mobile technology, the Bureau should remove the reference to inconvenient place from the rule altogether.187 The Bureau recognizes that the statutory language under FDCPA section 805(a) is broad and, to implement the flexibility afforded under the statute, proposed to incorporate various examples through commentary to facilitate debt collector compliance. FDCPA section 805(a) specifically states that a debt collector may not communicate with a consumer in connection with the collection of any debt at any unusual time or place or a time or place ‘‘known or which should be known’’ to be inconvenient to the consumer.188 Given this statutory provision, the Bureau declines commenters’ requests to omit the ‘‘should be known’’ standard from § 1006.6(b)(1). The Bureau also notes that any costs of coming into compliance to record and respect a consumer’s designations of inconvenient times (or places) are not a result of the Bureau’s adopting § 1006.6(b)(1), but rather arise from compliance with FDCPA section 805(a). For the same reason, the Bureau declines to rely only on the statutorily prescribed presumptively convenient times, as suggested by one commenter. Just as the presumptively convenient times are statutorily prescribed, so is the ability for a consumer to designate additional convenient (or inconvenient) times for debt collection communications.189 Nevertheless, as explained in detail below, the Bureau is finalizing comments 6(b)(1)–1 and –2 to include various additional illustrations in response to commenters’ requests for clarity. Accordingly, the Bureau adopts a flexible approach while clarifying the contours of permissible and prohibited debt collector communications with a consumer to assist debt collectors in complying with the final rule. One trade group commenter suggested that the statutory prohibition against communicating during inconvenient times and places shift altogether from a one-size-fits-all paradigm suited for 1977 when the FDCPA was enacted to a presumption that consumers can control when they would like to be contacted. And another trade group commenter encouraged the Bureau to adopt a reasonableness standard to prevent consumers from designating all, or almost all, times as inconvenient, or to require consumers to answer certain questions to trigger the protections on 188 15 U.S.C. 1692c(a)(1). unless an exception in FDCPA section 805(a) or final § 1006.6(b)(4) applies, a debt collector is required to abide by a consumer’s designation of inconvenient times, even if those times are presumptively convenient according to the statute. 189 Therefore, 186 15 U.S.C. 1692c(a)(1). further discussion of communications or attempts to communicate at unusual or inconvenient places, see the section-by-section analysis of § 1006.6(b)(1)(ii). 187 For PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 communications at inconvenient times or places. The statutory standard under FDCPA section 805(a)(1) is one of inconvenience. Additionally, the statute does not limit a consumer’s ability to invoke the protections afforded under FDCPA section 805(a)(1) based on a reasonableness standard, and therefore it would not be appropriate for this rule to do so. Nor would such a limitation comport with the protections afforded a consumer under FDCPA section 805(c), which requires a debt collector to cease further communications with the consumer upon the consumer’s written notification, or under FDCPA section 806, which prohibits a debt collector from engaging in conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. For all of these reasons, the Bureau is finalizing the general standard in § 1006.6(b)(1) as proposed to implement and interpret FDCPA section 805(a)(1). Consumer Designation of Inconvenient Times or Places The Bureau proposed comment 6(b)(1)–1 to provide general interpretations and illustrations of the time and place restrictions in § 1006.6(b)(1), including how a debt collector knows or should know that a time or place is inconvenient to a consumer. The Bureau proposed this comment to clarify one aspect of the knowledge standard for time and place, that is, that a debt collector knows or should know that a time or place is inconvenient if the consumer designates it as such. Proposed comment 6(b)(1)–1 provided general interpretations and illustrations regarding consumer designation, including that a debt collector knows or should know that a time or place is inconvenient even if the consumer does not use the word ‘‘inconvenient.’’ For the reasons discussed below, the Bureau is finalizing comment 6(b)(1)–1 with revisions to address feedback.190 Information transfer. One trade group commenter read the proposal as imposing a substantial information transfer requirement on a debt collector and worried that it would require debt collectors to rely upon the previous holder of the debt for details that can be excessively subjective. Some industry 190 While proposed comments 6(b)(1)–1.ii and .iv also addressed consumer-initiated communications at times previously designated as inconvenient, for organizational purposes, the Bureau is finalizing those examples under new comment 6(b)(1)–2.i and .ii and accordingly discusses feedback about those comments in the section-by-section analysis of comment 6(b)(1)–2 below. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 commenters expressed concerns regarding the difficulty associated with a creditor transferring information about a consumer’s inconvenience designations to a debt collector. Another industry commenter stated that proposed comment 6(b)(1)–1 neglected to account for the significant amounts of information that may be available to a debt collector and whether the debt collector is bound to some duty of inquiry with respect to such information. The proposal would not have required any transfer of information regarding a consumer’s inconvenience designations from a creditor or previous debt collector to the current debt collector, and nor does this final rule. However, to illustrate a situation in which a debt collector knows or should know that specific times are inconvenient to a consumer based on recent notes in a file from the creditor placing the debt for collection, the Bureau includes a new example in final comment 6(b)(1)–1.i. Specificity of designation. As noted above, the Bureau proposed that, even if a consumer does not use the word ‘‘inconvenient’’ to notify the debt collector, the debt collector may nevertheless know, or should know, based on the facts and circumstances, that a time or place is inconvenient to the consumer. Some industry commenters suggested shifting the onus to the consumer to utter specific words or undertake certain actions to trigger the FDCPA’s communication protections. Two industry commenters suggested that it would be reasonable to require a consumer to use some specific language to put a debt collector on notice that contact at a certain time or place is inconvenient. One trade group commenter stated that the rule should require, as a trigger to compliance, consumers to use words that reasonably identify for a debt collector the inconvenient times during which the debt collector should refrain from contact. One consumer commenter supported the proposal not to require that the consumer utter specific words to invoke the protections under FDCPA section 805(a) on the basis that how a consumer expresses what is convenient or inconvenient should not be restricted to approved words as an excuse for a debt collector’s noncompliance. The Bureau declines to restrict how a consumer may designate a time or place as inconvenient. The statute does not prescribe any specific actions or require precise responses or utterances on behalf of the consumer to invoke these communications protections, and nor does this final rule impose such PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 76761 requirements. The Bureau determines that a flexible approach is necessary when it comes to communications, which by their very nature are dynamic, depend upon the specific circumstances, and differ from consumer to consumer. Such fluid communications cannot be scripted, nor can every permutation be anticipated. The Bureau therefore is finalizing its proposed interpretation of FDCPA section 805(a)(1), which refers to what is ‘‘inconvenient to the consumer,’’ without specifying that a consumer must designate communications as inconvenient using the word ‘‘inconvenient.’’ One industry commenter stated the word ‘‘inconvenient’’ should not be a tool for a consumer to prevent communication with a debt collector. However, FDCPA section 805(a)(1) explicitly recognizes that communications must not occur at a time or place known or which should be known to be inconvenient to the consumer. The Bureau notes that a consumer also has the option under FDCPA section 805(c) to notify a debt collector to cease communications with the consumer altogether. Therefore, it serves not only consumers but also debt collectors for communications to occur at times and places that are convenient to the consumer, and to avoid requiring consumers to perform specific actions or require precise responses or utterances to achieve the protections under FDCPA section 805(a), lest consumers more simply resort to notifying debt collectors under FDCPA section 805(c) to cease further communication. Some industry commenters asked the Bureau to clarify how debt collectors may appropriately determine a time or place is inconvenient if a consumer gives unclear, vague, or ambiguous instructions, or insufficient information for the debt collector to identify when or where the consumer does not want to be contacted. Some trade group commenters suggested that a debt collector be permitted to ask a consumer follow-up questions to obtain more specific information to honor the consumer’s request. Two trade group commenters suggested that, unless a consumer provides readily understandable instructions as to the scope of any identified inconvenient time or place, a debt collector should be permitted to continue contacting the consumer as if no designation had been made. The Bureau understands that a consumer’s articulation of inconvenience sometimes may require further clarification. Because the standard in FDCPA section 805(a)(1) is E:\FR\FM\30NOR3.SGM 30NOR3 76762 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 based on what is ‘‘inconvenient to the consumer,’’ 191 the consumer is the best source of information for the debt collector to learn when is an inconvenient time or where is an inconvenient place. To clarify this point and to provide debt collectors guidance in circumstances in which the debt collector needs additional clarity or information from the consumer, the Bureau is revising comment 6(b)(1)–1 to specifically state that the debt collector may ask follow-up questions regarding whether a time or place is convenient to clarify statements by the consumer. The Bureau determines that this approach will allow consumers to exercise their right to limit communications at inconvenient times and places while decreasing uncertainty for debt collectors. Accordingly, the Bureau revises the example proposed as comment 6(b)(1)–1.i, now finalized as comment 6(b)(1)–1.ii, to illustrate such an exchange between a debt collector and a consumer. Other industry commenters requested that the Bureau clarify how the rule applies if a consumer answers a telephone call from a debt collector, states that the consumer is ‘‘busy right now’’ or ‘‘cannot talk right now,’’ and immediately hangs up the telephone. If a debt collector does not have an opportunity to ask a consumer followup questions because the consumer has, for example, abruptly ended a telephone call, the standards regarding telephone call frequencies in § 1006.14(b)(2) may be instructive in assisting a debt collector in determining when the debt collector may call the consumer again.192 Although § 1006.6(b)(1) would not require a debt collector to construe a consumer’s statement that the consumer is ‘‘busy right now’’ or ‘‘cannot talk right now’’ without anything further to mean that the consumer is generally designating that time or place as inconvenient for future communications, the statement does indicate that the time or place is inconvenient for current communications. Inconvenient places. As part of proposed comment 6(b)(1)–1, the Bureau included an example in proposed comment 6(b)(1)–1.iii to illustrate when a debt collector knows or should know that a place is 191 15 U.S.C. 1692c(a)(1). the section-by-section analysis of § 1006.14(b)(2) presuming compliance with § 1006.14(b)(1) if a debt collector places a telephone call to a particular person in connection with the collection of a particular debt not within a period of seven consecutive days after having had a telephone conversation with the person in connection with the collection of such debt. 192 See VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 inconvenient to a consumer. Proposed comment 6(b)(1)–1.iii assumed that a consumer tells a debt collector not to communicate with the consumer at school. Based on these facts, proposed comment 6(b)(1)–1.iii explained, the debt collector knows or should know that communications to the consumer at school are inconvenient and, thereafter, the debt collector must not communicate or attempt to communicate with the consumer at that place. The Bureau received many comments from industry asking how, in light of technology such as mobile telephones, which consumers can take with them everywhere, a debt collector could be sure to avoid contacting a consumer at an inconvenient place. Industry commenters requested that the Bureau either remove the example or revise it to include specific times or other information from the consumer that would enable the debt collector to know when the consumer is at the inconvenient place, suggesting that, without such information, the debt collector would have to make assumptions about the consumer’s whereabouts. To address these concerns, the Bureau is revising the example in comment 6(b)(1)–1.iii. Final comment 6(b)(1)–1.iii illustrates that once a debt collector knows or should know that communications to a place are inconvenient to a consumer, unless the consumer otherwise informs the debt collector that the place is no longer inconvenient, § 1006.6(b)(1)(ii) prohibits the debt collector from communicating or attempting to communicate with the consumer at that place, including by sending mail to the address associated with that place and by placing calls to the landline telephone number at that place. And in response to commenters’ request for further clarification regarding when a consumer is at an inconvenient place, consistent with the addition to comment 6(b)(1)–1 discussed above that a debt collector may ask follow-up questions regarding whether a time or place is convenient to clarify statements by a consumer, a debt collector may ask a consumer to identify times associated with an inconvenient place. For further discussion regarding communications or attempts to communicate at an inconvenient place, see the section-by-section analysis of § 1006.6(b)(1)(ii). Duty To Inquire The Bureau did not propose to require, but requested comment on whether to require, a debt collector to ask a consumer at the outset of all debt collection communications whether the PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 time or place is convenient to the consumer. An academic commenter as well as a group of consumer advocates supported such a requirement, with the group of consumer advocates stating that asking a consumer whether the time or place is convenient is a best practice for telephone calls or in-person communications and requesting the Bureau adopt that approach. A number of industry commenters disagreed, stating that such a requirement would be impractical and cumbersome as part of a lengthy telephone call introduction that already requires verifying the consumer’s identity and providing various disclosures. One trade group commenter suggested that such a long introduction would annoy the consumer, and another stated that the natural reaction to receiving a call from an unknown individual who inquires whether the call is convenient would be to respond that the call is inconvenient. The Bureau agrees that it would be impractical to require debt collectors to ask consumers at the outset of every debt collection communication whether the time or place is convenient. A debt collector, of course, is free to ask this question and may find that it is a natural question that arises as part of a communication with a consumer. However, the Bureau does not believe that such a requirement is necessary or warranted to implement FDCPA section 805(a)(1). For the reasons discussed above, the Bureau is finalizing comment 6(b)(1)–1 regarding a consumer’s designation of an inconvenient time or place to provide that a debt collector knows or should know that a time or place is inconvenient to a consumer if the consumer uses the word ‘‘inconvenient’’ to notify the debt collector. In addition, depending on the facts and circumstances, the debt collector knows or should know that a time or place is inconvenient even if the consumer does not specifically state to the debt collector that a time or place is ‘‘inconvenient.’’ Final comment 6(b)(1)– 1 also provides that a debt collector may ask follow-up questions regarding whether a time or place is convenient to clarify statements by the consumer and, as discussed above, includes three illustrative examples. Consumer-Initiated Communications at Previously Designated Inconvenient Times or Places As part of proposed comment 6(b)(1)– 1, the Bureau proposed to clarify that, if a consumer initiates a communication with a debt collector at a time or from a place that the consumer previously designated as inconvenient, the debt E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations collector may respond once; but thereafter, the debt collector must not communicate or attempt to communicate further with the consumer at that time or place until the consumer conveys that the time or place is no longer inconvenient. The Bureau also proposed two illustrative examples. The Bureau is finalizing this aspect of proposed comment 6(b)(1)–1 as comment 6(b)(1)–2, with revisions and additional examples in response to feedback as discussed below. One consumer commenter supported the proposal’s approach to permit one reply as protective of consumers and a fair compromise to debt collectors. A number of industry commenters requested clarification regarding the scope of a debt collector’s one permitted reply if a consumer initiates a communication with a debt collector at a time or from a place that the consumer previously designated as inconvenient. Industry commenters suggested that, if a consumer contacts a debt collector during a time that the consumer previously designated as inconvenient, the debt collector either should be able to ask if the consumer has revoked the inconvenience designation or should be able to assume that the consumer has done so. One trade group commenter requested that the Bureau clarify whether a debt collector’s unanswered call to a consumer would constitute the debt collector’s one reply. In response to commenters’ suggestions, the Bureau notes that a debt collector is not prohibited from inquiring in the one permitted reply whether the consumer is revoking the inconvenient time or place designation. However, the consumer’s act of simply initiating a communication does not revoke the inconvenient time or place designation. As comment 6(b)(1)–2 explains, after a debt collector’s one permitted response, § 1006.6(b)(1) prohibits the debt collector from communicating or attempting to communicate further with the consumer at that time or place until the consumer conveys that the time or place is no longer inconvenient, unless an exception in § 1006.6(b)(4) applies. Additionally, in response to the trade group commenter’s request for further clarity, the Bureau determines that a debt collector’s unanswered call does constitute the debt collector’s one permitted reply as described under comment 6(b)(1)–1. However, nothing prohibits the debt collector from communicating or attempting to communicate at times or places that are not inconvenient to the consumer, including to ask the consumer if the VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 time or place previously designated by the consumer remains inconvenient. The final rule further clarifies the scope of a debt collector’s one permitted reply by specifying in final comment 6(b)(1)–2 that the debt collector’s one reply must be through the same medium of communication used by the consumer to initiate the communication. For example, if a consumer sends a debt collector a text message at a time the consumer previously designated as inconvenient, the debt collector may reply once by text message; but unless the consumer provided prior consent to receive a telephone call, for example, the debt collector may not reply once by placing a telephone call to the consumer. The Bureau finds that a consumer-initiated communication is, by its nature, not inconvenient to the consumer, and that includes the medium of communication used by the consumer to initiate that communication. Because the consumer initiated the communication, the debt collector neither knows nor should know that responding to that communication through the same medium of communication is inconvenient to the consumer.193 Additionally, if a consumer designates a period of time as inconvenient and subsequently initiates a communication with a debt collector during that time, although the debt collector may wait for the inconvenient time period to expire before contacting the consumer, final comment 6(b)(1)–2.i and .ii, discussed below, illustrate that the debt collector may respond once during the inconvenient time period on that day. Accordingly, final comment 6(b)(1)–2 states that, if a consumer initiates a communication with a debt collector at a time or from a place that the consumer previously designated as inconvenient, the debt collector may respond once at that time or place through the same medium of communication used by the consumer.194 After that response, § 1006.6(b)(1) prohibits the debt collector from communicating or attempting to communicate further with the consumer at that time or place until 193 The Bureau notes, however, that some automated processes that would occur through different communication media, such as two-factor authentication, may be permissible because they are not attempts to communicate or communications if they are not about the debt. Alternatively, a consumer may provide prior consent to receive such communications, including, for example, providing prior consent to receive confirmation of payment by email or text message when making a payment on a debt collector’s website at a time or from a place that the consumer previously designated as inconvenient. 194 For more on medium of communication, see § 1006.14(h) and its associated commentary. PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 76763 the consumer conveys that the time or place is no longer inconvenient, unless an exception in § 1006.6(b)(4) applies. Comment 6(b)(1)–2 also includes four examples illustrating how a debt collector may comply with § 1006.6(b)(1) if a consumer initiates a communication with a debt collector at a time or from a place that the consumer previously designated as inconvenient, with the third example focused on websites and mobile applications, and the fourth example focused on automated replies. The first two examples under comment 6(b)(1)–2 were proposed as comments 6(b)(1)–1.ii and .iv, respectively. The Bureau is revising these examples consistent with the discussion above that a debt collector’s one permitted reply must be through the same medium of communication used by the consumer in initiating the communication, and is finalizing them as comments 6(b)(1)–2.i and .ii. These two examples illustrate a debt collector responding once through the same medium of communication used by the consumer before the expiration of the consumer’s otherwise inconvenient time or place designation. The third example under comment 6(b)(1)–2.iii relates to websites and mobile applications. As discussed in the section-by-section analysis of final § 1006.2(b) and (d), some industry commenters asserted that the proposed definitions of attempt to communicate and communicate or communication would include information provided to consumers who visit or navigate a debt collector’s website or online portal.195 Such information may constitute an attempt to communicate or a communication depending on its content. However, as the example in comment 6(b)(1)–2.iii illustrates, when a consumer initiates a communication by navigating a debt collector’s website or using a debt collector’s mobile application at a time or from a place that the consumer previously designated as inconvenient, § 1006.6(b)(1) does not prohibit the debt collector from conveying information to the consumer about the debt through the website or mobile application. Accordingly, comment 6(b)(1)–2.iii provides clarity regarding websites and mobile applications. The final example under comment 6(b)(1)–2.iv is focused on automated replies. The Bureau received a number of comments requesting that the Bureau clarify how § 1006.6(b)(1) applies to such replies. Specifically, several 195 Those comments are summarized in the section-by-section analyses of § 1006.2(b) and (d). E:\FR\FM\30NOR3.SGM 30NOR3 76764 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations industry commenters expressed concern regarding the circumstance in which a consumer initiates an electronic communication, such as an email or text message, with a debt collector at a time or from a place that the consumer previously designated as inconvenient, and the debt collector’s system generates an automated reply to confirm receipt of the consumer’s message and inform the consumer when a response from the debt collector might be expected. Some industry commenters also expressed concern over an automated reply generated in response to a consumer-initiated communication received during the presumptively inconvenient times between 9:00 p.m. and 8:00 a.m., local time at the consumer’s location. One trade group commenter suggested model language for an automated reply that would not meet the definitions of attempt to communicate or communication under § 1006.2(b) and (d).196 As discussed above, the Bureau finds that a consumer-initiated communication is, by its nature, not inconvenient to the consumer and that the debt collector may respond once, including by automated reply, through the same medium of communication used by the consumer. The Bureau is adopting comment 6(b)(1)–2.iv to clarify that, if a consumer initiates a communication by sending an email message at a time or from a place that the consumer previously designated as inconvenient or that is presumptively inconvenient, the debt collector is not prohibited from responding once, such as by sending a system-generated automated email reply.197 6(b)(1)(i) TKELLEY on DSKBCP9HB2PROD with RULES3 FDCPA section 805(a)(1) provides, in relevant part, that a debt collector may not communicate with a consumer in connection with the collection of any debt at any unusual time, or at a time that the debt collector knows or should know is inconvenient to the 196 As discussed in the section-by-section analyses of § 1006.2(b) and (d), other commenters suggested that the Bureau exclude automated replies from the definitions of attempt to communicate and communication. Those comments are addressed in the section-by-section analyses of § 1006.2(b) and (d). 197 In response to comments concerned with an automated reply generated in response to a consumer-initiated communication received during the presumptively inconvenient times between 9:00 p.m. and 8:00 a.m., local time at the consumer’s location, the Bureau believes that the consumer initiating a communication between those times may constitute the debt collector’s ‘‘knowledge of circumstances to the contrary’’ under § 1006.6(b)(1)(i). See the section-by-section analysis of § 1006.6(b)(1)(i). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 consumer.198 FDCPA section 805(a)(1) specifies that, in the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8:00 a.m. and before 9:00 p.m., local time at the consumer’s location. The Bureau proposed § 1006.6(b)(1)(i) to implement and interpret FDCPA section 805(a)(1)’s prohibition regarding unusual or inconvenient times.199 The Bureau interpreted the language in FDCPA section 805(a)(1) that a debt collector shall assume that the convenient time for communicating with a consumer is after 8:00 a.m. and before 9:00 p.m. to mean that a time before 8:00 a.m. and after 9:00 p.m. local time at the consumer’s location is inconvenient, unless the debt collector has knowledge of circumstances to the contrary. Comments regarding proposed § 1006.6(b)(1)(i) fell into three main categories, as discussed below. Existing Violations of FDCPA Section 805(a)(1) Several individual consumers noted that, notwithstanding the prohibition in FDCPA section 805(a)(1), they have received hateful and threatening debt collection calls before 8:00 a.m., after 9:00 p.m., and during all hours of the night. The Bureau notes that the FDCPA imposes a specific presumption against communicating with a consumer before 8:00 a.m. and after 9:00 p.m., local time at the consumer’s location regardless of the content of the communication.200 In the absence of knowledge of circumstances to the contrary, a debt collector’s communications with a consumer before 8:00 a.m. and after 9:00 p.m. are inconvenient to the consumer and are prohibited under FDCPA section 805(a)(1) and final § 1006.6(b)(1)(i). Depending on the facts and circumstances, communications made at prohibited times in violation of § 1006.6(b)(1)(i) may also violate other provisions of the FDCPA or this final rule. Inconvenient Times and Electronic Communications The Bureau received several comments on the general application of § 1006.6(b)(1)(i)’s inconvenient time prohibition to electronic 198 15 U.S.C. 1692c(a)(1). discussed in the section-by-section analysis of § 1006.6(b), § 1006.6(b)(1)(i) also interprets FDCPA sections 806 and 808 to prohibit a debt collector from attempting to communicate with a consumer at a time when FDCPA section 805(a)(1) would prohibit the debt collector from communicating with the consumer. 200 See 15 U.S.C. 1692c(a)(1). 199 As PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 communications. A group of State Attorneys General supported applying § 1006.6(b)(1)(i) to electronic communications and agreed with the proposal to extend the FDCPA’s limitation on permissible hours of communications to newer communication media including, but not limited to, email, text messaging, and social media. Many industry commenters, in contrast, expressed concern about the proposed approach. One industry commenter supported permitting debt collector communications by telephone call or text message during the presumptively convenient hours between 8:00 a.m. and 9:00 p.m., local time, as fair and reasonable, but requested that the Bureau exempt email and text messages from consumer-designated inconvenient time and place restrictions. Several industry commenters stated that, although a debt collector’s telephone calls to a consumer should adhere to the inconvenient time restrictions, the Bureau should except email or text messages or both from any time restrictions, thereby permitting electronic messages to be sent by a debt collector to a consumer at any time. A number of these commenters suggested that electronic communications such as email messages are distinct in nature from other media of communication, as are the ways in which a consumer may determine whether to engage with such communications. One industry commenter suggested that requiring electronic messages to adhere to inconvenient time restrictions puts debt collectors at a competitive disadvantage because no other industry has such a restriction, while another industry commenter suggested that, because internet service providers limit the frequency of outgoing email messages, such communications should not be subject to any further restrictions, including the inconvenient time restrictions under proposed § 1006.6(b)(1)(i). This same industry commenter also suggested that the Bureau exclude email messages from the definition of ‘‘communication’’ in proposed § 1006.6(b)(1)(i). One trade group commenter suggested that the unsubscribe instructions in proposed § 1006.6(e) would sufficiently protect consumers, such that subjecting electronic communications to inconvenient time restrictions was unnecessary. Some industry commenters stated that the difficulty lies with technology and the inability of their software to time-stamp and track electronic communications, and with the associated costs of having to do so. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations The statutory requirement under FDCPA section 805(a)(1) broadly applies to all debt collection communications with a consumer, without distinguishing between communication media.201 Consistent with the statute, the Bureau interprets FDCPA section 805(a)(1) to apply § 1006.6(b)(1)(i)’s inconvenient time prohibition to electronic communications and not just to telephone calls, for example, with the consumer. In response to industry comments suggesting that the costs associated with compliance will be burdensome, although this final rule does not require electronic communications by debt collectors, it provides clarity for a debt collector who elects to send electronic communications to a consumer. TKELLEY on DSKBCP9HB2PROD with RULES3 Decedent Debt Waiting Period Although the Bureau did not propose to define a period after a consumer’s death as an inconvenient time for communicating about the deceased consumer’s debt with surviving spouses or parents (in the case of deceased minor consumers) or persons acting as executors, administrators, or personal representatives of a deceased consumer’s estate, the Bureau requested comment on this topic.202 The FTC declined to adopt such a waiting period in its Policy Statement on Decedent Debt because it did not have a sufficient record to establish the necessity of a waiting period or the optimal length of such a period. While the Bureau received some comments on this issue, it likewise does not have a sufficient basis to determine whether to impose such a waiting period or the proper duration of such a waiting period. Therefore, the Bureau declines to include a waiting period in the final rule. For the reasons discussed above, the Bureau is finalizing § 1006.6(b)(1)(i) as proposed to provide that, except as provided in § 1006.6(b)(4), a debt collector must not communicate or 201 While commenters raised questions regarding new communication media and § 1006.6(b)(1)(i)’s prohibition on communicating or attempting to communicate with a consumer at an inconvenient time, none requested clarification regarding mailed communications. The Bureau understands that a consumer’s designation of a time as inconvenient under FDCPA section 805(a)(1) has not prevented debt collectors from sending communications by mail through the United States Postal Service. Unlike mail, the time at which an electronic communication, such as an email or text message, is sent generally correlates with the time of receipt. Therefore, § 1006.6(b)(1)(i)’s prohibition on communicating or attempting to communicate with a consumer at an inconvenient time generally does not apply to mail in the same manner as it does to electronic communications. 202 See 84 FR 23274, 23296 (May 21, 2019). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 attempt to communicate with a consumer in connection with the collection of any debt at any unusual time, or at a time that the debt collector knows or should know is inconvenient to the consumer. In the absence of the debt collector’s knowledge of circumstances to the contrary, a time before 8:00 a.m. and after 9:00 p.m. local time at the consumer’s location is inconvenient. The Bureau proposed comment 6(b)(1)(i)–1 to clarify that, for purposes of determining the time of an electronic communication under § 1006.6(b)(1)(i), an electronic communication occurs when the debt collector sends it, not, for example, when the consumer receives or views it. Two trade group commenters agreed with the proposed interpretation. One consumer commenter also supported it but suggested that the time of receipt by the consumer should control instead. And a group of consumer advocates supported the proposed interpretation but requested that the Bureau further clarify that ‘‘sending’’ does not include scheduling a message for later delivery. The Bureau proposed the clarification in comment 6(b)(1)(i)–1 to assist debt collectors who elect to send consumers electronic communications in complying with § 1006.6(b)(1)(i). As the Bureau stated in the proposal, ambiguity exists about whether, for purposes of FDCPA section 805(a)(1), an electronic communication occurs at the time of sending by the debt collector or at the time of receipt or viewing by the consumer. A debt collector can control the time at which it chooses to send communications, whereas it often would be impossible for a debt collector to determine when a consumer receives or views an electronic communication. The Bureau determines that a bright-line rule that clarifies that an electronic communication occurs when the debt collector sends it makes it possible for a debt collector to comply with the final rule. The Bureau also clarifies that sending for purposes of comment 6(b)(1)(i)–1 does not include scheduling a message at one time for delivery at a later time. For these reasons, the Bureau is finalizing comment 6(b)(1)(i)–1 as proposed, with minor revisions. The Bureau also proposed comment 6(b)(1)(i)–2 to provide a safe harbor and illustrate how a debt collector could comply with proposed § 1006.6(b)(1)(i) and FDCPA section 805(a)(1) if the debt collector has conflicting or ambiguous information regarding a consumer’s location, such as telephone numbers with area codes located in different time zones or a telephone number with an area code and a physical address that PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 76765 are inconsistent. The Bureau is finalizing comment 6(b)(1)(i)–2 largely as proposed, with certain clarifications in response to comments, as discussed below. A group of consumer advocates supported proposed comment 6(b)(1)(i)– 2 as a commonsense interpretation that will protect consumers and give helpful guidance to debt collectors. One consumer advocate suggested that the better course is to require debt collectors to determine whether a telephone number is a cellular or landline telephone. One trade group commenter supported the idea of a safe harbor but suggested revising it to protect debt collectors when they use the time period during which communications would be convenient in both locations as indicated by the zip code of the residence and the area code of the telephone. One industry commenter stated that debt collectors have no practical way of knowing the local time for a consumer at any particular point in time, and that a debt collector would be required to keep track of the consumer’s whereabouts to avoid communicating at inconvenient times. One industry commenter suggested that the Bureau amend the proposed commentary to permit a debt collector to communicate with a consumer at times that are convenient in any location in which the consumer might be located, or alternatively, that the debt collector should be responsible only for the area code, address of record, and locations explicitly communicated by the consumer. Several industry commenters stated that a debt collector should be permitted to rely on the address of record or last known physical address because, as one commenter explained, telephones are portable and the area code is no longer a reliable source of the consumer’s location. Specifically, one trade group commenter requested that mortgage servicers be allowed to determine call times based on the single, established billing address. The Bureau is adopting this safe harbor to facilitate a debt collector’s compliance with § 1006.6(b)(1)(i) when the debt collector has conflicting or ambiguous information regarding a consumer’s location. As proposed, comment 6(b)(1)(i)–2 stated that the safe harbor would apply if the debt collector is unable to determine the consumer’s location. In response to the commenter that a debt collector would be required to keep track of a consumer’s whereabouts, the Bureau revises this language to clarify that the safe harbor would apply if the debt collector has conflicting or ambiguous information E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76766 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations regarding the consumer’s location. A debt collector is not required to determine where the consumer actually is located when communicating or attempting to communicate with the consumer and knowledge that a telephone number is associated with a mobile telephone does not, without more, create conflicting or ambiguous information. A debt collector with conflicting information may know or should know that it is inconvenient to communicate or attempt to communicate with a consumer at a time outside of the presumptively convenient times (8:00 a.m. to 9:00 p.m.) in any of the time zones in which the consumer might be located. As the Bureau explained in the proposal, some debt collectors already have adopted this approach for determining convenient times to contact a consumer if the debt collector has conflicting location information for the consumer. This safe harbor would apply in circumstances in which the debt collector does not have knowledge of the consumer’s location and can rely only on information indicating where the consumer might be located. For example, this may arise in a debt collector’s initial communication with a consumer. One consumer commenter reported continually receiving calls as early as 5:00 a.m. (local time at the consumer’s location) because the debt collector relied only on the consumer’s telephone number area code, while ignoring information from the consumer that the consumer was in fact in a different time zone. However, once the debt collector has information about the consumer’s location, for example by asking the consumer in an initial communication or being told by the consumer in a subsequent communication, the debt collector would no longer have conflicting or ambiguous information regarding the consumer’s location and would not need to rely on the safe harbor provided in comment 6(b)(1)(i)–2. As finalized, comment 6(b)(1)(i)–2 states that, under § 1006.6(b)(1)(i), in the absence of a debt collector’s knowledge of circumstances to the contrary, an inconvenient time for communicating with a consumer is before 8:00 a.m. and after 9:00 p.m. local time at the consumer’s location. If a debt collector has conflicting or ambiguous information regarding a consumer’s location, then, in the absence of knowledge of circumstances to the contrary, the debt collector complies with § 1006.6(b)(1)(i) if the debt collector communicates or attempts to communicate with the consumer at a time that would be convenient in all of VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 the locations at which the debt collector’s information indicates the consumer might be located. Comment 6(b)(1)(i)–2 also provides two examples of how a debt collector complies with § 1006.6(b)(1)(i). 6(b)(1)(ii) FDCPA section 805(a)(1) provides, in relevant part, that a debt collector may not communicate with a consumer in connection with the collection of any debt at any unusual place, or at a place that the debt collector knows or should know is inconvenient to the consumer.203 As proposed, § 1006.6(b)(1)(ii) would have implemented this prohibition and generally restated the statute, with only minor changes for clarity. The Bureau is finalizing § 1006.6(b)(1)(ii) as proposed.204 Accordingly, § 1006.6(b)(1)(ii) states that except as provided in § 1006.6(b)(4), a debt collector must not communicate or attempt to communicate with a consumer in connection with the collection of any debt at any unusual place, or at a place that the debt collector knows or should know is inconvenient to the consumer. Communications or Attempts To Communicate at Unusual and Inconvenient Places The Bureau received many comments discussing the proposed approach to inconvenient places in response to proposed comment 6(b)(1)–1.iii asking how, in light of technology such as mobile telephones, which are not affixed to a particular place, a debt collector could be sure to avoid contacting a consumer at an inconvenient place.205 With respect to unusual place, one industry commenter noted that, while the Bureau’s proposal provided examples illustrating what may be considered ‘‘inconvenient’’ under the rule, the proposal did not provide examples illustrating what would constitute an ‘‘unusual’’ time or place under FDCPA section 805(a)(1). The commenter therefore requested the Bureau clarify what would be considered ‘‘unusual,’’ considering the extensive consumer use of mobile telephones and the mobile nature of consumers themselves. Another 203 15 U.S.C. 1692c(a)(1). discussed in the section-by-section analysis of § 1006.6(b), § 1006.6(b)(1)(ii) also interprets FDCPA sections 806 and 808 to prohibit a debt collector from attempting to communicate with a consumer at a place at which FDCPA section 805(a)(1) prohibits the debt collector from communicating with the consumer. 205 For a discussion of and response to those comments, see the section-by-section analysis of final comment 6(b)(1)–1.iii above. 204 As PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 industry commenter suggested that the statutory language ‘‘at any unusual . . . place’’ be removed from § 1006.6(b)(1) based on the difficulties presented when a consumer could be at an ‘‘unusual place’’ (e.g., a funeral), but without knowing where the consumer is, the debt collector calls the consumer’s mobile telephone. The Bureau recognizes that mobile technology has shifted how and where communications occur and may make it more difficult for a debt collector to know where a consumer is at the precise moment when the debt collector is communicating or attempting to communicate with the consumer. In this regard, the Bureau notes that the FDCPA does not require a debt collector to track a consumer’s whereabouts; it prohibits communications with a consumer at any unusual place, or a place that the debt collector knows or should know is inconvenient to the consumer. To further clarify how the FDCPA’s prohibition regarding unusual and inconvenient places applies in the context of mobile technology, the Bureau is adopting new comment 6(b)(1)(ii)–1 to explain that some communication media, such as mailing addresses and landline telephone numbers, are associated with a place, whereas other communication media, such as email addresses and mobile telephone numbers, are not. Comment 6(b)(1)(ii)–1 provides that pursuant to § 1006.6(b)(1)(ii), a debt collector must not communicate or attempt to communicate with a consumer through media associated with an unusual place, or with a place that the debt collector knows or should know is inconvenient to the consumer. Unless the debt collector knows that the consumer is at an unusual place, or a place that the debt collector knows or should know is inconvenient to the consumer, comment 6(b)(1)(ii)–1 continues, § 1006.6(b)(1)(ii) does not prohibit a debt collector from communicating or attempting to communicate with a consumer through communication media not associated with the unusual or inconvenient place. The Bureau is also adopting an example in new comment 6(b)(1)(ii)–1.i. The Bureau believes this approach addresses the complexities presented by mobile technology, clarifies how debt collectors may comply with FDCPA section 805(a)(1)’s prohibitions on communications with a consumer at unusual and inconvenient places, and maintains the consumer protections under FDCPA section 805(a)(1). The Bureau also reiterates that, in addition to an inconvenient place designation under § 1006.6(b)(1)(ii), a consumer may invoke an inconvenient time E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations designation under § 1006.6(b)(1)(i) or a medium of communication restriction under § 1006.14(h)(1) to further control when or whether a debt collector can communicate or attempt to communicate with the consumer using mobile technology. Additionally, as the Bureau noted in the proposal, in response to feedback received during the SBREFA process, the Bureau declined to propose an intervention under consideration that would have designated four categories of places as presumptively inconvenient.206 Accordingly, this final rule does not designate categories of places as presumptively inconvenient. The Bureau is also not aware of confusion or concerns regarding places that are considered unusual under FDCPA section 805(a)(1). This final rule therefore implements the statutory language ‘‘at any unusual time or place’’ as part of final § 1006.6(b)(1) consistent with the statute and without further commentary or interpretation. To address commenter concerns, however, the Bureau is adding new comment 6(b)(1)(ii)–1 as discussed above to clarify how a debt collector may communicate through media that rely on mobile technology when a consumer may be at an unusual or inconvenient place. 6(b)(2) Prohibitions Regarding Consumer Represented by an Attorney TKELLEY on DSKBCP9HB2PROD with RULES3 FDCPA section 805(a)(2) prohibits a debt collector from communicating with a consumer in connection with the collection of any debt if the debt collector knows the consumer is represented by an attorney with respect to the debt and has knowledge of, or can readily ascertain, the attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer.207 The Bureau proposed § 1006.6(b)(2) to implement this prohibition and generally restate the statute.208 For the reasons discussed below, the Bureau is finalizing § 1006.6(b)(2) as proposed, with minor revisions and with one clarification in response to comments, as discussed below. 206 84 FR 23274, 23297 n.211 (May 21, 2019). U.S.C. 1692c(a)(2). 208 84 FR 23274, 23297 (May 21, 2019). As discussed in the section-by-section analysis of § 1006.6(b), § 1006.6(b)(2) also interprets FDCPA sections 806 and 808 to prohibit a debt collector from attempting to communicate with a consumer who is represented by an attorney if FDCPA section 805(a)(2) prohibits the debt collector from communicating with that consumer. 207 15 VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 The Bureau received comments requesting four specific clarifications. First, several industry commenters requested the Bureau define what constitutes ‘‘a reasonable period of time’’ by, for example, specifying a certain number of days. A number of industry commenters suggested the Bureau adopt 10, 21, or 30 days as a reasonable period of time, and some commenters drew parallels to existing State debt collection laws. One such industry commenter suggested the Bureau go further and clarify that, upon expiration of a 30-day period, a debt collector may assume the attorney is not representing the consumer. Two trade group commenters suggested that attempts to contact a consumer’s attorney often go unanswered by the attorney to create an FDCPA violation. One consumer advocate suggested that the reasonable period of time depends on the circumstances and on whether the communication from the debt collector is the type of communication that requires a response from the consumer’s attorney, such as a settlement offer or a request for clarification pursuant to a verification request. However, the commenter suggested that, for debt collection communications seeking simply to persuade the consumer to pay the alleged debt, the attorney would not be obliged to respond and therefore no corresponding reasonable time exists. The Bureau declines to adopt a specific time period under § 1006.6(b)(2). As explained in the section-by-section analysis of § 1006.10, the Bureau concludes that reasonableness generally depends upon the facts and circumstances surrounding a debt collector’s communications with a consumer’s attorney. Accordingly, the Bureau declines to specify a period of time in which a consumer’s attorney must respond before a debt collector is permitted to communicate or attempt to communicate with a consumer. Second, some trade group commenters suggested the Bureau adopt a requirement that the consumer’s attorney, the consumer, or both, undertake specific steps to confirm the attorney’s representation of the consumer. These suggestions included that the consumer’s attorney respond to a debt collector’s request for confirmation of representation, with one trade group commenter specifying that the attorney’s response must be between five and seven days of the request and that the attorney must enter an appearance on behalf of the consumer. Additionally, this commenter suggested the consumer also be required to provide the attorney’s full contact PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 76767 information, name, address, telephone number and, if applicable, email address, in order to confirm the consumer is in fact represented by an attorney. Similarly, another trade group commenter suggested the Bureau adopt an approach similar under the laws of one State where a notice of attorney representation must contain certain information to be effective,209 and that the Bureau further require that the notice list the account(s) for which the attorney is representing the consumer. In response to these comments, the Bureau notes that FDCPA section 805(a)(2) requires only that a debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address. This statutory provision does not require any further action on behalf of either the consumer’s attorney or the consumer to confirm the representation and trigger the statutory protections afforded, namely that the debt collector may not communicate with the consumer in connection with the collection of any debt. The Bureau therefore declines to adopt the commenters’ suggested approaches. Third, some industry commenters requested that the Bureau clarify the effect of a consumer-initiated communication once the debt collector knows the consumer is represented by an attorney. One such commenter stated that, under such circumstances, the debt collector should be permitted to answer the consumer’s questions and return the consumer’s telephone call for the sole purpose of responding to that consumerinitiated communication and to also clarify whether the consumer is still represented by counsel. One industry commenter requested the Bureau clarify that a consumer can inform a debt collector that the consumer is no longer being represented by an attorney, while another industry commenter suggested that the debt collector must await a response from the attorney before communicating with the consumer. The introductory paragraph of FDCPA section 805(a) contains exceptions for the prior consent of the consumer given directly to the debt collector and the express permission of a court of competent jurisdiction, which are implemented by the Bureau in § 1006.6(b)(4) and further discussed in that section’s analysis below. In addition to the exceptions specific to FDCPA section 805(a)(2) (e.g., unless the attorney fails to respond within a reasonable period of time to a 209 See E:\FR\FM\30NOR3.SGM W. Va. Code 46A–2–128(e). 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76768 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations communication from the debt collector or unless the attorney consents to direct communication with the consumer), the general exceptions contained in FDCPA section 805(b) also function as exceptions to FDCPA section 805(a)(2). Therefore, under the FDCPA, a consumer’s prior consent given directly to a debt collector permits a debt collector to communicate with a consumer that the debt collector knows is represented by an attorney. Accordingly, the Bureau is adopting new comment 6(b)(2)–1 to clarify that a consumer-initiated communication from a represented consumer constitutes the consumer’s prior consent to that communication under § 1006.6(b)(4)(i), and that therefore the debt collector may respond to that consumer-initiated communication. A debt collector is not prohibited from inquiring in that response whether the consumer is still represented by an attorney; however, as comment 6(b)(2)–1 explains, the consumer’s act of initiating a communication does not negate the debt collector’s knowledge that the consumer is represented by an attorney and does not revoke the protections afforded the consumer under § 1006.6(b)(2). Comment 6(b)(2)–1 further provides that after the debt collector’s response, the debt collector must not communicate or attempt to communicate further with the consumer unless the debt collector knows the consumer is not represented by an attorney with respect to the debt, either based on information from the consumer or the consumer’s attorney, or an exception under § 1006.6(b)(2)(i) or (ii) or § 1006.6(b)(4) applies. Fourth, one industry commenter requested that the Bureau clarify whether a debt collector should assume that, if an attorney represents a consumer with respect to one debt, the attorney represents the consumer with respect to future debts; in particular, the commenter expressed concern about privacy and medical debts. FDCPA section 805(a)(2) states in relevant part that ‘‘if the debt collector knows the consumer is represented by an attorney with respect to such debt.’’ 210 The Bureau interprets the protections afforded a consumer under FDCPA section 805(a)(2) to apply to a particular debt allegedly owed by the consumer, but not to future or other debts allegedly owed by the consumer, unless the debt collector knows that an attorney represents the consumer with respect to those debts and has knowledge of, or can readily ascertain, the attorney’s name and address. Accordingly, the Bureau revises § 1006.6(b)(2) to more 210 15 U.S.C. 1692c(a)(2). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 closely mirror the statutory language and clarify that the protections under FDCPA section 805(a)(2) apply ‘‘with respect to such debt.’’ For the reasons discussed above, the Bureau is finalizing § 1006.6(b)(2) as proposed, with one revision to clarify that § 1006.6(b)(2) applies per debt. Accordingly, § 1006.6(b)(2) states that, except as provided in § 1006.6(b)(4), a debt collector must not communicate or attempt to communicate with a consumer in connection with the collection of any debt if the debt collector knows the consumer is represented by an attorney with respect to such debt and knows, or can readily ascertain, the attorney’s name and address, unless the attorney: (i) Fails to respond within a reasonable period of time to a communication from the debt collector; or (ii) consents to the debt collector’s direct communication with the consumer. 6(b)(3) Prohibitions Regarding Consumer’s Place of Employment FDCPA section 805(a)(3) prohibits a debt collector from communicating with a consumer in connection with the collection of any debt at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.211 The Bureau proposed § 1006.6(b)(3) to implement this prohibition and generally restate the statute.212 For the reasons discussed below, the Bureau is finalizing § 1006.6(b)(3) as proposed. Many consumers commented on the disruptive effects of debt collection calls to the workplace. Many commenters described these calls as harassing and disruptive, while many more consumers stated that frequent debt collection calls to the workplace have threatened their employment or led to them being fired, thus making repayment of the allegedly owed debt more unlikely. Some consumer and consumer advocate commenters explained that these calls are an unwelcome distraction that could jeopardize a consumer’s ability to pay the debt and that interrupt the work not only of the consumer who allegedly owes the debt, but of others, including co-workers who may be responsible for answering incoming telephone calls to 211 15 U.S.C. 1692c(a)(3). FR 23274, 23297 (May 21, 2019). As discussed in the section-by-section analysis of § 1006.6(b), § 1006.6(b)(3) also interprets FDCPA sections 806 and 808 to prohibit a debt collector from attempting to communicate with a consumer at the consumer’s place of employment if FDCPA section 805(a)(3) prohibits the debt collector from communicating with the consumer there. 212 84 PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 the workplace and employers. Other consumer commenters particularly objected to debt collectors calling and leaving messages with employers as placing undue pressure on employees because of the risk of being penalized by the employer.213 Consistent with these consumer comments, many consumer advocate commenters requested that the Bureau ban debt collectors from communicating or attempting to communicate with consumers at the workplace altogether. Alternatively, they recommended that the Bureau prohibit debt collectors from calling or leaving messages with employers at the workplace. One group of consumer advocates requested that the Bureau clarify that, under FDCPA section 805(a)(3) and § 1006.6(b)(3), a debt collector knows or has reason to know that an employer prohibits a consumer from receiving communications in connection with the collection of any debt at the workplace if the consumer asks the debt collector not to contact the consumer at work. And a group of State Attorneys General recommended that the Bureau prohibit a debt collector from calling a consumer’s place of employment if the debt collector reliably learns, in any way, that the consumer’s employer prohibits debt collection calls. A number of industry commenters agreed that a debt collector should be expected to honor a consumer’s request to stop contacting the consumer at the workplace, while generally requesting that the Bureau further clarify when a debt collector knows or has reason to know that a consumer’s employer prohibits the consumer from receiving debt collection communications at the workplace. Many industry commenters suggested that a debt collector should not be responsible for having to proactively track and record, for all present and future consumers, which employers do or do not prohibit such communications, and that such a requirement for debt collectors to crossreference their files would be unreasonable. One industry commenter explained that a communication from one consumer suggesting that the employer prohibits communication at work does not necessarily apply to all employees, as certain managers or supervisors may restrict such calls while the employer, as a matter of policy, may not. Accordingly, one industry commenter requested the 213 As explained in the section-by-section analysis of final § 1006.2(j), the definition of limited-content message adopted under this final rule does not include third-party limited-content messages, either in live conversations or as voicemail messages knowingly left for a third party. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations Bureau to clarify that an instruction from a consumer or employer to a debt collector to cease contacting a consumer through an employer-provided email address or telephone number is effective only as to that specific consumer and would not be imputed to the entirety of the employer’s workforce. Recognizing that a debt collection communication may cause problems for a consumer in the workplace, two industry commenters suggested that it would be reasonable to require a consumer to use specific language to put a debt collector on notice. One industry commenter explained that, because FDCPA section 805(a)(3)’s knowledge standard is difficult to fulfill, all a consumer needs to do is give notice to a debt collector that the consumer does not want telephone calls or email messages at a physical place of work or on a physical telephone owned and managed by the company. In addition to the unusual and inconvenient time and place protections delineated under FDCPA section 805(a)(1), Congress separately provided consumers with the workplace protections afforded under FDCPA section 805(a)(3). Accordingly, the Bureau implements this prohibition and generally restates the statute in final § 1006.6(b)(3). This provision states that, except as provided in § 1006.6(b)(4), a debt collector must not communicate or attempt to communicate with a consumer in connection with the collection of any debt at the consumer’s place of employment, if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication. As described by many consumer commenters, the Bureau recognizes the unique consumer harm presented by debt collection communications at a consumer’s place of employment, including possible or actual termination of employment. Although some consumer group commenters requested that the Bureau ban all workplace telephone calls or all workplace communications generally, the Bureau declines to do so because FDCPA section 805(a)(3) prohibits a debt collector from communicating with a consumer at the consumer’s place of employment only if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.214 214 Recognizing that the risk of third-party disclosure is particularly high for communications sent to employer-provided email addresses, the Bureau is finalizing § 1006.22(f)(3) to prohibit debt VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 In addition, consistent with the Bureau’s interpretation regarding a consumer’s designation of a time or place as inconvenient, as explained above,215 the Bureau concludes that a consumer need not undertake specific actions or utter specific words to be afforded the statutory protections provided under FDCPA section 805(a)(3). The statute does not prescribe any specific actions or require precise responses or utterances on behalf of the consumer to invoke the workplace communications protections, and nor does this final rule impose such requirements. Even if a consumer does not precisely state that the employer prohibits the consumer from receiving debt collection communications at the workplace, the debt collector nevertheless may know or have reason to know, based on the facts and circumstances, that the employer prohibits such communications. Accordingly, the Bureau is finalizing revised comment 6(b)(3)–1 to provide that a debt collector knows or has reason to know that a consumer’s employer prohibits the consumer from receiving such communication if, for example, the consumer tells the debt collector that the consumer cannot take personal calls at work. The debt collector may ask follow-up questions regarding the employer’s prohibitions or limitations on contacting the consumer at the place of employment to clarify statements by the consumer.216 Once the debt collector knows or has reason to know of this limitation, the debt collector is prohibited from communicating or attempting to communicate with the consumer at the workplace by, for example, by mailing a letter to the consumer’s workplace address or calling the consumer’s work landline. collectors from communicating or attempting to communicate using an email address that the debt collector knows is provided by the consumer’s employer. See the section-by-section analysis of § 1006.22(f)(3). For clarity, the Bureau is finalizing comment 6(b)(3)–2 to cross-reference this prohibition regarding employer-provided email addresses. 215 See the section-by-section analysis of § 1006.6(b)(1). 216 The Bureau nevertheless notes that a debt collector who does not know or have reason to know that the consumer’s employer prohibits the consumer from receiving such communication and who elects to communicate or attempt to communicate with a consumer in connection with the collection of any debt at the consumer’s place of employment should carefully manage any such communications or attempts so as to not risk a third-party disclosure as prohibited under FDCPA section 805(b) and implemented under final § 1006.6(d). For additional discussion of prohibited third-party communications and exceptions, respectively, see the section-by-section analysis of § 1006.d(1) and (2). PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 76769 In response to those commenters suggesting that a debt collector would be required to track which employers prohibit their employees from receiving debt collection communications at the workplace, this final rule imposes no such requirement. The Bureau is adopting § 1006.6(b)(3) to implement the prohibition contained in FDCPA section 805(a)(3) and to restate the statute. The Bureau also requested comment on whether additional clarification would be useful with respect to a debt collector’s communications or attempts to communicate with a consumer while at work, for example, on a consumer’s personal mobile telephone or portable electronic device. One consumer commented that, because many people use their mobile telephones for work and personal use, it would be extremely disruptive for a debt collector to send text messages during work hours while a consumer is using that mobile telephone for work purposes. Another consumer commented that the Bureau should clarify under § 1006.6(b)(3) that communications at the workplace include communications through a device or channel owned by an employer and through a personal device during a consumer’s known work hours. A consumer advocate that suggested the Bureau adopt a bright-line rule against all debt collection communications through any medium with a consumer at the workplace also suggested that such a rule should extend to the use of mobile telephones, as long as the debt collector knows or has reason to know that the consumer is at work. The commenter explained that the debt collector may ask the consumer to inform the debt collector which hours the consumer is at work so the debt collector may avoid those times, and if the consumer states specific hours and times, the debt collector must respect those instructions. A group of consumer advocates suggested that the prohibition under proposed § 1006.6(b)(3) should also prohibit a debt collector from directing communications, including by voice or text message, to any personal mobile device during any known working hours. One local government commenter suggested that, consistent with proposed § 1006.22(f)(3), a debt collector should not be permitted to send mail to a consumer’s place of employment or call, text, or leave voicemails on a consumer’s work telephone without the consumer’s prior consent. Industry commenters generally requested clarity regarding debt collection communications with a consumer to a personal mobile E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76770 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations telephone or device while the consumer is at work. One industry commenter suggested that, because it is within the consumer’s discretion whether to answer the call, telephone calls to a consumer’s personal mobile telephone number should not be considered a communication at the consumer’s place of employment. One trade group commenter suggested that the Bureau adopt a safe harbor to exempt from liability, absent a consumer’s designation of a specified time as inconvenient or medium of communication restriction, a debt collector who unknowingly reaches a consumer at the place of employment if attempting to communicate with the consumer through a mobile telephone or other permissible communication media, for example, an email message to the consumer’s personal email account. Alternatively, one trade group commenter suggested that a consumer may prefer to communicate privately during work hours through a personal device instead of during non-work hours when the consumer may prefer to focus on family or other pursuits. As discussed above with respect to unusual and inconvenient places under FDCPA section 805(a)(1) and final comment 6(b)(1)(ii)–1,217 the Bureau similarly recognizes here the complexities presented by mobile technology while debt collectors aim to comply with the statutory requirement under FDCPA section 805(a)(3) that a debt collector not communicate with a consumer at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication. Final comment 6(b)(3)–1, discussed above, provides that a debt collector may ask follow-up questions regarding the employer’s prohibitions or limitations on contacting the consumer at the place of employment to clarify statements by the consumer. For example, a debt collector may ask a consumer to identify times when the consumer is at the place of employment. As explained in the section-by-section analysis of § 1006.6(b)(1)(ii), some communication media are associated with a place.218 At the consumer’s place of employment, such media may include, for example, mail to the consumer’s place of employment and calls to the consumer’s work landline or employer-provided mobile telephone number. Consistent with the Bureau’s 217 See the section-by-section analysis of § 1006.6(b)(1)(ii). 218 See id. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 approach in comment 6(b)(1)(ii)–1, a debt collector must not communicate or attempt to communicate with a consumer through media associated with the consumer’s place of employment if, pursuant to § 1006.6(b)(3), the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication. For other communication media not associated with the consumer’s place of employment, such as a personal email address or personal mobile telephone number, § 1006.6(b)(3) does not prohibit a debt collector from communicating or attempting to communicate with a consumer through such media unless the debt collector knows that the consumer is at the place of employment. Therefore, absent information regarding when the consumer is at the place of employment or other communication restriction,219 the debt collector does not violate § 1006.6(b)(3) by placing a telephone call or sending an electronic communication to the consumer’s personal mobile telephone number or portable electronic device, even if the consumer receives or views the communication while at the place of employment. 6(b)(4) Exceptions FDCPA section 805(a) provides certain exceptions to its limitations on a debt collector’s communications with a consumer. The Bureau proposed § 1006.6(b)(4) to implement and interpret the exceptions in FDCPA section 805(a).220 For the reasons discussed below, the Bureau is finalizing § 1006.6(b)(4) as proposed. 6(b)(4)(i) The Bureau proposed § 1006.6(b)(4)(i) to implement the introductory language in FDCPA section 805(a) that, in relevant part, sets forth the exception for the prior consent of the consumer given directly to the debt collector. Proposed § 1006.6(b)(4)(i) generally mirrored the statute, except that proposed § 1006.6(b)(4)(i) interpreted FDCPA section 805(a) to require that the consumer’s prior consent must be given during a communication that would not violate proposed § 1006.6(b)(1) through (3), i.e., the prohibitions on communications with a consumer at unusual or inconvenient times or places, communications with a consumer represented by an attorney, 219 Such a restriction could include, for example, an inconvenient time designation under § 1006.6(b)(1)(i) or a medium of communication restriction under § 1006.14(h)(1). 220 84 FR 23274, 23297–98 (May 21, 2019). PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 and communications at the consumer’s place of employment. For the reasons discussed below, the Bureau is finalizing § 1006.6(b)(4)(i) as proposed. A group of consumer advocates supported the Bureau’s proposed interpretation of FDCPA section 805(a) to require that a consumer’s prior consent must be given during a communication that would not violate proposed § 1006.6(b)(1) through (3) as an important additional protection for consumers. The Bureau is adopting its interpretation of FDCPA section 805(a) to require that the consumer’s prior consent must be given during a communication that would not violate § 1006.6(b)(1) through (3). For example, ordinarily a debt collector could not place a telephone call to a consumer at midnight and obtain the consumer’s prior consent for future debt collection communications at that time. The Bureau interprets a consumer’s prior consent to be consent obtained in the absence of conduct that would compromise or eliminate a consumer’s ability to freely choose whether to consent. A communication that would violate § 1006.6(b)(1) through (3) (e.g., consent obtained from a consumer at an unusual or inconvenient time or place) is likely to compromise or eliminate a consumer’s ability to freely choose whether to consent. By prohibiting prior consent purported to be obtained during a communication that would violate § 1006.6(b)(1) through (3), the Bureau does not intend to suggest that prior consent obtained in other unlawful ways would comply with FDCPA section 805(a). Accordingly, the Bureau is adopting § 1006.6(b)(4)(i) as proposed to provide that the prohibitions in § 1006.6(b)(1) through (3) do not apply when a debt collector communicates or attempts to communicate with a consumer in connection with the collection of any debt with the prior consent of the consumer, given directly to the debt collector during a communication that does not violate § 1006.6(b)(1) through (3). The Bureau also proposed comment 6(b)(4)(i)–1 to clarify the meaning of prior consent. Proposed comment 6(b)(4)(i)–1 explained that, if a debt collector learns during a communication that the debt collector is communicating with a consumer at an inconvenient time or place, the debt collector cannot during that communication ask the consumer to consent to the continuation of that debt collection communication. The Bureau proposed this comment as an interpretation of the language in FDCPA section 805(a) that consent must be ‘‘prior’’ and therefore given in E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations advance of a communication that otherwise would violate proposed § 1006.6(b)(1) through (3). For the reasons stated below, the Bureau is finalizing comment 6(b)(4)(i)–1 largely as proposed, with minor revisions. One industry commenter opposed this proposed interpretation on the basis that it takes away a consumer’s ability to freely choose to continue the communication and requested that the Bureau instead prohibit a debt collector from continuing or forcing the consumer to communicate if the time or place is considered inconvenient. Another industry commenter requested that the Bureau clarify whether a debt collector could ask the consumer whether the time or communication medium is inconvenient, and if so, whether the consumer prefers another time or communication medium. The Bureau is finalizing comment 6(b)(4)(i)–1 largely as proposed, with minor revisions. The Bureau is adopting its proposed interpretation that prior consent must be given in advance of a communication that otherwise would violate § 1006.6(b)(1) through (3), because consent that satisfies FDCPA section 805(a) must be ‘‘prior.’’ Additionally, permitting a debt collector to ask a consumer to consent to a communication once the debt collector knows or should know the communication is occurring, for example, at an inconvenient time or place, would undermine the very protection guaranteed to the consumer under FDCPA section 805(a)(1). Therefore, final comment 6(b)(4)(i)–1 clarifies that the debt collector would be prohibited from asking the consumer to consent to the continuation of that inconvenient communication. The comment clarifies, however, that a debt collector may ask the consumer during that communication what time or place would be convenient. Accordingly, final comment 6(b)(4)(i)–1 states that § 1006.6(b)(4)(i) provides, in part, that the prohibitions in § 1006.6(b)(1) through (3) on a debt collector communicating or attempting to communicate with a consumer in connection with the collection of any debt do not apply if the debt collector communicates or attempts to communicate with the prior consent of the consumer. If the debt collector learns during a communication that the debt collector is communicating with the consumer at an inconvenient time or place, for example, the debt collector may ask the consumer during that communication what time or place would be convenient. However, § 1006.6(b)(4)(i) prohibits the debt collector from asking the consumer to VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 consent to the continuation of that inconvenient communication. Additionally, consistent with the introductory language in FDCPA section 805(a), the Bureau proposed comment 6(b)(4)(i)–2 to restate the rule that the prior consent of the consumer must be given directly to the debt collector, and to explain that a debt collector cannot rely on the prior consent of the consumer given to the original creditor or to a previous debt collector. The Bureau proposed this comment to implement the statutory requirement in FDCPA section 805(a) that the prior consent of the consumer be given directly to the debt collector. For the reasons discussed below, the Bureau is finalizing comment 6(b)(4)(i)–2 largely as proposed. A consumer commenter supported the proposal and stated that prior consent should not be transferred along with an account, while one trade group commenter suggested that consumer consent given to the creditor should be passed to a debt collector hired by that creditor. The Bureau is adopting comment 6(b)(4)(i)–2 as proposed, with minor revisions. A debt collector cannot rely on the prior consent of the consumer given to a creditor or to a previous debt collector because such prior consent is not given ‘‘directly’’ to the debt collector, as FDCPA section 805(a) expressly requires. This interpretation is also consistent with the FDCPA’s legislative history.221 Accordingly, comment 6(b)(4)(i)–2 states that § 1006.6(b)(4)(i) requires the prior consent of the consumer to be given directly to the debt collector. For example, a debt collector cannot rely on the prior consent of the consumer given to a creditor or to a previous debt collector. 6(b)(4)(ii) The Bureau proposed § 1006.6(b)(4)(ii) to implement the introductory language in FDCPA section 805(a) that, in relevant part, sets forth the exception for the express permission of a court of competent jurisdiction. As proposed, § 1006.6(b)(4)(ii) generally restated the statute, with only minor wording and organizational changes for clarity. The Bureau received no comments on proposed § 1006.6(b)(4)(ii) 221 See H. Rep. No. 95–131, at 5 (1977) (‘‘The committee intends that in section [805] the ‘prior consent’ be meaningful, i.e., that any prior consent by a consumer is to be a voluntary consent and shall be expressed by the consumer directly to the debt collector. Consequently, the committee intends that any term in a contract which requires a consumer to consent in advance to debt collection communication would not constitute ‘prior consent’ by such consumer.’’). PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 76771 and is finalizing it as proposed. Accordingly, final § 1006.6(b)(4)(ii) provides that the prohibitions in § 1006.6(b)(1) through (3) do not apply when a debt collector communicates or attempts to communicate with a consumer in connection with the collection of any debt with the express permission of a court of competent jurisdiction. 6(c) Communications With a Consumer—After Refusal To Pay or Cease Communication Notice FDCPA section 805(c) provides that, subject to certain exceptions, if a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt.222 The Bureau proposed § 1006.6(c) to implement and interpret FDCPA section 805(c) and pursuant to the Bureau’s authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors. For the reasons discussed below, the Bureau is finalizing § 1006.6(c) largely as proposed. 6(c)(1) Prohibition The Bureau proposed § 1006.6(c)(1) to implement FDCPA section 805(c)’s cease communication provision and generally restate the statute, with only minor changes for clarity. Proposed § 1006.6(c)(1) stated that, except as provided in proposed § 1006.6(c)(2), a debt collector must not communicate or attempt to communicate further with a consumer with respect to a debt if the consumer notifies the debt collector in writing that: (i) The consumer refuses to pay the debt; or (ii) the consumer wants the debt collector to cease further communication with the consumer.223 For the reasons discussed below, the Bureau is finalizing § 1006.6(c)(1) largely as proposed, with non222 15 U.S.C. 1692c(c). For ease of reference, through this section-by-section analysis, the Bureau refers to this as the FDCPA’s ‘‘cease communication’’ provision, and to a consumer’s notification that the consumer refuses to pay a debt or wishes the debt collector to cease further communication with the consumer as a consumer’s ‘‘cease communication request.’’ 223 84 FR 23274, 23298 (May 21, 2019). For the same reasons that § 1006.6(b) prohibits debt collectors from attempting to communicate with consumers if FDCPA section 805(a) prohibits communications with consumers, § 1006.6(c) interprets FDCPA sections 806 and 808 to prohibit a debt collector from attempting to communicate with a consumer if FDCPA section 805(c) prohibits the debt collector from communicating with the consumer. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76772 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations substantive revisions to more closely mirror the statutory language. Many consumers commented that a debt collector should be required to obey a consumer’s oral request that the debt collector stop calling. Consistent with these consumer comments, one commenter that represents consumers cited a survey by a consumer advocate suggesting that the majority of consumers that asked a debt collector to stop calling were subsequently contacted by the debt collector. This commenter also suggested that the Bureau should require debt collectors to obey consumers’ oral requests to stop calling. A group of consumer advocates generally agreed that a debt collector should be required to stop contacting a consumer upon the consumer’s oral request at any time. Other groups of consumer advocates requested that the Bureau clarify that ‘‘stop calling’’ requests can be made orally and should apply to all calls from a debt collector, unless a consumer asks to stop calls to one telephone number only. Some consumer advocates suggested that a consumer’s oral request that the debt collector simply ‘‘stop calling’’ or a text message to the debt collector to ‘‘stop’’ should require the debt collector to discontinue contact with the consumer. One consumer advocate explained that, particularly for vulnerable consumers who may have limited literacy or language proficiency, making a request in writing can be burdensome. FDCPA section 805(c) states that, if a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt unless certain exceptions apply. Because the writing requirement proposed in § 1006.6(c)(1) was intended to implement the language in FDCPA section 805(c) that a consumer notify a debt collector in writing, the Bureau is finalizing it as proposed. As part of this final rule, however, the Bureau also is finalizing § 1006.14(h)(1), which prohibits a debt collector from communicating or attempting to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person.224 Therefore, even if a consumer does not notify a debt collector in writing that the consumer 224 This prohibition and its exceptions are explained in detail in the section-by-section analysis of § 1006.14(h). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 refuses to pay a debt or wishes the debt collector to cease further communication with the consumer as required under § 1006.6(c)(1), the consumer’s oral request that the debt collector ‘‘stop calling,’’ for example, would constitute a request that the debt collector not use that medium of communication (e.g., telephone calls) to communicate with the consumer, and, consistent with § 1006.14(h)(1), the debt collector would thereafter be prohibited from placing telephone calls to the consumer. The Bureau proposed comment 6(c)(1)–1 to implement FDCPA section 805(c)’s provision that, if the consumer’s cease communication request is made by mail, the notification is complete upon receipt by the debt collector.225 The Bureau proposed to apply this standard to all written or electronic forms of a consumer’s cease communication request. Proposed comment 6(c)(1)–1 thus provided that if, pursuant to § 1006.6(c)(1), a consumer notifies a debt collector in writing or electronically using a medium of electronic communication through which a debt collector accepts electronic communications from consumers that the consumer either refuses to pay a debt or wants the debt collector to cease further communication with the consumer, notification is complete upon the debt collector’s receipt of that information.226 The Bureau requested comment on whether a debt collector should be afforded a certain period of time to update its systems to reflect a consumer’s cease communication request even after the notification is received, and, if so, how long. One academic commenter opposed, without explanation, the creation of any grace period for a debt collector to update records when a consumer sends a cease communication request. Industry commenters generally supported affording a debt collector a certain period of time to update its systems to reflect a consumer’s cease communication request, though they differed in their specific recommendations. One trade group commenter suggested no less than two business days, because the immediacy of electronic communications makes it 225 15 U.S.C. 1692c(c). Bureau proposed this clarification on the basis that FDCPA section 805(c) does not state that only mail notifications are complete upon receipt, but rather leaves ambiguous when other forms of notification are complete and, regardless of the medium, it may not be reasonable to consider a debt collector to have been notified before the debt collector has received a consumer’s cease communication request. 84 FR 23274, 23298 (May 21, 2019). 226 The PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 commercially impractical for debt collectors to update their records and comply with a consumer’s cease communication request in real time. One industry commenter suggested that, for notification by letter, email, or text message, a timeframe of 72 hours from the next business day that the notification was received should be given, while another industry commenter suggested three business days from the date of receipt. Similarly, one trade group commenter suggested that a debt collector is deemed to have notice three days after receipt of the request. One trade group commenter suggested that, because electronic communications may be filtered and quarantined before actually being released into the debt collector’s virtual environment, a certain amount of time, for example, a three-to-five-day grace period, should be afforded a debt collector to ‘‘receive’’ the electronic cease communication request and update its internal reporting systems to reflect it. Two industry commenters suggested that debt collectors should be required to send an acknowledgement and acceptance correspondence to the consumer within five days of receipt of a cease communication request. Another industry commenter suggested that, consistent with the CAN–SPAM Act of 2003,227 the Bureau should adopt a tenbusiness day safe harbor given debt collectors’ legitimate business and operational reasons. One industry commenter suggested that cease communication requests should be treated as received upon processing, as long as the debt collector has reasonable procedures for processing them. The Bureau recognizes that any maximum period of time afforded a debt collector to update its systems to reflect a cease communication request must be short enough to protect consumers from unwanted communications, but long enough for compliance to be practical. Given the disparate periods of time suggested by commenters and the different methods by which a written or electronic cease communication request may be made by a consumer, this final rule does not specify the period of time afforded a debt collector to update its systems to reflect a cease communication request. However, depending upon the circumstances, FDCPA section 813(c)’s bona fide error defense to civil liability may apply if, notwithstanding the maintenance of procedures reasonably adapted to avoid any such error, a debt collector communicates or attempts to communicate with a consumer after 227 15 E:\FR\FM\30NOR3.SGM U.S.C. 7701 et seq. 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 receiving, but before processing, a cease communication request. For example, if a debt collector who schedules an email message to be sent to a consumer subsequently receives a cease communication request by email but sends the previously scheduled email message to the consumer before the request can be processed (notwithstanding the maintenance of procedures to avoid such an error), the debt collector may be entitled to a bona fide error defense to civil liability under FDCPA section 813(c).228 For the reasons discussed above, the Bureau is finalizing comment 6(c)(1)–1 as proposed, and including a new example in comment 6(c)(1)–1.i to illustrate a consumer’s cease communication request made by mail being complete upon receipt by a debt collector. The Bureau proposed comment 6(c)(1)–2 to codify its interpretation of the E–SIGN Act enabling a consumer to satisfy, through an electronic request, FDCPA section 805(c)’s requirement that the consumer’s notification be in writing. The Bureau proposed to interpret the applicability of the E–SIGN Act to a consumer electronically notifying a debt collector that the consumer refuses to pay a debt or wants the debt collector to cease further communication with the consumer.229 For the reasons stated below, the Bureau is finalizing comment 6(c)(1)–2 as proposed. A group of consumer advocates supported proposed comment 6(c)(1)–2 228 A number of courts have considered a debt collector’s assertion of a bona fide error defense under such circumstances. See, e.g., Webster v. ACB Receivables Mgmt., Inc., 15 F. Supp. 3d 619, 629 (D. Md. 2014) (holding debt collector not entitled to bona fide error defense where employees’ communications with consumer after cease communication notification constituted good-faith human errors, but where debt collector failed to present any evidence of redundancy or safeguards in its policies and procedures to prevent such human errors); Smith v. Transworld Sys., Inc., 953 F.2d 1025, 1036 (6th Cir. 1992) (holding debt collector’s letter mailed shortly after receiving consumer’s cease communication notification constituted bona fide error given debt collector’s procedures, including a five-page instruction manual describing collection procedures, were reasonably adapted to avoid any such error); Carrigan v. Cent. Adjustment Bureau, Inc., 494 F. Supp. 824, 827 (N.D. Ga. 1980) (assuming debt collector’s violation of FDCPA section 805(c) was unintentional, denying debt collector bona fide error defense where debt collector failed to provide any evidence it maintained proper procedures governing handling mail and where error of being unaware of consumer’s cease communication letter led to calling consumer). 229 Section 104(b)(1)(A) of the E–SIGN Act provides authority for a Federal regulatory agency with rulemaking authority under a statute to interpret section 101 of the E–SIGN Act with respect to that statute by regulation. 15 U.S.C. 7004(b)(1)(A). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 as entirely consistent with the E–SIGN Act and stated that the Bureau’s interpretation will make it easier for consumers to access the protections of § 1006.6(c). One local government commenter supported the Bureau’s proposal to interpret the writing requirement in FDCPA section 805(c) to include email messages but expressed concern with the proposed approach that a debt collector would be required to give legal effect to a consumer’s notification submitted electronically only if the debt collector generally chose to accept electronic communications from consumers. The commenter suggested that the Bureau require a debt collector to accept email communications from a consumer regarding communication preferences. Another local government commenter requested that the Bureau mandate that consumers be permitted to make cease communication requests using any communication medium that the debt collector either has used to communicate with the consumer or has invited the consumer to use to communicate with the debt collector. This commenter stated that a cease communication request submitted by email, text message, or through a debt collector’s website should be treated as a written communication for purposes of § 1006.6(c)(1). The E–SIGN Act could affect whether a consumer satisfies the requirement in FDCPA section 805(c) that a cease communication request be ‘‘in writing.’’ Section 101(a)(1) of the E–SIGN Act generally provides that a record relating to a transaction in or affecting interstate or foreign commerce may not be denied legal effect, validity, or enforceability solely because it is in electronic form.230 However, section 101(b)(2) of the E– SIGN Act does not require any person to agree to use or accept electronic records or electronic signatures, other than a governmental agency with respect to a record other than a contract to which it is a party.231 Section 104(b)(1)(A) of the E–SIGN Act provides authority for a Federal agency with rulemaking authority under a statute to interpret by regulation the application of E–SIGN Act section 101 to that statute.232 The Bureau interprets the applicability of the E–SIGN Act as it relates to FDCPA section 805(c)’s requirement that a cease communication request be in writing. Specifically, the Bureau interprets FDCPA section 805(c)’s writing requirement as being 230 15 U.S.C. 7001(a)(1). U.S.C. 7001(b)(2). 232 15 U.S.C. 7004(b)(1)(A). 231 15 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 76773 satisfied when a consumer makes a cease communication request using a medium of electronic communication through which a debt collector accepts electronic communications from consumers, such as email messages or a website portal.233 Thus, consistent with the Bureau’s interpretation of the E– SIGN Act, pursuant to § 1006.6(c)(1), a debt collector is required to give legal effect to a consumer’s electronic cease communication request if the debt collector generally accepts electronic communications from consumers. The Bureau adopts this interpretation to harmonize FDCPA section 805(c)’s writing requirement with the E–SIGN Act. Additionally, because the consumer may only use a medium of electronic communication through which a debt collector accepts electronic communications from consumers, section 101(b) of the E– SIGN Act is not contravened. One trade group commenter suggested that the Bureau permit a debt collector to require a consumer to send an electronic cease communication request only to portals and email addresses designated by the debt collector. A group of consumer advocates requested the Bureau to clarify that a debt collector should be deemed to accept electronic cease communication requests from consumers through any non-public-facing medium listed on the debt collector’s website or listed in any of the debt collector’s outgoing communications to consumers. Nothing in § 1006.6(c)(1) prohibits a debt collector from requesting a consumer to send an electronic cease communication request through online portals or to email addresses designated by the debt collector. As debt collectors likely already do for cease communication requests received by mail, debt collectors should maintain procedures reasonably adapted to avoid any errors in receiving such requests electronically. The final rule’s prohibitions on harassing, deceptive, and unfair practices in §§ 1006.14, 1006.18, and 1006.22 may address many of the harms that commenters may have been concerned with, such as a debt collector intentionally ignoring a consumer’s cease communication request received through an online portal or to an email address not designated by the debt collector for receiving such notifications. 233 This interpretation is responsive to comments recommending that, if a debt collector makes an electronic means of communication available to consumers, electronic communications received from consumers through that channel should trigger the debt collector’s obligations under FDCPA section 809(b). E:\FR\FM\30NOR3.SGM 30NOR3 76774 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations One commenter asked what a debt collector should do if the debt collector receives a cease communication request after communicating with a consumer but before providing the consumer a validation notice pursuant to FDCPA section 809(a).234 As the commenter explained, FDCPA section 809(a) generally requires a debt collector to send a consumer a validation notice within five days after the initial communication with the consumer (unless the validation was provided in the initial communication), and it is unclear what the debt collector should do if the consumer asks to cease communication before the validation notice is sent. To the extent any conflict exists between FDCPA sections 805(c) and 809(a), the Bureau notes that the conflict is statutory and not a result of this final rule. Nevertheless, the Bureau believes that such circumstances may be rare in practice because many debt collectors provide the validation notice in the initial communication as permitted under FDCPA section 809(a). And, to the extent that the validation notice is not provided in the initial communication, many validation notices will have been prepared for sending or sent before a debt collector receives and processes any such cease communication request.235 The Bureau is not aware of any such conflict causing significant issues or consumer harms at this time. Accordingly, the Bureau will monitor this issue for any potential consumer harm or compliance concerns and revisit at a later time if needed. 6(c)(2) Exceptions FDCPA section 805(c) provides exceptions to the cease communication provision. The exceptions allow a debt collector to communicate with a consumer even after a cease communication request: (1) To advise the consumer that the debt collector’s further efforts are being terminated; (2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or (3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.236 The Bureau proposed § 1006.6(c)(2) to implement these exceptions and generally restate the statute, with only minor changes for clarity. The Bureau proposed comment 6(c)(2)–1 to clarify that, consistent with the 2016 Servicing Final Rule 237 and the concurrently issued 2016 FDCPA Interpretive Rule,238 the Bureau interprets the written early intervention notice required under Regulation X 239 as falling within the cease communication exceptions in FDCPA section 805(c)(2) and (3) (proposed as § 1006.6(c)(2)(ii) and (iii)).240 The Bureau received no comments on proposed § 1006.6(c)(2) or on proposed comment 6(c)(2)–1 and therefore is finalizing them as proposed, with minor non-substantive edits. Relatedly, one industry commenter requested that the Bureau clarify whether periodic statements for residential mortgage loans required under Regulation Z, 12 CFR 1026.41(a) are exempt under FDCPA section 805(c)(2) and (3). The Bureau previously addressed this question in its 2013 bulletin providing implementation guidance for certain mortgage servicing rules,241 in which the Bureau determined that, notwithstanding a consumer’s cease communication request, a mortgage servicer who is subject to the FDCPA with respect to a mortgage loan would not be liable under the FDCPA for complying with certain servicing rule provisions, including requirements to provide a borrower with disclosures regarding the forced placement of hazard insurance,242 a disclosure regarding an adjustable-rate mortgage’s initial interest rate adjustment,243 and a periodic statement for each billing cycle.244 The Bureau explained that these disclosures are specifically mandated by the Dodd-Frank Act,245 which makes no mention of their potential cessation under the FDCPA and presents a more recent and specific statement of legislative intent regarding these disclosures than does the FDCPA. The Bureau also explained that these notices provide useful information to consumers regardless of their collection 236 15 U.S.C. 1692c(c)(1)–(3). FR 72160 (Oct. 19, 2016). 238 81 FR 71977, 72233–38 (Oct. 19, 2016). 239 12 CFR 1024.39(d)(3). 240 84 FR 23274, 23298–99 (May 21, 2019). 241 CFPB Bulletin 2013–12, at 7 (Oct. 15, 2013), https://files.consumerfinance.gov/f/201310_cfpb_ mortgage-servicing_bulletin.pdf. 242 12 CFR 1024.37. 243 12 CFR 1026.20(d). 244 12 CFR 1026.41. 245 Dodd-Frank Act sections 1418 (ARM initial interest rate adjustment), 1420 (periodic statements), and 1463 (force-placed insurance). TKELLEY on DSKBCP9HB2PROD with RULES3 237 81 234 The Bureau proposed to implement FDCPA section 809(a) in § 1006.34. As discussed in the section-by-section analysis of § 1006.34, the Bureau intends to finalize that section in a disclosurefocused final rule addressing the validation notice. 235 As discussed above, a debt collector who, notwithstanding the maintenance of procedures reasonably adapted to avoid any such error, communicates or attempts to communicate with a consumer after receiving, but before processing, a consumer’s cease communication request pursuant to § 1006.6(c)(1) may have a bona fide error defense to civil liability under FDCPA section 813(c). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 status. The Bureau is adopting this relevant guidance in new comment 6(c)(2)–2 for mortgage servicers subject to the FDCPA with respect to a mortgage loan. 6(d) Communications With Third Parties FDCPA section 805(b) prohibits a debt collector from communicating, in connection with the collection of any debt, with any person other than the consumer 246 or certain other persons.247 FDCPA section 805(b) also identifies certain exceptions to this prohibition. The Bureau proposed § 1006.6(d)(1) and (2), respectively, to implement FDCPA section 805(b)’s general prohibition against communicating with third parties and the exceptions to that prohibition. Additionally, the Bureau proposed § 1006.6(d)(3) to specify, for purposes of FDCPA section 813(c), procedures that are reasonably adapted to avoid an error in sending an email or text message that would result in a violation of FDCPA section 805(b). The Bureau proposed § 1006.6(d) pursuant to its authority under FDCPA section 814(d) to write rules with respect to the collection of debts by debt collectors. 6(d)(1) Prohibitions With limited exceptions, FDCPA section 805(b) prohibits a debt collector from communicating, in connection with the collection of any debt, with any person other than the consumer (as defined in FDCPA section 805(d)) or certain other persons. The Bureau proposed § 1006.6(d)(1) to implement FDCPA section 805(b) and generally restate the statute, with minor wording and organizational changes for clarity.248 For the reasons discussed below, the Bureau is finalizing § 1006.6(d)(1) as proposed. One consumer advocate requested that, to protect consumers’ privacy across all forms of communication, the Bureau ban debt collectors from communicating with third parties without the consumer’s written consent. The Bureau declines to adopt such an approach. FDCPA section 805(b) contemplates a debt collector communicating with third parties subject to the prior consent of the consumer given directly to the debt 246 The Bureau implements the term consumer as used in section 805(b) in § 1006.6(a). 247 15 U.S.C. 1692c(b). Specifically, FDCPA section 805(b) prohibits communicating with any person other than the consumer, the consumer’s attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the creditor’s attorney, or the debt collector’s attorney. 248 84 FR 23274, 23299 (May 21, 2019). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 collector but does not require that the consumer effectuate that prior consent in writing. One industry commenter requested the Bureau clarify what constitutes a third party. This commenter explained that a debt collector frequently must speak with a consumer’s insurance company or a State victim assistance program to verify enrollment, and that such a third-party communication is intended to benefit the consumer and should therefore be considered permissible by the Bureau. FDCPA section 805(b) specifically delineates the following persons with whom a debt collector may communicate without violating the prohibition on communication with third parties: The consumer, the consumer’s attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector. If a debt collector needs to communicate with any other person in connection with the collection of any debt, FDCPA section 805(b) provides an exception, as discussed below,249 permitting the debt collector to do so with the prior consent of the consumer given directly to the debt collector. Therefore, to the extent a debt collector needs to speak with persons other than those listed in FDCPA section 805(b) and implemented in § 1006.6(d)(1) of this final rule, certain exceptions may apply permitting the debt collector to do so. One industry commenter suggested that the Bureau adopt a safe harbor for inadvertent communications with a third party, such as if a third party hears a debt collector’s voicemail message left on an answering machine. This commenter suggested that, if the debt collector discloses the third-party communication to the consumer and stops future communications with that third party, the debt collector should not be liable for the disclosure. Federal government agency staff and some courts have found that debt collectors do not violate the FDCPA’s prohibition on third-party disclosures unless they have reason to anticipate that the communication may be heard or read by third parties.250 As the FTC previously explained, ‘‘[a] debt collector 249 This exception is implemented in § 1006.6(d)(2) as discussed further in the section-bysection analysis below. See the section-by-section analysis of § 1006.6(d)(2). 250 See, e.g., Berg v. Merchants Ass’n Collection Div., Inc., 586 F. Supp. 2d 1336, 1342, 1345 (S.D. Fla. 2008); Peak v. Prof’l Credit Serv., No. 6:14–cv– 01856–AA, 2015 WL 7862774, at *5–6 (D. Or. Dec. 2, 2015); Chlanda v. Wymard, No. C–3–93–321, 1995 WL 17917574, at *2 (S.D. Ohio Sept. 5, 1995). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 does not violate [FDCPA section 805(b)] when an eavesdropper overhears a conversation with the consumer, unless the debt collector has reason to anticipate the conversation will be overheard.’’ 251 As discussed in detail below, the Bureau is finalizing procedures in § 1006.6(d)(3) through (5) that are designed to ensure that a debt collector who uses a specific email address or telephone number to communicate with a consumer by email or text message does not have a reason to anticipate that an unauthorized thirdparty disclosure may occur.252 In other situations, unless the debt collector has reason to anticipate that the communication may be heard or read by third parties, a debt collector who unintentionally communicates with a third party may be able to raise a bona fide error defense to civil liability under FDCPA section 813. One State government commenter suggested that, for active service members, debt collectors often call the member’s commanding officer to inform the supervisor about the outstanding debt. The commenter requested that the rule be revised to prohibit such violations of consumer privacy and job security. Unless the consumer has provided consent for such communications directly to the debt collector or another exception in § 1006.6(d)(2) applies, such conduct already is prohibited by FDCPA section 805(b) and will be prohibited by § 1006.6(d)(1). For the reasons stated above, the Bureau is finalizing § 1006.6(d)(1) as proposed to provide that, except as provided in § 1006.6(d)(2), a debt collector must not communicate, in connection with the collection of any debt, with any person other than: The consumer (as defined in § 1006.6(a)); the consumer’s attorney; a consumer reporting agency, if otherwise permitted by law; the creditor; the creditor’s attorney; or the debt collector’s attorney. Proposed comment 6(d)(1)–1 explained that, because a limitedcontent message is not a communication, a debt collector does not violate § 1006.6(d)(1) if the debt collector leaves a limited-content message for a consumer orally with a third party who answers the consumer’s home or mobile telephone. As discussed in the section-by-section analysis of § 1006.2(j), the Bureau is declining to finalize a definition of limited-content 251 Statements of General Policy or Interpretation: Staff Commentary on the FDCPA, 53 FR 50097, 50104 (Dec. 13, 1988). 252 See the section-by-section analysis of § 1006.6(d)(3). PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 76775 message that allows for such third-party limited-content messages. Accordingly, the Bureau is not adopting proposed comment 6(d)(1)–1. 6(d)(2) Exceptions FDCPA section 805(b) specifies exceptions to the general prohibition against a debt collector communicating with third parties, including that a debt collector may engage in an otherwise prohibited communication with the prior consent of the consumer given directly to the debt collector. The Bureau proposed § 1006.6(d)(2) to implement the exceptions in FDCPA section 805(b) and generally restate the statute, with minor wording and organizational changes for clarity.253 In relevant part, proposed § 1006.6(d)(2)(ii) would have implemented the statutory exception permitting third-party communications with a person when the debt collector has received prior consent directly from the consumer for such communications. One industry commenter suggested that the Bureau clarify that prior consent under proposed § 1006.6(d)(2)(ii) includes consent the consumer gives to a third party to discuss debts with a debt collector. This commenter explained that, in some cases, a debt collector may receive from a debt settlement company an authorization signed by a consumer permitting the debt collector to communicate about a debt with the debt settlement company. The Bureau declines to clarify the prior consent exception as requested because the scenario posed by the commenter will depend upon the specific facts and circumstances as to whether the consent provided satisfies § 1006.6(d)(2)(ii). The Bureau therefore is finalizing § 1006.6(d)(2) as proposed to provide that the prohibition in § 1006.6(d)(1) does not apply when a debt collector communicates, in connection with the collection of any debt, with a person: (i) For the purpose of acquiring location information, as provided in § 1006.10; (ii) with the prior consent of the consumer given directly to the debt collector; (iii) with the express permission of a court of competent jurisdiction; or (iv) as reasonably necessary to effectuate a postjudgment judicial remedy. The Bureau proposed comment 6(d)(2)–1 to refer to the commentary to proposed § 1006.6(b)(4)(i) for guidance concerning a consumer giving prior consent directly to a debt collector. The Bureau received no comments on 253 84 E:\FR\FM\30NOR3.SGM FR 23274, 23299 (May 21, 2019). 30NOR3 76776 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations comment 6(d)(2)–1 and is finalizing it as proposed. TKELLEY on DSKBCP9HB2PROD with RULES3 6(d)(3) Reasonable Procedures for Email and Text Message Communications Proposed § 1006.6(d)(3) identified procedures reasonably adapted to avoid a violation of FDCPA section 805(b)’s prohibition on third-party disclosures when communicating by email or text message.254 A debt collector who sent an email or text message in accordance with the proposed procedures would have been entitled to a bona fide error defense to civil liability under FDCPA section 813(c) in the event of an unintentional third-party disclosure.255 Specifically, the Bureau proposed § 1006.6(d)(3) to provide a debt collector with a safe harbor from civil liability 256 for an unintentional third-party disclosure if, when communicating with a consumer using an email address or, in the case of a text message, a telephone number, the debt collector’s procedures included steps to reasonably confirm and document that the debt collector: (1) Obtained and used the email address or telephone number in accordance with one of the methods described in proposed § 1006.6(d)(3)(i); and (2) took additional steps, in accordance with proposed § 1006.6(d)(3)(ii), to prevent communications using an email address or telephone number that the debt collector knew had led to an unauthorized third-party disclosure. Proposed § 1006.6(d)(3)(i)(A) through (C) described three methods of obtaining and using an email address or telephone number for text messages, none of which would have required a debt collector to obtain a consumer’s direct prior consent (or ‘‘opt in’’) before communicating by email or text message. As discussed throughout the section-by-section analysis of § 1006.6(d)(3) through (5), and pursuant to its authority under FDCPA section 814(d) to implement and interpret 254 See 15 U.S.C. 1692c(b); 84 FR 23274, 23299– 04 (May 21, 2019). 255 15 U.S.C. 1692k(c) (providing that a debt collector may not be held liable in any action brought under the FDCPA if the debt collector shows by a preponderance of the evidence that the violation was not intentional, that it resulted from a bona fide error, and that it occurred even though the debt collector maintained procedures reasonably adapted to avoid the error). As explained in the proposal, the Bureau reasoned that a debt collector who communicated by email or text message in compliance with the proposed procedures would not have reason to anticipate a prohibited third-party disclosure. See 84 FR 23274, 23300 (May 21, 2019). 256 See note 6, supra, explaining the Bureau’s use of the phrase ‘‘safe harbor from civil liability’’ throughout this Notice when discussing the effect of following the procedures in § 1006.6(d)(3) through (5). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 FDCPA sections 805(b) and 813(c), the Bureau is finalizing some portions of proposed § 1006.6(d)(3), and reorganizing and modifying others, as final § 1006.6(d)(3) through (5). The Bureau received a large number of comments in response to proposed § 1006.6(d)(3), including thousands of comments from individual consumers, as well as comments from consumer advocates, creditors, debt collectors, trade associations, some members of Congress, State Attorneys General, local governments, and academics. Many commenters addressed specific aspects of proposed § 1006.6(d)(3); these comments are addressed where relevant in the section-by-section analysis of final § 1006.6(d)(3) through (5). Immediately below, the Bureau addresses the large number of comments that it received regarding the general operation of proposed § 1006.6(d)(3). Risk of Consumer Harm Posed by ThirdParty Disclosures The Bureau received multiple comments regarding the general risks to consumers of third-party disclosures from electronic communications. Consumer and consumer advocate commenters argued that the reassignment of telephone numbers,257 and the sharing of email accounts and telephone numbers between family members, increase the risk that a debt collector who sends an email or text message will disclose sensitive debt collection information to a third party not authorized to receive it. Moreover, some commenters noted, emails and text messages may be viewable by a consumer’s email or telephone provider or appear on a publicly visible screen, such as when a consumer accesses email at the library. Several consumer advocate commenters stated that thirdparty disclosures could cause consumers to suffer reputational damage; increased risk of identity theft; and shame and other emotional pain, particularly when the third party to whom the disclosure is made is an employer, family member, or friend. One industry commenter characterized email and text message communications as posing no more third-party disclosure risk than traditional mail and telephone 257 According to a 2018 FCC notice of proposed rulemaking, nearly 35 million telephone numbers are disconnected and made available for reassignment each year. Advanced Methods to Target and Eliminate Unlawful Robocalls, 83 FR 17631, 17632 (Apr. 23, 2018) (‘‘Consumers disconnect their old numbers and change to new telephone numbers for a variety of reasons, including switching wireless providers without porting numbers and getting new wireline telephone numbers when they move.’’). PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 communications. This commenter asserted that there is little third-party disclosure risk when a debt collector emails a consumer’s current or former personal email address because, unlike telephone numbers, email addresses are rarely reassigned. Although the commenter conceded that the reassignment of telephone numbers increases the risk of third-party disclosure when debt collectors send text messages, the commenter asserted that, because consumers regularly change home addresses, the same degree of risk is present when a debt collector mails information to a consumer’s last known address. Further, the commenter argued, any third-party disclosure risk that exists when a third party accesses a consumer’s email account or sees an email or text message on a publicly visible screen is entirely within the consumer’s control. The Bureau recognizes that electronic communications in debt collection offer benefits to consumers and debt collectors. The Bureau also recognizes that electronic communications pose a risk of third-party disclosure, such as when a debt collector sends a text message to a telephone number that no longer belongs to the consumer, and, for some consumers, such a disclosure may cause harm. However, the Bureau emphasizes that there is no empirical data in the rulemaking record demonstrating whether and to what extent the privacy risks from electronic communications in debt collection are greater than, the same as, or less than those associated with non-electronic communications in debt collection. In finalizing the procedures in § 1006.6(d)(3) through (5), the Bureau has considered the benefits and risks of electronic communications based on the information in the rulemaking record.258 Reason-To-Anticipate Standard A few commenters addressed the Bureau’s proposal to design the procedures in proposed § 1006.6(d)(3) so that a debt collector who uses them does not have reason to anticipate a third-party disclosure.259 A consumer advocate commenter opposed the reason-to-anticipate standard, noting that consumers can be harmed even by 258 Section 1006.6(d)(3) through (5) addresses the risk of third-party disclosure posed by electronic communications. Other risks posed by electronic communications, such as the potential that debt collectors may use them in harassing ways, are addressed in other provisions of the final rule, including § 1006.6(e) and § 1006.14(a). 259 See 84 FR 23274, 23300 n.238 (May 21, 2019) (citing FTC staff and court opinions finding that debt collectors do not violate FDCPA section 805(b) unless they have reason to anticipate that a disclosure may be heard or read by third parties). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 unforeseeable disclosures. An industry commenter supported the standard, arguing that debt collectors should not be penalized for third-party disclosures they had no reason to anticipate, particularly when the circumstances giving rise to a disclosure, such as a third party’s access to the consumer’s email account or telephone, are out of the debt collector’s control. As in the proposal, the Bureau has designed the procedures in the final rule around the reason-to-anticipate standard. The reason-to-anticipate standard recognizes that it is generally not possible for a debt collector to eliminate entirely the risk that a third party will see or hear a debt collection communication. The standard is therefore consistent with FDCPA section 813(c), which protects debt collectors who unintentionally violate the statute notwithstanding the use of reasonable procedures. FDCPA section 813(c), like the reason-to-anticipate standard, generally recognizes that a debt collector acting in good faith pursuant to reasonable procedures should not be liable for errors (in this context, a thirdparty disclosure) that the debt collector did not intend and could not have foreseen. Reasonably Confirm and Document An industry commenter asked the Bureau to clarify the proposed requirement that a debt collector’s procedures include steps to reasonably confirm and document that the debt collector acted in accordance with proposed § 1006.6(d)(3).260 Another industry commenter suggested that procedures to reasonably confirm and document compliance should include an audit component and asked the Bureau to publish sample procedures. Consumer and consumer advocate commenters generally did not address the proposed requirement to reasonably confirm and document compliance. The final rule retains the requirement that a debt collector’s procedures include steps to reasonably confirm and document that the debt collector acted in accordance with § 1006.6(d)(3). Depending on their size, the scope of their operations, and other businessspecific facts, different debt collectors may take different approaches to reasonably confirming and documenting compliance with § 1006.6(d)(3). The Bureau declines to specify by rule a single set of steps or elements that all procedures must or should include under § 1006.6(d)(3). As the Bureau noted in the preamble to the proposal, however, procedures permitting a debt collector to use obviously incorrect email addresses merely because the addresses were obtained consistent with § 1006.6(d)(3) would not satisfy the requirement to reasonably confirm and document compliance.261 In this circumstance, any purported confirmation of the debt collector’s compliance with § 1006.6(d)(3) would not be reasonable. Scope of Procedures The procedures in proposed § 1006.6(d)(3) would have applied only to a debt collector’s email and text message communications.262 Two industry commenters requested that the Bureau clarify the term email. One did not propose a definition, while the other asked the Bureau to adopt an expansive definition that would include private communication tools offered by social media platforms. This commenter asserted that social media accounts, like email accounts, are password protected and generally not reassigned, and, as a result, direct messaging communications on social media should be treated the same as email communications. The commenter also stated that the definition of email should include mobile application or web-based technologies that allow consumers to initiate a live written conversation with a business through a ‘‘chat box.’’ A group of consumer advocate commenters asked the Bureau to clarify that the term email does not include direct messages, whether sent through social media platforms or free-standing messaging platforms. These commenters asserted that, on some direct messaging platforms, users search for each other by first and last name rather than by a distinct and individual user name, which increases the likelihood of misdirected messages, particularly among consumers with common names. In light of the apparent variations in direct messaging technology, the Bureau is unable to assess how well the procedures in final § 1006.6(d)(3) through (5) would address the risk of third-party disclosures in the direct messaging context. Therefore, for purposes of § 1006.6(d)(3) through (5), the Bureau declines to define the term email to include direct messaging technology in mobile applications or on social media. Debt collectors may use these communication media, subject to the requirements and prohibitions of the FDCPA and the final rule. Multiple industry commenters advocated expanding the procedures in 261 See 260 See id. at 23301. VerDate Sep<11>2014 21:38 Nov 27, 2020 262 See Jkt 253001 PO 00000 id. at 23300. id. Frm 00045 Fmt 4701 Sfmt 4700 76777 proposed § 1006.6(d)(3), or developing new procedures, to cover additional communication technologies, such as smart phone notifications, ringless voicemails, and traditional telephone calls and voicemails. Each of these contexts may pose third-party disclosure risks that differ, in varying degrees, from the third-party disclosure risks posed by email and text message communications. Because the Bureau did not propose procedures related to other communications technologies, it lacks the benefit of public comment about what such procedures might look like.263 Developing procedures to cover such technologies is outside the scope of this rulemaking. The Bureau reiterates, however, that the final rule identifies neither the only circumstances in which a debt collector may communicate with a consumer electronically nor the only technologies a debt collector may use to do so. Nor does it identify the only procedures that may be reasonably adapted to avoid a violation of the prohibition on thirdparty disclosures. Thus, a debt collector would not necessarily violate § 1006.6(d)(1) or FDCPA section 805(b) by communicating with a consumer electronically other than by email or text message, or by email or text message without using the procedures in § 1006.6(d)(3) through (5). Moreover, depending on the facts, a debt collector might be able to show by a preponderance of the evidence that any third-party disclosures were unintentional and that the debt collector employed procedures reasonably adapted to avoid them. First-Party Debt Collectors Two credit union commenters asked the Bureau to clarify the rules for creditors’ use of email and text messages. The procedures in § 1006.6(d)(3) through (5) apply to FDCPA debt collectors only. Creditors who are not FDCPA debt collectors are not subject to the FDCPA’s prohibition on third-party disclosures, although they are covered by other consumer financial laws. To the extent commenters were requesting that the Bureau develop and finalize procedures applicable to creditors, such a request is outside the scope of this rulemaking. 263 See 84 FR 23274, 23300 (May 21, 2019) (‘‘The procedures in proposed § 1006.6(d)(3) address email and text message communications only. At this time, the Bureau does not propose procedures related to the use of less-developed and lesswidespread forms of electronic communications because consumers do not appear accustomed to using such technologies in their financial lives.’’). E:\FR\FM\30NOR3.SGM 30NOR3 76778 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations Telephone Consumer Protection Act The Telephone Consumer Protection Act (TCPA) generally prohibits the use of automated dialing equipment to call a telephone number without a consumer’s consent.264 A group of consumer advocate commenters asked the Bureau to clarify how the Bureau’s procedures interact with the TCPA. Congress has vested the FCC—not the Bureau—with authority to implement the TCPA.265 The final rule does not interpret the TCPA; nor does anything in the final rule alter any FCC rule or any obligation imposed on debt collectors by such a rule. For the reasons discussed above, the Bureau is finalizing § 1006.6(d)(3), which sets forth procedures that debt collectors may use to reduce their risk of civil liability for unintentional thirdparty disclosures when communicating with consumers by email or text message. In response to numerous comments regarding the details of the proposed procedures, and as discussed in detail below, the Bureau is finalizing procedures that differ substantively and organizationally from those that the Bureau proposed.266 TKELLEY on DSKBCP9HB2PROD with RULES3 6(d)(3)(i) As proposed, § 1006.6(d)(3)(i) identified the first of two conditions that a debt collector would have had to satisfy to obtain a safe harbor from civil liability for an unintentional third-party disclosure when communicating by email or text message. Under proposed § 1006.6(d)(3)(i), the debt collector’s procedures would have had to include steps to reasonably confirm and document that the debt collector communicated using an email address, or telephone number for text messages, in accordance with one of the three methods described in proposed § 1006.6(d)(3)(i)(A) through (C). As proposed, § 1006.6(d)(3)(i)(A) through (C) provided a safe harbor if, among other things, the consumer had used the email address or telephone number to communicate with the debt collector (proposed § 1006.6(d)(3)(i)(A), the ‘‘consumer-use’’ method); the consumer received notice and an opportunity to opt out of the debt collector’s use of the email address or telephone number for text messages (proposed § 1006.6(d)(3)(i)(B), the ‘‘notice-and-opt-out’’ method); or the 264 See 47 U.S.C. 227; ACA Int’l v. Fed. Commc’ns Comm’n, 885 F.3d 687 (D.C. Cir. 2018). 265 See 47 U.S.C. 227(b)(2). 266 The text of the introductory paragraph of final § 1006.6(d)(3) is largely the same as the text of the introductory paragraph of proposed § 1006.6(d)(3), with technical edits for clarity. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 creditor or a prior debt collector had obtained the email address or telephone number from the consumer and used it to communicate about the debt (proposed § 1006.6(d)(3)(i)(C), the ‘‘creditor-or-prior-debt-collector-use’’ method). As proposed, the methods in § 1006.6(d)(3)(i)(A) through (C) did not distinguish between communications sent by email and communications sent by text message. Many commenters offered substantive feedback about the three methods of obtaining and using email addresses and telephone numbers described in proposed § 1006.6(d)(3)(i)(A) through (C). Those comments are addressed where relevant in the section-by-section analysis of § 1006.6(d)(4) and (5). Some commenters also highlighted the differences between email and text message communications, noting the unique third-party disclosure risks presented by the reassignment of mobile telephone numbers. After considering the public comments, the Bureau is, as proposed, finalizing § 1006.6(d)(3)(i) to identify the first of two conditions that a debt collector must satisfy to obtain a safe harbor from civil liability for an unintentional third-party disclosure when communicating by email or text message. However, in light of comments highlighting the different third-party disclosure risks of email communications and text message communications, the final rule sets forth different procedures for email messages and text messages and also addresses them separately (email in § 1006.6(d)(4) and text messages in § 1006.6(d)(5)). To reflect this change, final § 1006.6(d)(3)(i) provides that, for a debt collector to obtain a safe harbor from civil liability for an unintentional third-party disclosure, a debt collector’s procedures must include steps to reasonably confirm and document that the debt collector communicated with the consumer by sending an email to an email address described in § 1006.6(d)(4) or a text message to a telephone number described in § 1006.6(d)(5). 6(d)(3)(ii) Proposed § 1006.6(d)(3)(ii) identified the second of two conditions a debt collector would have had to satisfy to obtain a safe harbor from civil liability for an unintentional third-party disclosure when communicating by email or text message. Specifically, under proposed § 1006.6(d)(3)(ii), the debt collector’s procedures would have had to include steps to reasonably confirm and document that the debt collector took additional steps to PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 prevent communications using an email address or telephone number that the debt collector knew had led to an unauthorized third-party disclosure. The Bureau proposed § 1006.6(d)(3)(ii) on the basis that a debt collector whose procedures are not designed to prevent recurrence of a known violation may intend to convey information related to the debt or its collection to a third party. A group of consumer advocate commenters argued that proposed § 1006.6(d)(3)(ii) did not sufficiently address the risk of repeat third-party disclosures. According to these commenters, the Bureau should simply require debt collectors to stop using an email address or telephone number for text messages if the debt collector knows that using the address or telephone number has led to a thirdparty disclosure, unless the consumer has expressly consented. One industry commenter requested that the Bureau provide examples of additional steps a debt collector could take to prevent communications using an email address or telephone number that the debt collector knows has led to a third-party disclosure. The Bureau is finalizing § 1006.6(d)(3)(ii) with modifications for clarity. Specifically, § 1006.6(d)(3)(ii) provides that, to obtain a safe harbor from civil liability, a debt collector’s procedures must include steps to reasonably confirm and document that the debt collector did not communicate with the consumer by sending an email to an email address or a text message to a telephone number that the debt collector knows has led to a disclosure prohibited by § 1006.6(d)(1). The Bureau is not adopting the suggestion to require debt collectors simply to stop using email addresses and telephone numbers that have led to third-party disclosures. As noted, the Bureau is finalizing § 1006.6(d)(3) through (5) as an interpretation of FDCPA section 813(c)’s bona fide error defense. A bona fide error defense is only available under FDCPA section 813(c) if a debt collector maintains procedures reasonably adapted to avoid an error. Accordingly, § 1006.6(d)(3)(ii) is framed in terms of a debt collector’s procedures. The Bureau notes, however, that, if a debt collector sends repeated emails to an email address or text messages to a telephone number that the debt collector knows has led to a thirdparty disclosure, that conduct would likely show that the debt collector’s procedures are not reasonable and that E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations the debt collector is not entitled to a safe harbor from civil liability.267 In response to the industry commenter’s request for examples, the Bureau is adopting new comment 6(d)(3)(ii)–1, which clarifies that, for purposes of § 1006.6(d)(3)(ii), a debt collector knows that sending an email to an email address or a text message to a telephone number has led to a disclosure prohibited by § 1006.6(d)(1) if any person has informed the debt collector of that fact. Thus, to comply with § 1006.6(d)(3)(ii), it is necessary (but not sufficient) for a debt collector to accept and track complaints. TKELLEY on DSKBCP9HB2PROD with RULES3 6(d)(4) Procedures for Email Addresses As noted above, the final rule reorganizes proposed § 1006.6(d)(3)(i) by separating email procedures and text message procedures, and final § 1006.6(d)(4) describes the three procedures that a debt collector may use to obtain a safe harbor from civil liability for an unintentional third-party disclosure when communicating by email. The final email procedures are discussed in detail in the section-bysection analysis of § 1006.6(d)(4)(i) through (iii). The Bureau received one overarching comment regarding its proposed email procedures. One industry commenter stated that requiring debt collectors to encrypt email communications or protect them with passwords would reduce the risk of third-party disclosure. As proposed, the email procedures would not have required encryption or password protection, and the Bureau declines to require debt collectors to take these steps to obtain a safe harbor from civil liability for third-party disclosures. The Bureau notes, however, that a debt collector who encrypts its emails or protects them with a password would not thereby lose access to a safe harbor from civil liability under § 1006.6(d)(3) for which the debt collector otherwise qualified. 6(d)(4)(i) Procedures Based on Communication Between the Consumer and the Debt Collector Proposed § 1006.6(d)(3)(i)(A) (the ‘‘consumer-use’’ method) for emails provided that a debt collector could obtain a safe harbor from civil liability for an unintentional third-party disclosure if, in addition to complying with § 1006.6(d)(3)(ii), the debt collector maintained procedures to reasonably 267 Moreover, depending on the facts, a debt collector who repeatedly sends an email or a text message to an email address or telephone number that the debt collector knows has led to a thirdparty disclosure may violate FDCPA section 808’s prohibition on unfairness. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 confirm and document that the debt collector communicated with the consumer using an email address, including an employer-provided email address, that the consumer recently used to contact the debt collector for purposes other than opting out of electronic communications.268 As discussed below, the Bureau is finalizing the email procedures in proposed § 1006.6(d)(3)(i)(A) as § 1006.6(d)(4)(i), with modifications and additions to address comments received, and with revisions for clarity. The Bureau received numerous comments regarding its assumption that a debt collector may not have reason to anticipate a third-party disclosure when sending an email to an email address, including an employer-provided email address, that the consumer recently used to communicate with the debt collector. The Bureau reasoned that a consumer generally is better positioned than a debt collector to determine whether third parties have access to a specific email address, and a consumer’s decision to communicate with a debt collector using a specific email address may suggest that the consumer assessed the risk of thirdparty disclosure to be low.269 In general, industry commenters supported the Bureau’s reasoning, while several consumer advocate commenters rejected it. Consumer advocate commenters generally asserted that it is unlikely that consumers will have done a third-party disclosure risk analysis before using a particular email address to communicate with a debt collector, and that consumers who lack regular access to a computer or email address might use another person’s email address to communicate with the debt collector. Consumer advocate commenters also asserted that a consumer may feel some urgency to contact a debt collector and may use a certain email address to do so without intending to establish that address as a regular means of contact. As to employer-provided email addresses specifically, consumer advocate 268 As noted, proposed § 1006.6(d)(3)(i)(A) would have applied to both email addresses and telephone numbers, but final § 1006.6(d)(4)(i) applies only to email addresses. This section-by-section analysis therefore addresses proposed § 1006.6(d)(3)(i)(A) only with respect to comments that specifically discussed email addresses, or that did not distinguish between email addresses and telephone numbers. Comments received in response to proposed § 1006.6(d)(3)(i)(A) that discussed telephone numbers are addressed in the section-bysection analysis of § 1006.6(d)(5)(i). 269 See 84 FR 23274, 23301 (May 21, 2019) (discussing the Bureau’s rationale for including both employer-provided and personal email addresses in the proposed § 1006.6(d)(3)(i)(A) safe harbor). PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 76779 commenters argued that employees may not be aware that employers can and do monitor emails sent or received on employer-provided accounts, and that even consumers who are aware of this possibility likely would be unaware that sending a carefully worded email to a debt collector could insulate the debt collector from third-party disclosure liability if the debt collector replied to that address. The Bureau determines that consumers are generally better positioned than debt collectors to determine if third parties have access to a particular email account, whether personal or employer provided. A consumer who uses a particular email address to contact a debt collector about a debt likely expects the debt collector to respond using the same address. In addition, because a third party with access to a consumer’s email account typically can read outgoing and incoming communications, an email message sent by a consumer to a debt collector may, like an email message received by a consumer from a debt collector, result in a third-party disclosure. For these reasons, the Bureau continues to believe that a consumer’s willingness to use an email address to contact a debt collector without conditions suggests that the risk of third-party disclosure is low if the debt collector responds to that email. Therefore, a debt collector who uses such an email address generally would lack reason to anticipate a third-party disclosure, unless the consumer has asked the debt collector not to engage in such communications.270 The Bureau also received numerous comments regarding proposed § 1006.6(d)(3)(i)(A)’s recency requirement, i.e., the requirement that the email address be one that the consumer recently used to contact the debt collector. While many commenters confirmed that telephone numbers are regularly reassigned, several industry commenters stated that email addresses typically are not reassigned and that the proposed recency requirement for email addresses therefore was unnecessary. Several industry commenters also objected on the ground that a recency requirement would impose a burden on debt collectors to track information, such as when a consumer last used an email address. A group of consumer advocate commenters acknowledged that email addresses are reassigned far 270 The Bureau notes that § 1006.14(h) prohibits a debt collector from communicating or attempting to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person. E:\FR\FM\30NOR3.SGM 30NOR3 76780 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 less frequently than telephone numbers but nevertheless supported the recency requirement for email addresses. The Bureau has decided not to include a recency requirement as part of the email procedures in final § 1006.6(d)(4)(i).271 The Bureau proposed the recency requirement principally to address the risk that a telephone number might be reassigned from one consumer to another, and would have applied the requirement to email addresses largely for consistency and ease of administration.272 In light of comments asserting that a recency requirement imposes some burden on creditors and debt collectors to track and transfer information, and comments indicating that emails are reassigned infrequently if at all, the Bureau concludes that a recency requirement should not apply to email addresses.273 Several industry commenters requested that the Bureau expand the procedures in proposed § 1006.6(d)(3)(i)(A), or create new procedures, to protect a debt collector who communicates with a consumer by email after receiving the consumer’s permission to use the email address for debt collection communications, such as if the consumer provides the email address to the debt collector over the telephone or while using the debt collector’s website, or provides the email address to a court for purposes of receiving electronic service of process.274 The Bureau concludes that, if a consumer has directly consented to a debt collector’s use of a particular email address and has not withdrawn that consent,275 the debt collector 271 As discussed in the section-by-section analysis of § 1006.6(d)(5), the Bureau is finalizing a recency requirement as part of the text message procedures. 272 See 84 FR 23274, 23301 (May 21, 2019) (discussing that emails are not regularly reassigned but proposing to apply the recency requirement to emails as well as to telephone numbers for consistency and ease of administration of the regulation). Although it appears that at least one email provider does allow email addresses to be reassigned, it is unclear how often this occurs and commenters generally agreed that, to the extent it happens, email reassignment is far less common that telephone number reassignment. See AJ Dellinger, Yahoo Hack: Why You Shouldn’t Delete Your Email Address, Account, Int’l Bus. Times (Oct. 5, 2017). 273 To the extent that commenters addressed specific elements of the proposed recency requirement for emails, such as how to define ‘‘recent,’’ those comments are moot because the Bureau is not finalizing a recency requirement for emails. The Bureau therefore does not discuss them. 274 Relatedly, a group of academic commenters requested that the Bureau prohibit debt collectors from using embedded cookies, which can track a user’s browsing history, on their websites. The Bureau does not further address this comment, as it is outside the scope of the rulemaking. 275 As explained in the section-by-section analysis of § 1006.6(e), a debt collector who VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 generally does not have reason to anticipate that using the email address to communicate with the consumer will lead to a third-party disclosure. Accordingly, and as discussed below, the final rule includes a new provision, § 1006.6(d)(4)(i)(B), to account for the direct consent scenario.276 Many industry commenters also requested that the Bureau expand the procedures in proposed § 1006.6(d)(3)(i)(A), or create new procedures, to cover not only an email address that the consumer provided to the debt collector, but also an email address that the consumer provided to, or used to contact, the creditor. Some of these commenters argued that, if a consumer provided an email address when opening an account or communicating with a creditor, the consumer knew or should have known that the debt collector would use the email address to collect the debt, and there is no need to delay the collection process by requiring consumers to reconfirm their preferences. Similarly, an industry commenter argued that a consumer who has chosen to communicate with a creditor electronically should be assumed to prefer communicating with a debt collector electronically, and that an optin system burdens consumer choice and delays the collection process by imposing an additional requirement before debt collectors may begin electronic debt collection communications. Some commenters advocated for a safe harbor from civil liability as long as the creditor’s account opening materials disclosed that an email address the consumer gives the creditor could be used for debt collection purposes. Other commenters, recognizing that a consumer’s communication preferences may change over time and that years may elapse between when a consumer provides a creditor with electronic contact information and when a creditor transfers the consumer’s debt to a debt collector, suggested a safe harbor for email addresses provided by the consumer to the creditor within a particular timeframe, such as within the 270 days preceding the debt collector’s use. Another industry commenter suggested a safe harbor for a debt collector who sends an email to an communicates electronically must provide consumers with a reasonable and simple way to opt out of such communications. 276 As discussed in the section-by-section analysis of § 1006.6(d)(5)(ii), the final rule similarly includes a new provision covering a debt collector who communicates with a consumer by text message after receiving the consumer’s unwithdrawn direct consent to do so. PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 email address used by the creditor to send the consumer delinquency communications in the months before an account is placed for collection. As the Bureau noted in the proposal, a consumer might agree to receive electronic communications from a creditor without considering the risk that a third party might read those communications, but a consumer who is indifferent to the disclosure of creditor communications may not be indifferent to the disclosure of debt collection communications.277 Thus, a consumer’s decision to communicate electronically with a creditor does not, without more, suggest that the risk of third-party disclosure is particularly low. Nor does a disclosure in account opening materials, without more, suggest that the risk of third-party disclosure is particularly low. Years may pass, and a consumer’s circumstances may change, between the time a consumer opens an account and the time the account is transferred to a debt collector. The Bureau therefore declines to add the procedures requested by these commenters. The Bureau notes, however, that nothing in § 1006.6(d)(4)(i) prohibits a debt collector from sending an email to an email address provided by the consumer to the creditor. Depending on the facts, a debt collector may be able to do so without violating FDCPA section 805(b).278 For the reasons discussed above, the Bureau is finalizing proposed § 1006.6(d)(3)(i)(A) as § 1006.6(d)(4)(i). Section 1006.6(d)(4)(i)(A) provides that a debt collector may obtain a safe harbor from civil liability for an unintentional third-party disclosure when sending an email to an email address if the consumer used the email address to communicate with the debt collector about the debt and the consumer has not since opted out of communications to that email address.279 Section 277 See 84 FR 23274, 23304 (May 21, 2019). example, in some circumstances, a consumer’s willingness to receive delinquency communications from a creditor electronically may better suggest that the risk of third-party disclosure is low than a consumer’s willingness to receive routine account communications from a creditor electronically. Similarly, in some circumstances, a debt collector’s use of an email address or telephone number recently provided by the consumer to the creditor may pose lower thirdparty disclosure risk than a debt collector’s use of an email address or telephone number provided by the consumer to the creditor at account opening. 279 Proposed § 1006.6(d)(3)(i)(A) specified that a debt collector could not use an email address used by the consumer to opt out of electronic communications. As finalized, § 1006.6(d)(4)(i)(A) retains this prohibition: A debt collector is not covered by § 1006.6(d)(4)(i)(A) if the debt collector communicates using an email address the consumer used to opt out of electronic communications. 278 For E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 1006.6(d)(4)(i)(B) provides that a debt collector may obtain a safe harbor from civil liability for an unintentional thirdparty disclosure when sending an email to an email address if the debt collector has received directly from the consumer prior consent to use the email address to communicate with the consumer about the debt and the consumer has not withdrawn that consent. The Bureau also is adopting new comments 6(d)(4)(i)(B)–1 and –2 to clarify the meaning of direct prior consent for purposes of § 1006.6(d)(4)(i)(B). Comment 6(d)(4)(i)(B)–1 clarifies that a consumer may provide direct consent orally, in writing, or electronically. Comment 6(d)(4)(i)(B)–2 clarifies that, if a consumer provides an email address to a debt collector (including on the debt collector’s website or online portal), the debt collector may treat the consumer as having consented directly to the debt collector’s use of the email address to communicate with the consumer about the debt for purposes of § 1006.6(d)(4)(i)(B) if the debt collector discloses clearly and conspicuously that the debt collector may use the email address to communicate with the consumer about the debt.280 TKELLEY on DSKBCP9HB2PROD with RULES3 6(d)(4)(ii) Procedures Based on Communication by the Creditor Proposed § 1006.6(d)(3)(i)(B) (the ‘‘notice-and-opt-out’’ method) generally provided that a debt collector could obtain a safe harbor from civil liability for an unintentional third-party disclosure if, in addition to complying with § 1006.6(d)(3)(ii), the debt collector maintained procedures to reasonably confirm and document that: (1) The debt collector communicated with the consumer using a personal email address after the creditor or the debt collector provided the consumer with notice of such communications and a reasonable opportunity to opt out; and (2) the consumer did not opt out.281 280 A consumer who consents to electronic service of process typically provides consent to the court rather than to the debt collector. Accordingly, a consumer’s consent to electronic service of process generally is not covered by § 1006.6(d)(4)(i)(B). The Bureau believes, however, that a debt collector generally would lack reason to anticipate a third-party disclosure when sending an email to an email address if the consumer has agreed to receive litigation communications relating to the debt at that address. 281 As noted, proposed § 1006.6(d)(3)(i)(B) would have applied to both email addresses and telephone numbers, but final § 1006.6(d)(4)(ii) applies only to email addresses. This section-by-section analysis therefore addresses proposed § 1006.6(d)(3)(i)(B) only with respect to comments that specifically discussed email addresses, or that did not distinguish between email addresses and telephone numbers. Comments received in response to proposed § 1006.6(d)(3)(i)(B) that discussed VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 The Bureau received a number of comments relating to the general concept of permitting a debt collector to use notice-and-opt-out procedures to obtain a safe harbor from civil liability for unintentional third-party disclosures when sending an email to a consumer.282 Industry commenters generally supported the Bureau’s reasoning that a consumer’s failure to opt out after receiving notice that an email address could be used for debt collection communications may suggest that the consumer has assessed the risk of third-party disclosure to be low. Industry commenters also generally opposed any requirement that consumers opt into electronic communications, with several predicting that few consumers would opt in, and that, as a result, electronic communications would be unlikely to take place at all. These commenters noted that, in at least one State that requires consumers to opt into email communications, debt collectors generally do not use email to communicate with consumers.283 Consumer advocate commenters requested that the Bureau not adopt a notice-and-opt-out approach. These commenters argued that the Bureau should permit electronic communications only pursuant to an opt-in approach, which would enable consumers, before agreeing to electronic communications, to: (1) Weigh any risks due to irregular internet or cellphone access; (2) confirm the addresses and telephone numbers to which electronic communications may be directed, ensuring that, particularly for consumers who regularly change telephone numbers or abandon email addresses, communications are sent to the consumer rather than to a third party; (3) weigh the financial cost of electronic communications (for consumers with limited text message or data plans); (4) familiarize themselves with the sender and weigh any security risks, helping to ensure that consumers actually would open emails and minimizing the chance that emails would be blocked by spam filters and telephone numbers are addressed in the section-bysection analysis of § 1006.6(d)(5). 282 Commenters also submitted numerous comments about particular aspects of proposed § 1006.6(d)(3)(i)(B); those comments are addressed where relevant in the section by section analysis of § 1006.6(d)(4)(ii)(A) through (E). 283 See 23 CRR–NY 1.6 (permitting a debt collector to communicate with a consumer by email only if the consumer has ‘‘(1) voluntarily provided an electronic mail account to the debt collector which the consumer has affirmed is not an electronic mail account furnished or owned by the consumer’s employer; and (2) consented in writing to receive electronic mail correspondence from the debt collector in reference to a specific debt’’). PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 76781 other screening devices; 284 and (5) weigh any privacy-related risks, including that emails and text messages could be viewed by a consumer’s telephone or email provider, could appear on a publicly visible computer or telephone screen, or could be coming from a phony, rather than legitimate, debt collector. The Bureau recognizes that, as consumer advocates observed, for an opt-out system to work the consumer must, among other things, actually receive the opt-out notice and have the opportunity to consider it. The Bureau also recognizes that a consumer who receives an opt-out notice may ignore it, fail to consider the risks of receiving emails (including the risk of third-party disclosure), or not take the steps necessary to opt out. However, the Bureau believes that the safeguards it has incorporated in the rule, which are discussed below, will mitigate these concerns.285 For these reasons, the Bureau is finalizing the notice-and-optout method in proposed § 1006.6(d)(3)(i)(B) as § 1006.6(d)(4)(ii), with modifications as discussed in the section-by-section analysis of § 1006.6(d)(4)(ii)(A) through (E) to increase the likelihood that a consumer will have an opportunity to make an adequately informed choice whether to opt out of receiving emails. 6(d)(4)(ii)(A) As proposed, the notice-and-opt-out method in § 1006.6(d)(3)(i)(B) generally would have provided a safe harbor from civil liability for debt collector communications sent to any personal email address other than the address to which the opt-out notice itself was sent, provided the other opt-out requirements were met. Under proposed § 1006.6(d)(3)(i)(B), then, a debt collector could have used the noticeand-opt-out method to obtain a safe harbor from civil liability for an unintentional third-party disclosure when sending an email to an email 284 As the Bureau noted in the proposal, several Federal agencies advise consumers not to open emails from senders they do not recognize. See 84 FR 23274, 23363 n.578 (May 21, 2019). 285 See in particular the section-by-section analysis of § 1006.6(d)(4)(ii)(C), which discusses that: (1) The opt-out notice must come from the creditor, be provided in written or electronic form, and describe the third-party disclosure considerations implicated by debt collection communications; and (2) the consumer must be provided a reasonable and simple method to opt out and at least 35 days to do so. See also the sectionby-section analysis of § 1006.6(d)(4)(ii)(E), which clarifies that debt collectors proceeding under the opt-out method generally cannot obtain a safe harbor from civil liability when emailing a consumer at an employer-provided email address. E:\FR\FM\30NOR3.SGM 30NOR3 76782 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 address obtained through skip tracing or any other method. To increase the likelihood that the email address for which a debt collector using the notice-and-opt-out method obtains a safe harbor actually belongs to the consumer, and thereby minimize the risk of a third-party disclosure, the Bureau finds that it is important to limit the types of email addresses debt collectors may use on an opt-out basis. An email address obtained by the creditor directly from the consumer is highly likely to belong to the consumer; by contrast, an email address obtained through skip tracing generally lacks the same degree of reliability.286 For these reasons, the Bureau is finalizing § 1006.6(d)(4)(ii)(A), which provides that, for purposes of the notice-and-optout method, the debt collector may send an email only to an email address that a creditor obtained from the consumer. Final § 1006.6(d)(4)(ii)(A) is similar to an aspect of proposed § 1006.6(d)(3)(i)(C),287 which, as discussed in the section-by-section analysis of final § 1006.6(d)(4)(iii), provided that a debt collector could satisfy the ‘‘creditor-or-prior-debtcollector-use’’ method of obtaining a safe harbor only if, among other things, the debt collector used an email address obtained from the consumer by the creditor or a prior debt collector.288 In response to that proposed requirement, a group of consumer advocate commenters asked the Bureau to clarify how a creditor could obtain an email address from the consumer and how a debt collector would know that a creditor had done so. There are many ways for a creditor to obtain an email address from a consumer for purposes of the notice-and-opt-out procedures in § 1006.6(d)(4)(ii). For example, the creditor may request the email address 286 An industry commenter urged the Bureau to create a safe harbor permitting the use of any email address that has been ‘‘verified.’’ The commenter did not define ‘‘verify’’ but noted that it is possible to obtain email addresses from commercially available databases. Because the Bureau currently lacks information to evaluate the completeness and accuracy of such databases, the Bureau declines the commenter’s suggestion to provide a safe harbor to a debt collector who ‘‘verifies’’ a consumer’s email address using such a database. 287 As discussed in the section-by-section analysis of § 1006.6(d)(4)(iii), the Bureau is not finalizing § 1006.6(d)(3)(i)(C) as proposed but, as here, is incorporating aspects of that provision into the final notice-and-opt-out procedures. The Bureau therefore responds to certain comments made in response to § 1006.6(d)(3)(i)(C) in this section-bysection analysis. 288 Unlike proposed § 1006.6(d)(3)(i)(C), final § 1006.6(d)(4)(ii) does not cover a debt collector’s use of an email address obtained by a prior debt collector. Safe harbor procedures covering a debt collector’s use of such an email address are found in final § 1006.6(d)(4)(iii). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 6(d)(4)(ii)(B) As noted, the notice-and-opt-out method in proposed § 1006.6(d)(3)(i)(B) generally would have provided a safe harbor for debt collector communications sent to any personal email address other than the address to which the opt-out notice was sent, provided the other opt-out requirements were met. There was no requirement that the creditor (or any other person) previously had used the email address to communicate with the consumer. To further reduce the risk of a thirdparty disclosure when debt collectors use the notice-and-opt-out method, the Bureau believes that it is important to incorporate such a requirement into § 1006.6(d)(4)(ii). While any requirement that the email address had been used by the creditor to communicate with the consumer (even if only for advertising or marketing) would help achieve this goal, the Bureau determines that requiring the creditor to have used the email address to communicate with the consumer about the account reduces the risk of third-party disclosure even further. Although the FDCPA recognizes that creditor communications are less sensitive than debt collector communications, some creditor communications, such as communications about the account, are more sensitive than others, such as advertising or marketing communications. The Bureau therefore believes that a consumer’s willingness to communicate electronically with a creditor about an account says more about the risk of third-party disclosure should the account enter collections than a consumer’s willingness to receive advertisements or marketing materials electronically. Conversely, if a consumer has asked a creditor to stop using an email address to communicate about an account, a debt collector may have reason to anticipate that using the address to communicate about the debt could lead to a third-party disclosure. For these reasons, the Bureau is finalizing § 1006.6(d)(4)(ii)(B), which provides that, for purposes of the noticeand-opt-out method, a debt collector may send an email only to an email address used by the creditor to communicate with the consumer about the account, and only if the consumer did not ask the creditor to stop using it. The Bureau also is adopting new comment 6(d)(4)(ii)(B)–1 to clarify the types of communications that constitute communications about the account for purposes of § 1006.6(d)(4)(ii)(B). Final § 1006.6(d)(4)(ii)(B) is similar to aspects of proposed § 1006.6(d)(3)(i)(C), which, as discussed in the section-bysection analysis of final § 1006.6(d)(4)(iii), provided that a debt collector could satisfy the ‘‘creditor-orprior-debt-collector-use’’ method of obtaining a safe harbor only if, among other things, the debt collector used an email address to which the creditor or a prior debt collector sent communications about the debt, and the consumer did not ask the creditor or prior debt collector to stop. The Bureau received a number of comments regarding those aspects of proposed § 1006.6(d)(3)(i)(C), and those comments have informed final § 1006.6(d)(4)(ii)(B).290 An industry commenter objected to requiring the creditor to have communicated ‘‘about the debt,’’ arguing that the requirement should be eliminated or broadened to include communications ‘‘about the account’’ because a creditor’s communications with a consumer typically involve the account rather than the debt. By contrast, a group of consumer advocate commenters argued the requirement would not sufficiently protect consumers because it would not have required that the consumer actually received or accessed the communications, or that the creditor or debt collector took any steps to confirm the consumer’s receipt and access. In addition, the consumer advocate commenters noted, any requirements placed on creditors would not be enforceable against creditors who were not also FDCPA debt collectors. The commenters also argued that a 289 The Bureau notes that § 1006.6(d)(4)(ii) does not provide a safe harbor to a debt collector who simply sends an email to an email address obtained by the creditor at account opening. Instead, for a debt collector to obtain a safe harbor from civil liability under § 1006.6(d)(4)(ii), the other requirements of the notice-and-opt-out procedures must be satisfied. 290 As discussed in the section-by-section analysis of § 1006.6(d)(4)(iii), the Bureau is not finalizing § 1006.6(d)(3)(i)(C) as proposed but, as here, is incorporating aspects of that provision into the final notice-and-opt-out procedures. The Bureau therefore responds to certain comments addressing § 1006.6(d)(3)(i)(C) in this section-by-section analysis. at account opening,289 or at a later stage of the parties’ relationship, or the consumer might voluntarily provide the email address on a website or otherwise. The Bureau does not believe it is necessary to specify by rule precisely how a debt collector would know that the creditor had obtained an email address from the consumer. Different debt collectors may have different approaches to reasonably confirming and documenting this fact. PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 consumer’s failure to request that the creditor stop using a particular email address is just as likely to mean that messages to that address had gone to the consumer’s spam folder or had reached the wrong person as to mean that the consumer had assessed third-party disclosure risk to be low. In addition, these commenters noted, a creditor is under no obligation to inform the consumer of the right or ability to opt out of communications, so a consumer’s failure to opt out should not implicitly authorize a debt collector to send emails to that email address. The Bureau determines that, given the multiple consumer protections built into the final notice-and-opt-out procedures to limit the likelihood of a third-party disclosure—including requirements relating to the form and content of the opt-out notice, as well as who may deliver it and in what manner—it is not necessary to require the creditor to have used the email address to communicate about the debt, as distinguished from the account. Nor does the Bureau believe it is necessary to require that the consumer actually received or was able to view the creditor’s communications, or that the creditor took steps to confirm the consumer’s receipt and access of those communications. Under § 1006.6(d)(4)(ii)(A), the email address must have been obtained by the creditor from the consumer and is therefore highly likely to belong to the consumer, particularly because email addresses generally are not reassigned. Moreover, a consumer who provides an email address to a creditor is likely to expect email communications about the account from the creditor and to follow up should any expected communications not arrive, diminishing the risk that a creditor’s emails will be blocked by a spam filter.291 In addition, to the extent that the email address is one for which the creditor has obtained consent under the E–SIGN Act, the creditor will already have confirmed the consumer’s ability to access the communications.292 Further, under § 1006.6(d)(4)(ii), a consumer’s failure to opt out of a creditor’s past use of an email address does not, without more, provide a safe harbor to a debt collector who uses that email address; the creditor must, among other things, 291 The Bureau is not aware of evidence suggesting that creditor communications are especially likely to be blocked by spam filters. Cf. Gmail Help, Prevent Mail to Gmail Users From Being Blocked or Sent to Spam, https:// support.google.com/mail/answer/81126?hl=en (last visited Oct. 1, 2020) (identifying factors that trigger Gmail’s spam filter). 292 See 15 U.S.C. 7001(c). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 provide the consumer with notice and a reasonable opportunity to opt out of debt collection communications to that address. Accordingly, the final rule does not treat a consumer’s failure to exercise an undisclosed opt-out right as implicitly authorizing a debt collector to send emails to that email address. Regarding the requirement that the consumer did not ask the creditor to stop using the address, one industry commenter suggested, without further explanation, that only a consumer’s written request should suffice. The Bureau declines the commenter’s suggestion; an oral request can suggest just as well as a written request that the risk of third-party disclosure is high. For these reasons, the Bureau is finalizing § 1006.6(d)(4)(ii)(B) as described above. 6(d)(4)(ii)(C) As proposed, § 1006.6(d)(3)(i)(B)(1) contained a number of requirements regarding the opt-out notice. The creditor or debt collector would have been required to notify the consumer clearly and conspicuously, no more than 30 days before the debt collector sent its first email communication, that the debt collector might use a particular personal email address for such communications. The creditor or debt collector also would have been required to provide the notice other than through the email address that the debt collector planned to use for debt collection communications, and to describe how to opt out. For the reasons discussed below, the Bureau is finalizing proposed § 1006.6(d)(3)(i)(B)(1), with modifications and additions, as final § 1006.6(d)(4)(ii)(C) to provide that, before a debt collector uses an email address to communicate with a consumer about a debt under § 1006.6(d)(4)(ii), the creditor must send the consumer a written or electronic notice that clearly and conspicuously discloses the information identified in § 1006.6(d)(4)(ii)(C)(1) through (5).293 Who May Provide the Opt-Out Notice Proposed § 1006.6(d)(3)(i)(B)(1) would have permitted either the creditor or the debt collector to provide the opt-out notice. Several industry commenters observed that a creditor who provides the opt-out notice itself will incur costs to do so, while a group of consumer advocate commenters expressed concern about enforcing the law against creditors who provide the opt-out notice in a manner that violates the rule. As 293 For clarity, the Bureau is finalizing the notice content requirements as § 1006.6(d)(4)(ii)(C)(1) through (5) and addresses content-related comments in that section-by-section analysis. PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 76783 commenters also noted in discussing electronic communications generally, many consumers are suspicious of communications from entities they do not know or recognize, such as debt collectors. Consumers may ignore or delete such communications without opening them and may be reluctant to click on any links they contain, including links to opt out of further communications. Indeed, as the Bureau noted in the proposal, several Federal agencies have warned consumers against clicking on links from unknown senders.294 The Bureau recognizes, as industry commenters noted, that creditors will incur a cost to send the opt-out notice. Some creditors may absorb these costs while others may seek to require debt collectors to absorb them. The Bureau notes, however, that debt collectors are not required to follow the procedures in § 1006.6(d)(4)(ii). A debt collector who deems the procedures too expensive may use the other procedures in § 1006.6(d)(4) or operate outside of the safe harbor. As to the consumer advocate commenter’s concern about enforceability, the Bureau reiterates that the final rule may be enforced against FDCPA debt collectors.295 The Bureau agrees that consumers may be reluctant to open emails from, or click on hyperlinks in emails from, unknown or untrusted sources. However, the Bureau determines that these concerns are less salient when a written or electronic communication comes from a recognized entity with which the consumer has an ongoing relationship, such as a creditor who has communicated with the consumer. For these reasons, the Bureau is finalizing § 1006.6(d)(4)(ii)(C) to provide that the 294 For example, the FTC advises consumers not to open links or attachments to emails they do not recognize, in order to prevent phishing and malware. See Fed. Trade Comm’n, How to Recognize and Avoid Phishing Scams (May 2019), https://www.consumer.ftc.gov/articles/howrecognize-and-avoid-phishing-scams; Fed. Trade Comm’n, Malware (Nov. 2015), https:// www.consumer.ftc.gov/articles/0011-malware. The FDIC offers consumers similar guidance. See Fed. Deposit Ins. Corp., Beware of Malware: Think Before You Click, https://www.fdic.gov/consumers/ consumer/news/cnwin16/malware.html (last updated Mar. 8, 2016). 295 Thus, if a debt collector relies on a creditor to take an action that a creditor does not actually take, such as sending an opt-out notice in compliance with § 1006.6(d)(4)(ii), the creditor generally would not be liable under the rule. But the rule still may be enforced against the debt collector. For example, a consumer could allege that, to the extent the debt collector’s procedures led it to rely on a creditor who did not send the opt-out notice, those procedures did not reasonably confirm and document that the debt collector communicated in accordance with § 1006.6(d)(4)(ii), and the debt collector is not entitled to a safe harbor from civil liability. E:\FR\FM\30NOR3.SGM 30NOR3 76784 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations creditor, and only the creditor, may send the opt-out notice. TKELLEY on DSKBCP9HB2PROD with RULES3 How the Opt-Out Notice May Be Provided Proposed § 1006.6(d)(3)(i)(B)(1) would not have permitted the creditor or the debt collector to send the notice to the specific email address the debt collector intended to use for future communications. Consumer advocate commenters generally did not address this limitation. Several industry commenters opposed it, arguing that it effectively would require a debt collector to establish right-party contact before providing the opt-out notice, which could require multiple calls to the consumer. These commenters also argued that the limitation could be confusing to consumers, who are used to receiving emails and clicking on unsubscribe links to stop future emails to that email address, not to prevent future emails to a different email address. The final rule does not include the requirement to send the opt-out notice other than to the email address the debt collector intends to use. The purpose of this requirement was to prevent a thirdparty disclosure of the opt-out notice itself. That concern was more salient under the proposal, which would have permitted debt collectors to send the opt-out notice. Because only creditors may provide the opt-out notice under the final rule and because the opt-out notice may be sent only to an email address the creditor used to communicate with the consumer about the account, the Bureau believes that the proposed requirement is unnecessary in the final rule. The final rule does, however, require the creditor to send the opt-out notice to an address the creditor obtained from the consumer and used to communicate with the consumer about the account. The purpose of this requirement is to help ensure that the consumer receives the opt-out notice.296 Form of Opt-Out Notice Proposed § 1006.6(d)(3)(i)(B)(1) would have required the creditor or the debt collector to provide clearly and conspicuously the information in the opt-out notice. It also would have permitted the notice to be provided orally, in writing, or electronically. Industry commenters generally did not address these delivery issues. A 296 As noted above, nothing prohibits a creditor from sending the opt-out notice to the email address the debt collector intends to use, and the Bureau expects that, for convenience, most creditors who send the notice electronically will send it to that email address. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 group of consumer advocate commenters appeared to support delivery of the opt-out notice by mail only. According to these commenters, telephone calls to consumers, particularly telephone calls from debt collectors, already involve multiple disclosures, and an opt-out notice related to electronic debt collection communications may be missed by consumers overwhelmed with other information. These commenters also asserted that consumers would be unlikely to listen to opt-out messages delivered by robocall, and they expressed concern that an opt-out notice delivered electronically might not be seen at all, particularly if blocked by a consumer’s spam filter. Final § 1006.6(d)(4)(ii)(C) retains the requirement that the information in the opt-out notice be clear and conspicuous. In addition, final § 1006.6(d)(4)(ii)(C) requires that the notice be delivered in writing or electronically, rather than orally (whether in a robocall or live conversation).297 Requiring that the notice be delivered in writing or electronically helps ensure that consumers can review the contents of the notice while making their opt-out decisions. The Bureau declines, however, to require that the opt-out notice be provided only by mail. The Bureau believes that the risk that a spam filter might block an opt-out notice was of greater concern under the proposal, which would have permitted debt collectors to send the opt-out notice. Under the final rule, however, the optout notice can be provided only by the creditor, a known sender, to an email address the creditor used to communicate with the consumer about the account, which should reduce the risk that an electronic notice would be flagged as spam.298 297 Because § 1006.6(d)(4)(ii)(C), unlike proposed § 1006.6(d)(3)(i)(B)(1), permits a creditor to send the opt-out notice to the specific email address the debt collector intends to use for future communications, the Bureau believes that there is less need to permit creditors to deliver the opt-out notice orally. 298 See, e.g., Google, Email Whitelists and Blacklists, https://support.google.com/a/answer/ 60752?hl=en(last visited Oct. 4, 2020) (identifying how users can block unknown senders); Yahoo!, Yahoo Mail Safety Guide, https://safety.yahoo.com/ SafetyGuides/Mail/index.htm (last visited Oct. 1, 2020) (same); AOL, Manage Spam and Privacy in AOL Mail, https://help.aol.com/articles/aol-mailspam-and-privacy (last visited Oct. 1, 2020) (same); Cf. Cade Metz, Google Says Its AI Catches 99.9 Percent of Gmail Spam, Wired, https:// www.wired.com/2015/07/google-says-ai-catches-999-percent-gmail-spam/ (July 9, 2015) (noting that, in 2015, Google’s false positive rate for spam—i.e., legitimate email misidentified as spam—was .05 percent). PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 Timing of Opt-Out Notice To ensure that consumers could make their opt-out decisions at a time reasonably contemporaneous with potential electronic debt collection communications, proposed § 1006.6(d)(3)(i)(B)(1) would have required the opt-out notice to be provided no more than 30 days before the debt collector engaged in debt collection communications by email. Consumer advocate commenters generally did not address this requirement. A few industry commenters supported the requirement as proposed; others asked that the period be lengthened or eliminated altogether. One industry commenter who called for eliminating the timing requirement argued that, once a debt is in collection, a consumer typically has ignored the creditor for 120 or 180 days. According to this commenter, such a consumer also is likely to ignore a notice sent from the creditor or the debt collector, so the timing requirement would serve no purpose. Another industry commenter argued that a timing requirement could interfere with the mortgage servicing practice of sending Real Estate Settlement Procedures Act of 1974 (RESPA) 299required transfer-of-servicing letters, also known as hello and goodbye letters, by email in some cases. This commenter suggested that, as long as a consumer has consented to receiving email communications from a prior servicer, the final rule should allow a new servicer to provide a hello letter by email if the email also includes the optout notice. Industry commenters who asked the Bureau to extend the 30-day period generally argued that 30 days is too little time for a creditor to send the consumer an opt-out notice and place the account with a debt collector, and for a debt collector to then process the file for collections and send an electronic communication. One such commenter asked the Bureau to adopt a 90-day period; another requested a 180day period. The Bureau determines that consumers should receive the opt-out notice at a time reasonably contemporaneous with potential debt collection communications. As discussed elsewhere, the Bureau believes that a notice provided by the creditor at account opening would generally not serve this goal because years may pass, and a consumer’s circumstances may change, between the time the consumer opens an account and the time a debt enters collections. 299 Public E:\FR\FM\30NOR3.SGM Law 93–533, 88 Stat. 1274 (1974). 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations In light of industry commenters’ concerns, however, final § 1006.6(d)(4)(ii)(C) does not contain a specific timing requirement. Instead, as discussed in the section-by-section analysis of § 1006.6(d)(4)(ii)(C)(1), the Bureau addresses the timing issue by requiring the opt-out notice to identify the debt collector to which the creditor has transferred or will transfer the debt. Creditors usually decide to whom they will transfer a debt close to the time they transfer it, which, in turn, is likely to be reasonably contemporaneous with the potential debt collection communication.300 For the reasons discussed above, the Bureau is finalizing § 1006.6(d)(4)(ii)(C), which provides that a debt collector may obtain a safe harbor from civil liability for an unintentional third-party disclosure if, among other things, before the debt collector used an email address to communicate with the consumer about the debt, the creditor sent a written or electronic notice, to an address the creditor obtained from the consumer and used to communicate with the consumer about the account, that clearly and conspicuously disclosed the information listed in § 1006.6(d)(4)(ii)(C)(1) through (5). The Bureau also is adopting new comments 6(d)(4)(ii)(C)–1 through –3 to clarify certain aspects of § 1006.6(d)(4)(ii)(C). Comment 6(d)(4)(ii)(C)–1 clarifies the requirement to provide the notice clearly and conspicuously.301 Comment 6(d)(4)(ii)(C)–2 provides sample language that a creditor may use to comply with § 1006.6(d)(4)(ii)(C). Comment 6(d)(4)(ii)(C)–3 clarifies that the opt-out notice may be contained in a larger communication that conveys other information, as long as the notice is clear and conspicuous.302 TKELLEY on DSKBCP9HB2PROD with RULES3 6(d)(4)(ii)(C)(1) Proposed § 1006.6(d)(3)(i)(B)(1) would have required the opt-out notice to 300 With respect to the industry commenter’s concern about sending transfer-of-servicing letters by email, the Bureau notes that § 1006.6(d)(4)(iii) includes procedures that servicers can use in that situation. The Bureau is not adopting the commenter’s suggested solution because, for the reasons discussed earlier in this section-by-section analysis, final § 1006.6(d)(4)(ii) requires the opt-out notice to come from the creditor. 301 This comment resembles proposed comment 6(d)(3)(i)(B)(1)–1, with modifications to reflect the fact that the final rule does not permit a creditor to deliver the opt-out notice orally. 302 Proposed comment 6(d)(3)(i)(B)(1)–3 would have clarified that a debt collector or a creditor may include the opt-out notice in the same communication as the opt-out notice described in proposed § 1006.42(d)(1) or (2), as applicable. As explained in the section-by-section analysis of final § 1006.42, the Bureau is not finalizing proposed § 1006.42(d). Accordingly, the Bureau is not adopting proposed comment 6(d)(3)(i)(B)(1)–3. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 contain the legal name of the debt collector to which the debt was being transferred. Commenters generally did not address this requirement. To harmonize the proposed requirement with the final rule’s approach that only the creditor may provide the opt-out notice, and to address the timing concerns discussed in the section-by-section analysis of § 1006.6(d)(4)(ii)(C), final § 1006.6(d)(4)(ii)(C)(1) retains the proposed requirement but modifies it to provide that the opt-out notice must disclose that the debt has been or will be transferred to the debt collector. Comment 6(d)(4)(ii)(C)(1)–1 clarifies that, to satisfy this requirement, the optout notice must identify the name of the specific debt collector to which the debt has been or will be transferred. The Bureau understands that most creditors do not know the precise debt collector to which they will transfer a debt until relatively close in time to the transfer. Moreover, the Bureau believes that, even among creditors who use only a single debt collector to collect their debts, or who otherwise know the identity of a debt collector well in advance, many would not send the optout notice before the consumer has become delinquent, because doing so could undermine the creditor’s relationship with the consumer. In addition, the Bureau anticipates that, to facilitate compliance with recordkeeping obligations imposed by other consumer protection statutes and regulations, many creditors will choose to send the opt-out notice close in time to the debt collector’s communication. The Bureau therefore finds that § 1006.6(d)(4)(ii)(C)(1)’s requirement to identify a specific debt collector will adequately ensure that the consumer receives the opt-out notice at a time reasonably contemporaneous with the proposed electronic communications, reducing the likelihood that the consumer’s circumstances will have changed by the time the debt collector communicates electronically. In addition, although consumers generally do not have pre-existing relationships with particular debt collectors, it is possible that some consumers, particularly those with multiple debts in collection, may have interacted with a particular debt collector in the past. Requiring the creditor to identify the debt collector by name in the opt-out notice allows such a consumer to make a more informed choice about whether to opt out of electronic communications. PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 76785 6(d)(4)(ii)(C)(2) Proposed § 1006.6(d)(3)(i)(B)(1) would have required the opt-out notice to contain the email address that the debt collector proposed to use for debt collection communications. The Bureau received no comments regarding this requirement and is finalizing it as § 1006.6(d)(4)(ii)(C)(2), which provides that the opt-out notice must disclose the email address and the fact that the debt collector might use the email address to communicate with the consumer about the debt. 6(d)(4)(ii)(C)(3) Proposed § 1006.6(d)(3)(i)(B)(1) would not have required the opt-out notice to disclose that others with access to the email address might see the debt collector’s communications. The Bureau believes that such a requirement would focus the consumer’s attention on the risk of third-party disclosure from debt collection communications and thereby help to address consumer advocates’ concerns, discussed elsewhere, that a consumer’s failure to opt out after receiving the opt-out notice might not reflect a consumer’s assessment of the risk of a third-party disclosure. For this reason, the Bureau is finalizing § 1006.6(d)(4)(ii)(C)(3) to provide that the opt-out notice must disclose that, if others have access to the email address, then it is possible they may see the emails. 6(d)(4)(ii)(C)(4) Proposed § 1006.6(d)(3)(i)(B)(1) would have required the opt-out notice to describe one or more methods that the consumer could use to opt out. As proposed, a debt collector could have employed any opt-out method—even a potentially inconvenient one—as long as it was disclosed in the notice. While commenters generally did not address this proposed requirement, the Bureau is finalizing it with modifications to ensure that the burden of opting out does not prevent or unduly hinder consumers who want to opt out from doing so. Specifically, final § 1006.6(d)(4)(ii)(C)(4) requires the optout notice to disclose instructions for a reasonable and simple method by which the consumer can opt out of a debt collector’s use of the email address identified in the opt-out notice. A reasonable-and-simple requirement, which is also used in the Bureau’s Regulation V,303 should help to ensure that a consumer who wishes to opt out is not deterred by the process of doing so. Comment 6(d)(4)(ii)(C)(4)–1 provides 303 12 E:\FR\FM\30NOR3.SGM CFR 1022.25. 30NOR3 76786 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations illustrative examples of opt-out methods that satisfy the reasonable-and-simple standard. TKELLEY on DSKBCP9HB2PROD with RULES3 6(d)(4)(ii)(C)(5) Proposed § 1006.6(d)(3)(i)(B)(1) would have required the opt-out notice to specify a reasonable period within which a consumer could opt out, but it did not define the term reasonable period. Several industry commenters opposed an opt-out period, arguing that a consumer who provided electronic contact information to a creditor at account opening has decided to communicate electronically and, for these consumers, an opt-out period would only delay the use of electronic communications. Other industry commenters warned that failing to define the term reasonable period would create legal uncertainty and litigation risk, thereby discouraging use of the safe harbor and, in turn, electronic communications in debt collection. These commenters suggested opt-out periods ranging between five and 14 days, variously noting that almost all requests to opt out would be received within the first week, that the CAN– SPAM Act requires covered entities to process email opt-out requests within 10 days,304 and that mortgage servicers must provide consumers at least 14 days to respond to an offer of loss mitigation in certain circumstances under the Bureau’s mortgage servicing rules.305 A group of consumer advocate commenters also urged the Bureau to define the term reasonable period, suggesting that an opt-out period of fewer than 30 days could result in consumer confusion given the 30-day validation period required by FDCPA section 809.306 The Bureau declines the suggestion to eliminate the opt-out period altogether. As explained in the section-by-section analysis of § 1006.6(d)(4)(i), a consumer’s decision to communicate electronically with a creditor does not, without more, suggest that the risk of third-party disclosure is particularly low. However, the Bureau agrees with industry and consumer advocate commenters about the need to define the opt-out period more clearly. Leaving the period undefined, or relying on a reasonableness requirement, could create legal uncertainty that could hamper the use of electronic communications in debt collection and 304 15 U.S.C. 7704(a)(4)(A); see also 84 FR 13115, 13118 (Apr. 4, 2019). 305 12 CFR 1024.41(e). 306 15 U.S.C. 1692g. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 make it harder for consumers to enforce their rights. Accordingly, the final rule specifies that the opt-out period must last at least 35 days from the date the opt-out notice is sent. In deciding to finalize a 35-day minimum opt-out period, the Bureau concluded that, consistent with FDCPA section 809, which affords consumers 30 days within which to exercise certain statutory rights, consumers should be afforded at least 30 days within which to inform the debt collector of a decision to opt out. The Bureau included an additional five days to account for the time it might take an opt-out notice to reach a consumer by mail.307 For the reasons discussed above, the Bureau is finalizing § 1006.6(d)(4)(ii)(C)(5), which requires the opt-out notice to disclose the date by which the debt collector or the creditor must receive the consumer’s request to opt out, which must be at least 35 days after the date the notice is sent. The Bureau may consider changing the 35day period in the future based on actual stakeholder experience with this provision.308 The Bureau also is adopting new comment 6(d)(4)(ii)(C)(5)– 1 to clarify that the opt-out notice may instruct the consumer to respond to the debt collector or to the creditor but not to both. The comment is meant to provide creditors and debt collectors with the flexibility to decide among themselves who will be responsible for receiving and processing opt-out requests, and to design the opt-out process accordingly.309 6(d)(4)(ii)(D) Proposed § 1006.6(d)(3)(i)(B)(2) provided that, for a debt collector to obtain a safe harbor from civil liability under the notice-and-opt-out method, the opt-out period must have expired, 307 The Bureau recognizes that, if a creditor sends the opt-out notice by email, a consumer might receive it instantaneously and read it soon thereafter. The Bureau notes, however, that some consumers, particularly those with limited internet access, do not check email regularly. Accordingly, a 35-day minimum period applies no matter how the opt-out notice is delivered. 308 The Bureau recognizes that the information in a validation notice is more extensive than the information in the opt-out notice, and that a consumer’s decision about how to engage with a debt collector in response to a validation notice may be more complex than a consumer’s decision about whether to communicate with a debt collector using a particular email account. 309 Proposed comment 6(d)(3)(i)(B)(1)–2 would have clarified that, if a creditor or a debt collector provides the opt-out notice orally, the creditor or the debt collector may require the consumer to make an opt-out decision during that same communication. Because final § 1006.6(d)(4)(ii) does not permit oral delivery of the opt-out notice, the Bureau is not finalizing proposed comment 6(d)(3)(i)(B)(1)–2. PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 and the consumer must not have opted out. Proposed comment 6(d)(3)(i)(B)(2)– 1 clarified that, notwithstanding the expiration of the § 1006.6(d)(3)(i)(B)(2) opt-out period, a consumer would remain free to request that a debt collector not use a particular email address, or not communicate using email generally, under proposed § 1006.14(h). For the reasons discussed below, the Bureau is finalizing proposed § 1006.6(d)(3)(i)(B)(2) as § 1006.6(d)(4)(ii)(D), largely as proposed but with non-substantive changes to reflect the revised organization and terminology in the final rule. The Bureau also is adopting new commentary for clarity and in response to feedback. First, an industry commenter raised a possible implementation issue regarding proposed § 1006.6(d)(3)(i)(B)(2), observing that, given the time necessary for an opt-out notice to reach a consumer and for the consumer to notify a debt collector of a decision to opt out, a debt collector acting in good faith may risk communicating with the consumer after the opt-out period ends but before receiving the consumer’s request to opt out. The commenter urged the Bureau to address this issue by creating a bright-line rule allowing for communication up to 45 days after the opt-out period ends. The Bureau believes that the commenter’s proposed solution entails an unnecessarily prolonged risk of third-party disclosure. After the opt-out period ends, a debt collector who sends an email to an email address pursuant to the procedures in § 1006.6(d)(4)(ii) remains within the safe harbor unless and until the debt collector receives the consumer’s request to opt out of emails to that email address. Once the debt collector receives such a request, future emails to that email address would not be protected by the safe harbor.310 Second, a group of consumer advocate commenters requested that the Bureau revise proposed comment 6(d)(3)(i)(B)(2)–1 to clarify that consumers can, even after the expiration 310 Moreover, future emails to that address would be covered by § 1006.14(h), which prohibits communicating or attempting to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person. See the section-by-section analysis of § 1006.14(h) and comment 14(h)(1)–1. Section 1006.14(h) would apply regardless of when the debt collector receives the consumer’s request to opt out, i.e., whether before or after the opt-out period ends. A debt collector who sends an email to an email address after receiving a consumer’s request to opt out under § 1006.6(d)(4)(ii) but before processing that request may have a bona fide error defense to civil liability under FDCPA section 813(c) with respect to unintentional violations of § 1006.14(h). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations of the opt-out period: (1) opt out of the debt collector’s use of an email address pursuant to § 1006.6(e); 311 and (2) cease communication under § 1006.6(c)(1).312 The Bureau is finalizing proposed comment 6(d)(3)(i)(B)(2)–1 as comment 6(d)(4)(ii)(D)–1, with revisions to incorporate these suggestions. Finally, industry commenters requested that the Bureau clarify whether a debt collector should treat a consumer’s request to opt out as a request to cease communication under § 1006.6(c)(1). A consumer’s request to opt out in response to an opt-out notice that identifies a particular email address to which debt collection communications may be sent is generally not a request to opt out of all communications. Accordingly, new comment 6(d)(4)(ii)(D)–2 clarifies that, in the absence of evidence that the consumer refuses to pay the debt or wants the debt collector to cease all communication with the consumer, a consumer’s request to opt out under § 1006.6(d)(4)(ii)(D) is not a request to cease all communication with respect to the debt under § 1006.6(c)(1). TKELLEY on DSKBCP9HB2PROD with RULES3 6(d)(4)(ii)(E) The notice-and-opt-out procedures in proposed § 1006.6(d)(3)(i)(B) would not have covered a debt collector who knew or should have known that the email address to which the debt collector sent an email was provided by the consumer’s employer. In support of this proposed limitation, the Bureau explained that employer-provided email addresses present a heightened risk of third-party disclosure because many employers have a legal right to read messages sent and received by employees on employer-provided email accounts, and some employers exercise that right. The Bureau expressed concern that, unlike a consumer’s affirmative decision to contact a debt collector using an employer-provided email address, a consumer’s failure to opt out of a debt collector’s use of an 311 Section 1006.6(e) requires a debt collector who communicates or attempts to communicate with a consumer electronically in connection with the collection of a debt using a specific email address, telephone number for text messages, or other electronic-medium address to include in such communication or attempt to communicate a clear and conspicuous statement describing a reasonable and simple method by which the consumer can opt out of further electronic communications or attempts to communicate by the debt collector to that address or telephone number. 312 Section 1006.6(c)(1) prohibits a debt collector from communicating or attempting to communicate further with a consumer with respect to a debt if the consumer notifies the debt collector in writing that the consumer refuses to pay the debt or the consumer wants the debt collector to cease further communication with the consumer. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 employer-provided email address after receiving an opt-out notice may not indicate that the consumer has assessed the risk of third-party disclosure to be low.313 Consumer advocate commenters generally supported the Bureau’s proposal to exclude employer-provided email addresses from the proposed notice-and-opt-out procedures, while industry commenters generally opposed it. Many industry commenters raised operational concerns, stating that there is generally no way to know whether an email address is employer provided. These commenters stated that no database of employer-provided email addresses exists, and that reviewing domain names is a labor-intensive and manual process, as well as insufficient to determine whether an address is employer provided. For example, an ‘‘.edu’’ domain name may indicate that a consumer is either a student or an employee of an educational institution. According to these commenters, because it is difficult to distinguish employerprovided email addresses from personal ones, excluding employer-provided email addresses from the notice-andopt-out procedures would create an implementation problem that would discourage debt collectors from using the procedures, thus stifling electronic communications and harming consumers. In addition to these operational concerns, industry commenters noted that consumers often disclose employerprovided email addresses to creditors, including on account-opening documents. According to these commenters, a consumer who has disclosed an employer-provided email address to a creditor has chosen to communicate about the account by email, and that choice should be honored even after the account is transferred to a debt collector. Conversely, these commenters argued, a consumer who does not want to receive debt collection communications on an employer-provided email account can decline to provide the creditor with such an email address. 313 Proposed § 1006.22(f)(3) would have prohibited a debt collector from communicating or attempting to communicate with a consumer using an email address that the debt collector knew or should have known was provided to the consumer by the consumer’s employer, unless the debt collector received directly from the consumer either prior consent to use that email address or an email from that email address. As discussed in the section-by-section analysis of final § 1006.22(f)(3), the Bureau is finalizing that provision with modifications. A debt collector who sends an email in conformity with § 1006.6(d)(4)(ii) complies with § 1006.22(f)(3). PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 76787 In addition, several industry commenters argued that, although the Bureau based its proposal to exclude employer-provided email addresses from the safe harbor on its belief that many employers have the right to monitor emails received on employerprovided accounts, the Bureau presented no evidence justifying that belief. Relatedly, an industry commenter argued that the Bureau’s concern about employer monitoring is misplaced because a personal email account may be monitored by a consumer’s commercial email provider. Industry commenters also argued that other proposed rule provisions—such as the requirement in proposed § 1006.6(e) to include, in all electronic communications, instructions for opting out of such communications—would sufficiently protect consumers who receive unwanted emails on employerprovided accounts. As the Bureau noted in the proposal, many employers have a legal right to read, and frequently do read, messages sent or received by employees on employer-provided email accounts.314 The Bureau disagrees that a debt collector who sends an email to an employer-provided email address should be entitled to a safe harbor from civil liability as long as the consumer provided that address to the creditor. As discussed in the section-by-section analysis of § 1006.6(d)(4)(i), a consumer’s decision to communicate by email with a creditor does not, without more, suggest that the risk of third-party disclosure is particularly low should a debt collector send an email to the same email address. Although the Bureau agrees that proposed § 1006.6(e)—which the Bureau is finalizing largely as proposed in final § 1006.6(e)—would help limit the risk of third-party disclosure by enabling consumers to opt 314 See 84 FR 23274, 23324 n.357 (May 21, 2019) (citing Am. Mgmt. Ass’n & ePolicy Inst., Electronic Monitoring and Surveillance 2007 Survey (2008), https://www.epolicyinstitute.com/2007-surveyresults (reporting that a survey of employers conducted in 2007 found that, among other things, 43 percent of employers monitored their employees’ email accounts and 66 percent of employers monitored their employees’ internet connection, with 45 percent of employers tracking the content, keystrokes, and time spent at the keyboard); Bingham v. Baycare Health Sys., No. 8:14–CV–73– T–23JSS, 2016 WL 3917513, at *4 (M.D. Fla. July 20, 2016) (collecting cases and concluding that ‘‘the majority of courts have found that an employee has no reasonable expectation of privacy in workplace emails when the employer’s policy limits personal use or otherwise restricts employees’ use of its system and notifies employees of its policy’’)); see generally Andrew Milam Jones, Employee Monitoring: An Overview of Technologies, Treatment, and Best Practices, 83 Tx. B.J. 98 (2020); Shawn Marie Boyne, Data Protection in the United States, 66 Am. J. Comp. L. 299, 313–14 (2018). E:\FR\FM\30NOR3.SGM 30NOR3 76788 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations out of electronic communications easily, the Bureau notes that the protection afforded by § 1006.6(e) is effective only after the debt collector has sent an email to the consumer and the consumer’s privacy interest has already been compromised. As for the observation that a personal email account may be monitored or scanned by a commercial email provider, the Bureau believes that monitoring by an employer is distinguishable from monitoring or scanning by a non-employer email provider. Congress and the courts have recognized that a consumer may suffer significant harm, including loss of employment, if an employer learns that the consumer has a debt in collection.315 Although some commercial email providers monitor or scan consumer email accounts to deliver targeted advertisements or services through associated applications,316 this type of activity generally does not threaten a consumer’s employment or reputation in the same way. The Bureau recognizes that distinguishing between employerprovided and personal email addresses TKELLEY on DSKBCP9HB2PROD with RULES3 315 S. Rep. No. 382, supra note 52, at 1699 (‘‘[A] debt collector may not contact third persons such as a consumer’s friends, neighbors, relatives, or employer. Such contacts are not legitimate collection practices and result in serious invasions of privacy, as well as the loss of jobs.’’); id. at 1696 (‘‘Collection abuse takes many forms, including . . . disclosing a consumer’s personal affairs to friends, neighbors, or an employer.’’); 122 Cong. Rec. H730707 (daily ed. July 19, 1976) (remarks of Rep. Annunzio on H. Rep. No. 13720) (Clearinghouse No. 31,059U) (‘‘Communication with a consumer at work or with his employer may work a tremendous hardship for a consumer because such calls can embarrass a consumer and can result in his losing a deserved promotion’’ and ‘‘[i]f a consumer loses his job, he is in a worse, not better, position to pay the debt.’’); Am. Fin. Servs. Ass’n v. Fed. Trade Comm’n, 767 F.2d 957, 974 (D.C. Cir. 1985) (upholding provision in the FTC’s Credit Practices Rule that prohibited certain wage assignments because, among other things, the rulemaking record showed that ‘‘employers tend to view the consumer’s failure to repay the debt as a sign of irresponsibility. As a consequence, many lose their jobs after wage assignments are filed. Even if the consumer retains the job, promotions, raises, and job assignments may be adversely affected.’’) (citing Credit Practices Rule, 49 FR 7740, 7758 (Mar. 1, 1984) (codified at 16 CFR 444)); Fed. Trade Comm’n v. LoanPointe, LLC, No. 2:10–CV– 225DAK, 2011 WL 4348304, at *6–8 (D. Utah Sept. 16, 2011) (holding that ‘‘Defendants’ practice of disclosing debts and the amount of the debts to consumers’ employers’’ violated the FDCPA and ‘‘qualifies as an unfair practice under the FTC Act’’), aff’d, 525 F. App’x 696 (10th Cir. 2013). 316 See, e.g., Jack Schofield, What’s the Best Email Service That Doesn’t Scan Emails for Ad Targeting, The Guardian (Apr. 19, 2018), https:// www.theguardian.com/technology/askjack/2018/ apr/19/whats-the-best-email-service-that-doesntscan-emails-for-ad-targeting; cf. Daisuke Wakabayashi, Google Will No Longer Scan Gmail for Ad Targeting, N.Y. Times (June 23, 2017), https://www.nytimes.com/2017/06/23/technology/ gmail-ads.html. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 presents a practical challenge for debt collectors. The Bureau is aware of no database of employer-provided email addresses that debt collectors can consult, and reviewing domain names will not always answer whether an email address is personal or employer provided. The Bureau finds, however, that most employer-provided email addresses have domain names that are not available to the general public and that it is relatively straightforward for a debt collector to distinguish domain names that are publicly available from those that are not. The Bureau also finds that, if employer-provided email addresses have domain names that are publicly available, it will be difficult (absent actual knowledge) for a debt collector to distinguish such an email address from a personal one. For these reasons, the Bureau is finalizing § 1006.6(d)(4)(ii)(E) to maintain the exclusion of most employer-provided email addresses from the notice-and-opt-out safe harbor, but also to clarify how debt collectors can distinguish between employerprovided and personal email addresses for purposes of satisfying the safe harbor. Specifically, § 1006.6(d)(4)(ii)(E) provides that a debt collector may obtain a safe harbor from civil liability for an unintentional third-party disclosure if, among other things, the debt collector communicated by sending an email to an email address with a domain name that is available for use by the general public, unless the debt collector knows the address is provided by the consumer’s employer. The Bureau believes that § 1006.6(d)(4)(ii)(E) effectively excludes most employerprovided email addresses from the notice-and-opt-out safe harbor, thereby largely avoiding the third-party disclosure risks associated with such addresses while imposing a manageable operational burden on debt collectors. To the extent a debt collector regards the limitation in § 1006.6(d)(4)(ii)(E) as overbroad—because, for example, it does not cover a debt collector who sends an email to an ‘‘.edu’’ address— the Bureau reiterates that a debt collector may communicate by email without following the procedures in § 1006.6(d)(4)(ii). Such a debt collector would, however, lose the protection of the safe harbor (unless the debt collector’s use of the email address otherwise satisfies the requirements of § 1006.6(d)(3)). The Bureau also is adopting new comments 6(d)(4)(ii)(E)–1 and –2 to clarify certain aspects of final § 1006.6(d)(4)(ii)(E). Comment 6(d)(4)(ii)(E)–1 clarifies that the domain name of an email address is available for PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 use by the general public when multiple members of the general public are permitted to use the same domain name, whether for free or through a paid subscription. Such a name includes, for example, john.doe@gmail.com and john.doe@yahoo.com. Such a name does not include one that is reserved for use by specific registrants, such as a domain name branded for use by a particular commercial entity (e.g., john.doe@ springsidemortgage.com) or reserved for particular types of institutions (e.g., john.doe@agency.gov, john.doe@ university.edu, or john.doe@ nonprofit.org). Comment 6(d)(4)(ii)(E)–2 clarifies that, for purposes of § 1006.6(d)(4)(ii)(E), a debt collector knows that an email address is provided by the consumer’s employer if any person has informed the debt collector that the address is employer provided. Comment 6(d)(4)(ii)(E)–2 further clarifies that § 1006.6(d)(4)(ii)(E) does not require a debt collector to conduct a manual review of consumer email addresses to determine whether an email address might be employer provided. 6(d)(4)(iii) Procedures Based on Communication by the Prior Debt Collector Proposed § 1006.6(d)(3)(i)(C) (the ‘‘creditor-or-prior-debt-collector-use’’ method) provided that a debt collector could obtain a safe harbor from civil liability for an unintentional third-party disclosure if, in addition to complying with § 1006.6(d)(3)(ii), the debt collector maintained procedures to reasonably confirm and document that: (1) The debt collector communicated with the consumer using a personal email address that the creditor or a prior debt collector obtained from the consumer to communicate about the debt; (2) the creditor or the prior debt collector recently sent communications about the debt to that email address; and (3) the consumer did not ask the creditor or the prior debt collector to stop such communications.317 Many consumer advocate commenters opposed proposed § 1006.6(d)(3)(i)(C) on the ground that, when consumers provide email addresses to creditors, they typically do not think about the 317 As noted, proposed § 1006.6(d)(3)(i)(C) would have applied to both email addresses and telephone numbers, but final § 1006.6(d)(4)(iii) applies only to email addresses. This section-by-section analysis therefore addresses proposed § 1006.6(d)(3)(i)(C) only with respect to comments that specifically discussed email addresses, or that did not distinguish between email addresses and telephone numbers. Comments received in response to proposed § 1006.6(d)(3)(i)(C) that discussed telephone numbers are addressed in the section-bysection analysis of § 1006.6(d)(5). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 possibilities that they will fail to make payments, that the account will be transferred to a debt collector, and that the debt collector will use the email address to communicate electronically. In addition, these commenters noted, years may pass, and a consumer’s circumstances may change, between the time a consumer provides an email address to a creditor and the time a debt collector uses that email address to try to collect a debt. Thus, according to these commenters, a consumer’s decision to provide an email address to a creditor says little about the risk of third-party disclosure if a debt collector uses that email address at some later date, and a debt collector who followed the procedures in proposed § 1006.6(d)(3)(i)(C) could not claim that it lacked reason to anticipate a thirdparty disclosure. The Bureau agrees with these concerns and notes that there are other reasons why a consumer might provide an email address to a creditor but not to a debt collector. For example, a consumer may conclude that the potential risk to a creditor’s reputation and the potential risk of losing the consumer as a customer—risks that may not exist, or that may exist to a lesser extent, for debt collectors—constrain the creditor from misusing the email address. The Bureau therefore declines to finalize a safe harbor based solely on the creditor’s prior use of an email address.318 For the reasons discussed below, however, the Bureau is finalizing other aspects of proposed § 1006.6(d)(3)(i)(C), with revisions, as § 1006.6(d)(4)(iii). First, like the proposal, the final rule provides a debt collector in certain circumstances with a safe harbor from civil liability for an unintentional thirdparty disclosure when sending an email to an email address obtained and used by a prior debt collector. However, unlike the proposal, a safe harbor is available under § 1006.6(d)(4)(iii) only if the debt collector uses an email address obtained by a prior debt collector in accordance with either § 1006.6(d)(4)(i) or (ii). As already discussed, the Bureau determines that an email address obtained by a debt collector pursuant to the procedures in § 1006.6(d)(4)(i) or (ii) presents a relatively low risk of 318 As discussed in the section-by-section analysis of § 1006.6(d)(4)(ii), however, the Bureau is strengthening the final notice-and-opt-out procedures by incorporating aspects of proposed § 1006.6(d)(3)(i)(C) into them, including by requiring the creditor to send the notice to an email address obtained from the consumer and used to communicate about the account. The Bureau discusses those aspects of proposed § 1006.6(d)(3)(i)(C), and public comments related to them, where relevant in the section-by-section analysis of § 1006.6(d)(4)(ii). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 unintentional third-party disclosure.319 Second, like the proposal, the final rule requires that a prior debt collector actually have communicated with the consumer about the debt using the email address the current debt collector intends to use.320 However, unlike the proposal, a safe harbor is available under § 1006.6(d)(4)(iii) only if the immediately prior debt collector—i.e., the debt collector immediately preceding the current one—used the email address to communicate with the consumer about the debt. A consumer’s personal circumstances may change over time, and limiting § 1006.6(d)(4)(iii) to email addresses used by the immediately prior debt collector decreases this risk in some circumstances. Third, the final rule requires that, for a debt collector to obtain a safe harbor from civil liability under § 1006.6(d)(4)(iii), the consumer must not have asked the immediately prior debt collector to stop using the email address for debt collection communications. Accordingly, final § 1006.6(d)(4)(iii) provides that a debt collector may obtain a safe harbor from civil liability for an unintentional third-party disclosure when sending an email to an email address if: (1) Any prior debt collector obtained the email address in accordance with § 1006.6(d)(4)(i) or (ii); (2) the immediately prior debt collector used the email address to communicate with the consumer about the debt; and (3) the consumer did not opt out of such communications.321 The Bureau is 319 Section 1006.6(d)(4)(ii), as noted, does not protect a debt collector who uses an email address that a debt collector knows is provided by a consumer’s employer. Section 1006.6(d)(4)(iii) does not include a similar prohibition. This is because a condition of § 1006.6(d)(4)(iii) is that the consumer not have opted out of the immediately prior debt collector’s use of the particular email address, a factor that, when satisfied, suggests that the risk of third-party disclosure is low if the later debt collector uses the email address. Therefore, a later debt collector may obtain a safe harbor from civil liability under § 1006.6(d)(4)(iii) even if it knows that the consumer’s email address is employer provided. 320 The final rule eliminates the proposed recency requirement for the same reasons discussed in the section-by-section analysis of § 1006.6(d)(4)(i)(A). 321 As noted in the section-by-section analysis of § 1006.6(d)(4)(ii)(C), an industry commenter expressed concern about how the procedures apply to the mortgage servicing practice of sending RESPA-required transfer-of-servicing letters, also known as hello and goodbye letters, by email. If a mortgage servicer who is an FDCPA debt collector sends such a hello letter, the debt collector may, under § 1006.6(d)(4)(iii), obtain a safe harbor from civil liability for an unintentional third-party disclosure if the debt collector sends the letter to an email address that any prior debt collector obtained in accordance with § 1006.6(d)(4)(i) or (ii), the immediately prior debt collector used the email address to communicate with the consumer, and the consumer did not opt out of such communications. PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 76789 adopting new comment 6(d)(4)(iii)–1 to clarify that, for purposes of § 1006.6(d)(4)(iii), the immediately prior debt collector is the debt collector immediately preceding the current debt collector. The Bureau also is adopting new comment 6(d)(4)(iii)–2 to provide examples illustrating the rule. 6(d)(5) Procedures for Telephone Numbers for Text Messages As noted above, the final rule reorganizes proposed § 1006.6(d)(3)(i) by separating email procedures and text message procedures. Final § 1006.6(d)(5) describes the procedures that a debt collector may use to obtain a safe harbor from civil liability for an unintentional third-party disclosure when communicating by text message. The final text message procedures are discussed in detail in the section-bysection analysis of § 1006.6(d)(5)(i) and (ii). Proposed Provisions Not Finalized The proposal identified opt-out procedures (proposed § 1006.6(d)(3)(i)(B)) and creditor-andprior-debt-collector-use procedures (proposed § 1006.6(d)(3)(i)(C)) that a debt collector could use to reduce the risk of liability for an unintentional third-party disclosure when sending emails or text messages to a consumer. The Bureau is not finalizing either set of procedures as to text messages. As discussed in the section-by-section analysis of § 1006.6(d)(5)(i), the practice of reassigning telephone numbers increases the risk of third-party disclosure when a debt collector sends a text message to a telephone number. The Bureau determines that the text message procedures it is finalizing in § 1006.6(d)(5)(i) and (ii)—which, as explained below, resemble an opt-in approach—address the risk posed by reassignment comprehensively. The Bureau will monitor debt collectors’ use of the text message procedures in § 1006.6(d)(5) and may revisit at a later date whether additional procedures, including procedures similar to those in final § 1006.6(d)(4)(ii) and (iii), can be designed to address the risk of thirdparty disclosure. Although the Bureau is not finalizing notice-and-opt-out or prior-use safe harbor procedures for text messages, the Bureau notes that the final rule does not prohibit debt collectors from communicating with consumers by text message outside of the safe harbors. 6(d)(5)(i) As proposed, § 1006.6(d)(3)(i)(A) (the ‘‘consumer-use’’ method) for text messages provided that a debt collector could obtain a safe harbor from civil E:\FR\FM\30NOR3.SGM 30NOR3 76790 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 liability for an unintentional third-party disclosure if, in addition to complying with § 1006.6(d)(3)(ii), the debt collector maintained procedures to reasonably confirm and document that the debt collector sent a text message to the consumer using a telephone number that the consumer recently used to contact the debt collector for purposes other than opting out of electronic communications.322 As discussed below, the Bureau is finalizing the proposed consumer-use method for text messages as § 1006.6(d)(5)(i), with modifications and additions to address comments received, and with revisions for clarity. The Bureau based the proposed consumer-use procedures for text messages on the same assumption as the proposed consumer-use procedures for email addresses, i.e., that a debt collector may not have a reason to anticipate a third-party disclosure when sending a text message to a telephone number that the consumer recently used to communicate with the debt collector. The Bureau reasoned that, as with email addresses, consumers generally are better positioned than debt collectors to determine if third parties have access to a particular telephone number for text messages.323 Feedback from industry and consumer advocate commenters regarding the Bureau’s reasoning was similar to feedback regarding the consumer-use procedures for email addresses, with industry generally supporting the Bureau’s reasoning and consumer advocates generally opposing it for the reasons discussed in the section-by-section analysis of § 1006.6(d)(4)(i). Also for the reasons discussed in that section-by-section analysis, the Bureau determines that a debt collector who sends a text message to a telephone number that the consumer has used to communicate with the debt collector by text message generally would lack reason to anticipate a third-party disclosure. However, for the reasons discussed in § 1006.14(h)(1), a debt collector could not continue to use a telephone number for text messages if the consumer asked 322 Proposed § 1006.6(d)(3)(i)(A) would have applied to both email addresses and telephone numbers for text messages, but final § 1006.6(d)(5)(i) only applies to telephone numbers for text messages. This section-by-section analysis therefore addresses proposed § 1006.6(d)(3)(i)(A) only with respect to comments that specifically discussed text messages. Comments received in response to proposed § 1006.6(d)(3)(i)(A) that discussed email addresses are addressed in the section-by-section analysis of § 1006.6(d)(4)(i). 323 See the section-by-section analysis of § 1006.6(d)(4)(i). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 the debt collector not to engage in such communications. An industry commenter and a group of consumer advocate commenters asked whether the proposed consumeruse method—which would have provided a safe harbor for text messages sent to a telephone number that the consumer had used ‘‘to contact’’ the debt collector—would protect a debt collector who sent a text message to a telephone number that the consumer had used to call (but not to text) the debt collector. The group of consumer advocate commenters argued that a call from a telephone number does not invite a text message to that number, while the industry commenter simply asked for clarification. Because a consumer who places a telephone call to a debt collector generally can control who listens to the conversation by initiating or engaging in the call in private, the Bureau does not believe that a consumer’s decision to call a debt collector, without more, generally suggests that the risk of third-party disclosure is low if the debt collector sends a text message to the same telephone number. Therefore, the text of § 1006.6(d)(5)(i), and new comment 6(d)(5)(i)–1, clarify that the consumeruse method for text messages does not apply if the consumer only used the telephone number to communicate with the debt collector about the debt by telephone call. An industry commenter asked whether, under the proposed consumeruse method, a debt collector would be protected from liability when responding to a consumer by text message if, after attempting to communicate with the consumer by telephone, the debt collector received a text message from the consumer asking ‘‘Who is this? What is this about? Please text me back.’’ The Bureau determines that a consumer who responds to a missed telephone call by sending a text message asking ‘‘who is this? what is this about?’’ and requesting a return text message likely does not know that the underlying communication or attempted communication was from a debt collector or related to a debt. Such a request therefore would not, without more, suggest that the risk of third-party disclosure is low if the debt collector responded by text message.324 For this reason, the Bureau is finalizing the consumer-use method for text messages with a clarification that it applies only if the consumer used the telephone 324 Nothing in the final rule prohibits a debt collector from communicating by text message in this scenario, although the Bureau notes that the prohibition in § 1006.6(d)(1) would apply. PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 number to communicate with the debt collector about the debt. Accordingly, § 1006.6(d)(5)(i) does not cover a debt collector who sends a text message to a consumer after receiving a text message from the consumer asking ‘‘Who is this? What is this about? Please text me back.’’ The Bureau received numerous comments regarding proposed § 1006.6(d)(3)(i)(A)’s recency requirement, i.e., the requirement that the consumer have recently used the telephone number to contact the debt collector. As discussed in the sectionby-section analysis of § 1006.6(d)(4)(i), multiple industry, consumer, and consumer advocate commenters confirmed the Bureau’s understanding, as discussed in the proposal, that telephone numbers are regularly reassigned. Consumer advocate commenters thus generally supported applying the recency requirement to telephone numbers, and industry commenters generally did not oppose doing so. Consumer advocate and industry commenters both argued, however, that the Bureau should define the term ‘‘recently,’’ with consumer advocates noting that a definition would better protect consumers and industry commenters noting that failing to define the term would create unnecessary litigation risk. A consumer advocate commenter urged the Bureau to define recent as within the past 30 days to reflect the month-to-month nature of many pay-as-you-go mobile telephone plans. This commenter also expressly opposed defining recent as within the past year, arguing that a period of this length fails to recognize that lowincome consumers in financial crisis may change telephone numbers multiple times in a single year. Some industry commenters argued that 30 days would adequately protect consumers while allowing debt collectors sufficient time to respond to consumer inquiries. A few industry commenters argued in favor of 60 days without explaining their reasoning, and others supported a one-year period. As discussed in the proposal, and as confirmed by commenters, millions of telephone numbers are disconnected and made available for reassignment each year, increasing the risk of thirdparty disclosure when a debt collector sends a text message.325 For this reason, the Bureau is finalizing a recency requirement as part of the consumer-use 325 See 84 FR 23274, 23301 (May 21, 2019) (noting that, according to a 2018 FCC notice of proposed rulemaking, 35 million telephone numbers are disconnected and made available for reassignment each year). E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations method for text messages. The Bureau agrees with commenters that the final rule should better define what constitutes ‘‘recently.’’ In this regard, the Bureau notes that the FCC has established a 45-day minimum aging period and a 90-day maximum aging period for telephone number reassignments.326 In other words, no fewer than 45 days and no more than 90 days may pass between the time a carrier disconnects a telephone number and the time it reassigns the number to a new consumer. The Bureau does not have reason to believe that a significant number of consumers have their telephone numbers disconnected the same day they contact a debt collector. Accordingly, the Bureau believes that basing the text message recency requirement on the 45-day minimumaging period would be unnecessarily restrictive. At the same time, because all disconnected telephone numbers must be reassigned within 90 days, the Bureau believes that basing the text message recency requirement on the 90day maximum aging period would not adequately address the risk of thirdparty disclosure posed by reassignment. The Bureau therefore is finalizing a 60day recency requirement as part of the consumer-use procedures for text messages. The Bureau finds that a 60day period will protect consumers against the risk of reassignment, facilitate the responsible use of text message communications in debt collection, and provide stakeholders with clarity. An alternative way to address the risk of third-party disclosure posed by the reassignment of telephone numbers is to require debt collectors to confirm that a telephone number belongs to a consumer before sending a text message to that number, such as by consulting a reliable third-party database. Indeed, several industry commenters urged the Bureau to incorporate the use of a thirdparty database into the procedures. For example, several industry commenters argued that debt collectors should receive a safe harbor from civil liability for an unintentional third-party disclosure when using any telephone number for text messages as long as the telephone number has recently been verified or validated as accurate. One industry commenter would have defined validated to mean that a debt collector had confirmed the accuracy of 326 See In re Advanced Methods to Target & Eliminate Unlawful Robocalls, 33 FCC Rcd. 12024, 12030–31 (Dec. 12, 2018) (citing 47 CFR 52.15(f)(1)(ii), 52.103(d)). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 the telephone number using a thirdparty database.327 The FCC has observed that, although commercial databases currently exist to help callers determine whether a telephone number has been reassigned, these databases are not comprehensive.328 For this reason, in December 2018, the FCC announced the creation of a new database to serve as a single, comprehensive source for determining whether a telephone number has been reassigned.329 The purpose of the database, known as the Reassigned Numbers Database, is to help curb the proliferation of unwanted telephone calls directed to reassigned telephone numbers.330 Once operational, the database will contain reassigned number information from each provider that obtains North American Numbering Plan U.S. geographic numbers and toll-free numbers.331 Users will be able to consult the database to determine whether a telephone number has been permanently disconnected since a particular date—such as the date the consumer last consented to communicate by text message or the date of the consumer’s most recent text message—and therefore no longer belongs to the consumer.332 If the database shows that a particular telephone number has been disconnected, then a debt collector has reason to anticipate that sending a text message to that number will result in a third-party disclosure. Thus, once operational, the FCC’s Reassigned Numbers Database can help debt collectors comply with FDCPA section 805(b) and the final rule’s prohibition on third-party disclosures. Accordingly, the final rule permits debt collectors sending text messages to use a complete and accurate database to verify that a particular telephone number continues to belong to the consumer. Debt collectors may rely either on this method or on the receipt of a recent text message from the consumer. Comment 6(d)(5)–1 clarifies 327 A consumer advocate commenter also proposed requiring debt collectors to verify consumers’ contact information before communicating electronically, but the commenter did not define the term verify, and it is possible the commenter was simply advocating for an opt-in system. 328 Reassigned Numbers Database (RND) Technical Requirements Document, 35 FCC Rcd. 38, ¶ 1.3 (Jan. 13, 2020) (observing that ‘‘[c]ommercial databases exist to aid callers, but these databases are not comprehensive’’); 33 FCC Rcd. at 12027 (observing that commercial databases ‘‘are not comprehensive’’). 329 33 FCC Rcd. at 12025. 330 Id. 331 Id. 332 Id. at 12029. PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 76791 that, for purposes of the consumer-use procedures, the FCC’s Reassigned Numbers Database qualifies as a complete and accurate database,333 as does any commercially available database that is substantially similar in terms of completeness and accuracy to the FCC’s Reassigned Numbers Database.334 The Bureau recognizes that, as a result of technological developments, debt collectors and others may develop new methods to confirm whether a telephone number has been reassigned, some of which may offer a level of certainty comparable to consulting a complete and accurate database. The Bureau will monitor the market for any such developments and consider whether to modify or expand the text message safe harbor procedures in the future. For the reasons discussed above, the Bureau is finalizing § 1006.6(d)(5)(i), which provides that a debt collector may obtain a safe harbor from civil liability for an unintentional third-party disclosure when sending a text message to a telephone number if the consumer used the telephone number to communicate with the debt collector about the debt by text message, the consumer has not since opted out of text message communications to that telephone number, and within the past 60 days either: (1) The consumer sent a text message to the debt collector from that telephone number; or (2) the debt collector confirmed, using a complete and accurate database, that the telephone number has not been reassigned from the consumer to another user since the date of the consumer’s most recent text message to the debt collector from that telephone number. As noted, the Bureau also is adopting new comment 6(d)(5)–1 to clarify the meaning of complete and accurate database, and new comment 6(d)(5)(i)–1 to clarify that § 1006.6(d)(5)(i) does not apply if the consumer used the telephone number to communicate with the debt collector about the debt only by telephone call. 333 The Bureau recognizes that the FCC’s Reassigned Numbers Database is not yet operational. Once it is operational, debt collectors may incorporate its use into their procedures under § 1006.6(d)(5)(i). 334 As noted, the FCC has observed that currently available commercial databases are not comprehensive. 33 FCC Rcd. at 12027. If a commercially available database that is substantially similar in terms of completeness and accuracy to the FCC’s Reassigned Numbers Database does exist or come into existence, debt collectors may incorporate its use into their procedures under § 1006.6(d)(5)(i). E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76792 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 6(d)(5)(ii) Several industry commenters requested that the Bureau expand the procedures in proposed § 1006.6(d)(3)(i)(A), or create new procedures, to protect a debt collector who communicates with a consumer by text message after receiving the consumer’s permission to do so. The Bureau believes that, if a consumer has consented to a debt collector’s use of a particular telephone number for text messages and has not withdrawn that consent, the debt collector generally does not have reason to anticipate that using the telephone number to communicate with the consumer by text message will lead to a third-party disclosure—as long as the debt collector has taken steps to confirm that the telephone number has not been reassigned.335 For this reason, the Bureau is finalizing § 1006.6(d)(5)(ii), which provides that a debt collector may obtain a safe harbor from civil liability for an unintentional third-party disclosure when sending a text message to a telephone number if the debt collector received directly from the consumer prior consent to use the telephone number to communicate with the consumer about the debt by text message, the consumer has not since withdrawn that consent, and within the past 60 days the debt collector either: (1) Obtained the prior consent or renewed consent from the consumer; or (2) confirmed, using a complete and accurate database, that the telephone number has not been reassigned from the consumer to another user since the date of the consumer’s most recent consent to use that telephone number to communicate about the debt by text message. The additional steps to confirm that the telephone number has not been reassigned are similar to those in § 1006.6(d)(5)(i), and, like those steps, are designed to increase the likelihood that the telephone number continues to belong to the consumer when the debt collector communicates by text message. As noted in the section-by-section analysis of § 1006.6(d)(5)(i), new comment 6(d)(5)–1 clarifies that the FCC’s Reassigned Numbers Database qualifies as a complete and accurate database for purposes of § 1006.6(d)(5)(ii), as does any commercially available database that is substantially similar in terms of completeness and accuracy to the FCC’s 335 The section-by-section analysis of § 1006.6(d)(4)(i) explains the basis for the Bureau’s belief that a debt collector generally does not have reason to anticipate a third-party disclosure when communicating by email with the consumer’s permission. The same explanation applies to text messages. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 Reassigned Numbers Database. The Bureau also is adopting new commentary to clarify the meaning of prior consent provided directly to a debt collector in the context of § 1006.6(d)(5)(ii). Specifically, new comment 6(d)(5)(ii)–1 refers to comment 6(d)(4)(i)(B)–1 for guidance concerning how a consumer may provide prior consent directly to a debt collector generally, and to comment 6(d)(4)(i)(B)– 2 for guidance concerning when a debt collector may treat a consumer who provides a telephone number for text messages as having provided prior consent directly to the debt collector. 6(e) Opt-Out Notice for Electronic Communications or Attempts To Communicate The use of electronic media for debt collection communications can further the interests of both consumers and debt collectors. As the Bureau explained in the proposal, however, electronic communications also pose potential consumer harms.336 One potential harm relates to consumer harassment. Because the marginal cost of transmitting electronic communications to consumers is low, particularly when compared to mail communications, debt collectors have less economic incentive to limit the number of such communications. Repeated or continuous debt collection communications can have the natural consequence of harassing, oppressing, or abusing the recipient.337 Another potential consumer harm relates to communication costs. As explained in the section-by-section analysis of § 1006.6(d)(3), consumers without unlimited text messaging plans may incur a charge each time they receive a text message, or each time they receive a text message that exceeds a specified limit. Some consumers without unlimited data plans also may incur a charge when they receive emails. A way to help consumers address potentially harassing or costly electronic communications is to provide them with a convenient way to opt out of 336 In this section-by-section analysis, the Bureau uses the phrase ‘‘electronic communication’’ to refer to emails, text messages, and other similar electronic communications that are readable. 337 As explained in the section-by-section analysis of § 1006.14(a), the general prohibition in § 1006.14(a) prohibits conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. In the final rule, the Bureau is adopting two comments to clarify that the general prohibition on harassing conduct applies to debt collectors’ use of communication media other than telephone calls, including cumulative communications involving telephone calls and other media. PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 such communications.338 Thus, proposed § 1006.6(e) would have required debt collectors to describe, clearly and conspicuously in every electronic communication, how consumers can opt out of receiving such communications directed at a specific email address, telephone number for text messages, or other electronicmedium address.339 It also would have prohibited a debt collector from requiring, directly or indirectly, that the consumer, to opt out, pay any fee to the debt collector or provide any information other than the email address, telephone number for text messages, or other electronic-medium address subject to the opt-out request. In response to feedback, the Bureau is finalizing proposed § 1006.6(e) with modifications for clarity as described below. Among other things, final § 1006.6(e) increases protection for consumers and increases clarity for debt collectors by specifying that the opt-out method debt collectors provide must be reasonable and simple. Opt-Out Concept in General Most industry commenters supported proposed § 1006.6(e) although, as explained below, many industry commenters also requested that the Bureau clarify certain aspects of the proposal. Several industry commenters appeared to oppose proposed § 1006.6(e) on the ground that it would make electronic communications more difficult, and one suggested that, instead of requiring debt collectors to provide opt-out instructions in each electronic 338 As the Bureau noted in the proposal, an optout requirement is consistent with several established public policies protecting consumers who receive electronic communications. For example, with respect to emails, the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN–SPAM) Act of 2003, 15 U.S.C. 7701 et seq., reflects a public policy in favor of providing consumers with a specific mechanism to opt out of certain email messages. See 15 U.S.C. 7704(a)(3) (requiring that commercial emails include a functioning return email address or other internet-based mechanism, clearly and conspicuously displayed, for the recipient to request not to receive future email messages from the sender at the address where the message was received); Fed. Trade Comm’n, CAN–SPAM Act: A Compliance Guide for Business (Sept. 2009), https://www.ftc.gov/tips-advice/business-center/ guidance/can-spam-act-compliance-guide-business (explaining that messages covered by the CAN– SPAM Act ‘‘must include a clear and conspicuous explanation of how the recipient can opt out of getting email from [the sender] in the future’’). In addition, the FTC’s regulations implementing the CAN–SPAM Act prohibit charging a fee or imposing other requirements on recipients who wish to opt out of certain email communications. 16 CFR 316.5. 339 See 84 FR 23274, 23304–06 (May 21, 2019). Proposed comment 6(e)–1 would have clarified the meaning of clear and conspicuous and provided examples of how to comply with proposed § 1006.6(e). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 communication, the Bureau should allow debt collectors to inform consumers periodically of the right to opt out, or in a standard notice on the debt collector’s website. The Bureau determines that periodically notifying consumers of the right to opt out, or requiring consumers to find and review a notice on a debt collector’s website, does not adequately protect consumers from potentially harassing and costly electronic communications. A consumer who finds electronic communications harassing or costly should not endure additional harassment or cost while waiting for a debt collector to explain how to opt out, and a consumer should not bear the burden and risk of locating, reviewing, and using an opt-out notice that appears only on a debt collector’s website. Nor does the Bureau believe that allowing consumers to opt out of electronic communications makes such communications more difficult. Presumably, many consumers who opt out of electronic communications with a debt collector would not respond to such communications even if opting out were difficult or impossible.340 Although, as discussed in the sectionby-section analysis of § 1006.6(d)(4), many consumer advocate commenters and multiple government and academic commenters urged the Bureau to adopt an opt-in system for electronic communications, they also supported allowing consumers to opt out of electronic communications once such communications have begun. These commenters argued that the ability to opt out of electronic communications is critical to prevent harassment, particularly because the Bureau did not include emails and texts messages in proposed § 1006.14(b)’s frequency limits.341 Consumer advocate 340 To the extent commenters asked the Bureau to clarify whether a creditor’s electronic communications must include opt-out instructions, the Bureau confirms that § 1006.6(e) applies only to FDCPA debt collectors. 341 One local government commenter argued that an opt-out approach for text messages effectively would permit an unfair debt collection practice. Specifically, the commenter argued that only an opt-in approach is consistent with FDCPA section 808(5), which prohibits a debt collector from causing charges to be made to any person for communications by concealment of the true purpose of the communication and provides, as an example, a consumer incurring collect telephone call charges because the debt collector concealed the true purpose of the call. While, as the commenter noted, the Bureau referred to FDCPA section 808(5) in the section-by-section analysis of proposed § 1006.6(e), the Bureau does not believe and did not mean to suggest that a debt collector necessarily violates FDCPA section 808(5) by sending a text message to a consumer with a limited text messaging plan. Rather, the Bureau believes that, as with any communication, a violation of FDCPA section 808(5) would require the debt collector to engage in concealment of the true VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 commenters also argued that enabling consumers to opt out of electronic communications is especially important for certain groups of consumers, such as those who are contacted using an employer-provided email address or telephone number and wish to end those contacts immediately, those who lack reliable access to a particular medium of electronic communication and therefore prefer to opt out of communications using that medium, and those who are contacted erroneously and prefer to opt out rather than to call the debt collector. However, many consumer and consumer advocate commenters, and several government and academic commenters, also expressed concern that proposed § 1006.6(e), on its own, would not sufficiently protect consumers from the risks of electronic debt collection communications. For example, some commenters noted that, if a consumer was worried about phishers and scammers, the consumer might be reluctant to exercise an opt-out right, particularly one that required clicking on a link or replying to an email or text message from an unknown sender. Other commenters expressed concern that a debt collector might not honor a consumer’s opt-out request, pointing to the difficulty reported by some consumers when trying to opt out of electronic communications outside of the debt collection context and to the Bureau’s consumer survey, which showed that 75 percent of surveyed consumers who asked a creditor or debt collector to stop contacting them (orally or in writing) reported that the creditor or debt collector attempted to contact them anyway.342 An academic commenter and a local government commenter also asserted that opt-out procedures generally create barriers to consumer action and that certain vulnerable populations, such as older consumers, might have difficulty navigating even relatively simply optout procedures. The Bureau determines that a way to address potentially harassing or costly purpose of the text message. The Bureau believes that a debt collector who communicates by text message pursuant to the procedures in § 1006.6(d)(5) would be unlikely to engage in such concealment. As explained further in the relevant section-by-section analysis, § 1006.6(d)(5) provides a safe harbor from civil liability to a debt collector who sends a text message to a telephone number only if, among other things, the consumer used the telephone number to send a text message to the debt collector or the consumer consented directly to the debt collector’s use of text messages. In both cases, the consumer has evidenced a familiarity with the debt collector and a willingness to communicate by text message. 342 See CFPB Debt Collection Consumer Survey, supra note 16, at 35. PO 00000 Frm 00061 Fmt 4701 Sfmt 4700 76793 electronic communications is to provide consumers with a convenient way to opt out of such communications. In response to concerns that the ability to opt out, on its own, does not sufficiently protect consumers from the risks of electronic communications, the Bureau notes that § 1006.6(e) is one of several provisions in the final rule designed to address those risks. For example, § 1006.6(d)(3) through (5) describes procedures to limit third-party disclosures when sending an email or text message; § 1006.14(a) prohibits a debt collector from communicating electronically in a manner that has the natural consequence of harassing, oppressing, or abusing any person in connection with the collection of a debt; § 1006.14(h) prohibits a debt collector from using a medium of communication if a person has requested that the debt collector not use that medium; and §§ 1006.18(d) and 1006.22(f)(4) include protections regarding debt collectors’ use of social media. Ease of Use of Opt-Out Instructions Many consumer and consumer advocate commenters, several academic commenters, a group of State Attorneys General, and other State and local government commenters noted that proposed § 1006.6(e) would have required a debt collector to describe how to opt out, but it would not have required the opt-out mechanism to take a particular form. For example, these commenters expressed concern that, as drafted, proposed § 1006.6(e) would have permitted a debt collector to construct a complicated opt-out mechanism, such as requiring a consumer to opt out by mail only, or by telephone call during particular hours. Several consumer advocate commenters observed that, even if a debt collector does not intend to make it difficult to opt out, an unnecessarily limited optout method may be problematic for some consumers. For example, if a debt collector inadvertently emailed a consumer at work, an opt-out method that required a return email from that email address could be problematic for a consumer whose employer-provided account is monitored and who would therefore prefer to contact the debt collector by telephone or through another communication medium. Similarly, if a debt collector required opt-out requests to be communicated by telephone during particular hours, those hours might not be convenient for a consumer. A group of State Attorneys General and a group of consumer advocate commenters argued that, in this respect, proposed § 1006.6(e) was less protective of consumers than other E:\FR\FM\30NOR3.SGM 30NOR3 76794 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 consumer protection laws and regulations. For example, the CAN– SPAM Act requires email marketers to provide a reply email or internet-based means by which an opt-out request may be sent by the consumer,343 and the FCC allows consumers to revoke consent under the TCPA in any manner that clearly expresses a desire not to receive further messages.344 Consumer, consumer advocate, government, and academic commenters who urged the Bureau to strengthen proposed § 1006.6(e) offered several suggestions. Many such commenters urged the Bureau to require a debt collector to accept an opt-out request in the same medium in which the debt collector communicated with the consumer and the opt-out instructions were delivered. Thus, for example, a consumer should be permitted to opt out of email communications by replying to a debt collector’s email. Other commenters urged the Bureau to require a debt collector to accept an optout request in any medium that the debt collector uses to communicate with consumers. Thus, for example, a debt collector who communicates with consumers by telephone, email, and mail would have to accept an opt-out request submitted by any of those methods, even if the request is in response to an email. Other commenters argued that the final rule should adopt a more general standard, such by as requiring debt collectors to allow consumers to opt out using any ‘‘convenient method’’ or any ‘‘reasonable method.’’ Relatedly, several consumer advocate commenters urged the Bureau to strengthen proposed § 1006.6(e) by elaborating generally on the procedural and disclosure requirements that debt collectors must follow. For example, a consumer advocate commenter urged the Bureau to require debt collectors to provide consumers with a hyperlink allowing them to opt out of electronic communications. A group of consumer advocate commenters urged the Bureau to require debt collectors to list all the ways a consumer may opt out of electronic communications, and to do so in textual rather than graphic format to ensure that the information is available to visually impaired consumers who use 343 See 15 U.S.C. 7704(a)(3)(A) (making it ‘‘unlawful for any person to initiate the transmission to a protected computer of a commercial electronic mail message that does not contain a functioning return electronic mail address or other internet-based mechanism’’). 344 See In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 30 FCC Rcd. 7961, 7996 (July 10, 2015), set aside in part by ACA Int’l v. Fed. Commc’ns Comm’n, 885 F.3d 687 (D.C. Cir. 2018). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 text reading tools and to consumers who use email programs that do not download graphics. Other commenters suggested that the Bureau require debt collectors to disclose that the right to opt out can be exercised at any time, and to ensure that the disclosure appears in the body of a communication where it can be seen without scrolling down. The Bureau agrees that the ability to opt out of electronic communications affords little protection if the costs to consumers of opting out prevent or unduly hinder them from making that choice. Accordingly, final § 1006.6(e) clarifies that a debt collector must describe a reasonable and simple method by which the consumer can opt out of further electronic communications or attempts to communicate by the debt collector to a particular electronic address or telephone number.345 The Bureau also is adopting commentary providing examples, informed by suggestions from commenters, of opt-out methods that comply with the reasonable-and-simple standard. Specifically, comment 6(e)–1 clarifies that, in the context of text message communications, the standard is satisfied if a consumer can opt out by replying ‘‘stop’’ to the debt collector. Comment 6(e)–1 also clarifies that, in the context of email communications, the standard is satisfied if a consumer can opt out by clicking on a link in the email or replying with the word ‘‘stop’’ in the subject line. The Bureau expects that most debt collectors will follow these examples when they communicate electronically with consumers. Permissible Fees and Required Information in Connection With OptOut Requests Proposed § 1006.6(e) would have prohibited a debt collector from requiring, directly or indirectly, that the consumer, in order to opt out, pay any fee to the debt collector. A group of consumer advocate commenters noted that, because this prohibition was limited to paying a fee to a debt collector, a debt collector could still require the consumer to pay a fee to a third party. For example, the commenters noted, proposed § 1006.6(e) would appear to have allowed debt collectors to require a certified letter to opt out, with the fee paid to the postal service. In addition, these commenters observed, a debt collector who requires consumers to send a text message to opt 345 As explained in the section-by-section analysis of § 1006.6(d)(4)(ii), the reasonable-andsimple standard also appears in the Bureau’s Regulation V. 12 CFR 1022.25. PO 00000 Frm 00062 Fmt 4701 Sfmt 4700 out would force consumers with limited text messaging plans to incur a charge, with the fee paid to the consumer’s telephone provider. An industry commenter recommended that debt collectors include, in all text messages to consumers, a statement that message rates may apply. Final § 1006.6(e) retains the prohibition on fees as proposed. The consumer advocate commenters’ concern about the cost of an opt-out notice sent by certified mail (and other similarly inconvenient media) is addressed by § 1006.6(e)’s reasonableand-simple requirement; an opt-out method that requires a consumer to use certified mail (which entails the consumer arranging for a special form of delivery that is costlier than ordinary mail and generally unwarranted under the circumstances) is not reasonable and simple. Section 1006.6(e) does not, however, prohibit a consumer from incurring a fee for sending an opt-out request by text message as long as such fee is not paid, directly or indirectly, to the debt collector. Because such a consumer has already expressed a willingness to incur the costs of text message communications, the Bureau does not believe it is necessary to prohibit consumers from incurring such costs in § 1006.6(e). And, as discussed in detail in the section-by-section analyses of §§ 1006.6(b)(1) and 1006.14(h), a consumer may control communications in other ways, including by, for example, informing a debt collector by telephone that the consumer does not want to receive text messages. The Bureau also does not believe it is necessary to require debt collectors to note, in text messages to consumers, that message rates may apply. The Bureau understands from consumer advocate commenters that consumers with limited text messaging plans generally are aware that they may be charged for text messages. Proposed § 1006.6(e) also would have prohibited a debt collector from requiring that the consumer, in order to opt out, provide any information other than the email address, telephone number for text messages, or other electronic-medium address subject to the opt-out request. Federal government agency staff encouraged the Bureau to ensure that this prohibition would not inadvertently prevent consumers from also sharing their opt-out preferences. The Bureau intended to allow debt collectors to solicit a consumer’s opt-out preferences, and the final rule expressly adds the consumer’s opt-out preferences to the list of information that a debt collector may require the consumer to provide. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 Processing Period for Opt-Out Requests Multiple industry commenters and one consumer advocate commenter requested that the Bureau specify the time period within which a debt collector would be required to process a consumer’s request to opt out. One industry commenter suggested that the Bureau require debt collectors to process opt-out requests within a ‘‘reasonable’’ period of time, while another industry commenter suggested a 72-hour processing period. Several industry commenters suggested a 10-day processing period, which is the period the FTC has set for processing opt-out requests under the CAN–SPAM Act. An industry commenter who presently communicates with consumers by email stated that it processes opt-out requests in less than 10 minutes, another industry commenter predicted that debt collectors would be able to process optout requests in 24 to 48 hours, and another industry commenter predicted that debt collectors would be able to process opt-out requests in fewer than 10 days. A consumer advocate commenter proposed a processing period of 24 hours, arguing that the frequency of some debt collection communications means that a short compliance period is necessary to ensure that a consumer’s opt-out request is honored. The Bureau recognizes that any maximum processing period for opt-out requests under § 1006.6(e) must be short enough to protect consumers from unwanted electronic communications but long enough for compliance to be practical. Given the disparate periods of time suggested by commenters, and the fact that few debt collectors communicate electronically and process electronic opt-out requests today, the final rule does not specify the period of time afforded a debt collector to process an opt-out request under § 1006.6(e). However, depending on the circumstances, a debt collector who unintentionally communicates with a consumer electronically after receiving a consumer’s request to opt out but before processing the request may have a bona fide error defense to civil liability under FDCPA section 813(c). For example, if a debt collector who schedules an email to be sent to a consumer later receives an opt-out request from the consumer but sends the previously scheduled email to the consumer before the request can be processed (notwithstanding the maintenance of procedures to avoid such an error), the debt collector may VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 have a bona fide error defense to civil liability under FDCPA section 813(c).346 Other Requests for Clarification The requirements of final § 1006.6(e), like the requirements of proposed § 1006.6(e), apply to all electronic communications using a specific email address, telephone number for text messages, or other electronic-medium address. A group of consumer advocate commenters expressed concern that direct messages sent using certain social media platforms—such as platforms that allow users to search by name rather than by email address, telephone number, or another account identifier— might not be covered by proposed § 1006.6(e) because those platforms may not use electronic-medium addresses. These commenters urged the Bureau to clarify that opt-out notices are required for all electronic communications. The language of § 1006.6(e) makes clear that it applies to all electronic communications, regardless of whether that particular form of electronic communication is specified in the rule. This includes direct messaging communications on social media and communications in an application on a website, mobile telephone, or computer. It also includes electronic communications using platforms that allow users to search by name or another identifier rather than by email address or telephone number. Several industry commenters asked the Bureau to clarify the scope of an optout request made under § 1006.6(e). For example, some industry commenters asked whether a § 1006.6(e) opt-out request applies to all of a consumer’s debts being collected by a particular debt collector or only to the specific debt about which the debt collector communicated. Other industry commenters asked whether a § 1006.6(e) opt-out request applies to all electronic communication media or only to the medium of electronic communication (or the particular address or telephone number) used by the debt collector to 346 Cf. Transworld Sys., Inc., 953 F.2d at 1036 (holding debt collector’s letter, mailed shortly after receiving consumer’s cease communication notification, constituted bona fide error where debt collector’s procedures were reasonably adapted to avoid such an error); ACB Receivables Mgmt., Inc., 15 F. Supp. 3d at 629 (denying bona fide error defense where debt collector communicated with consumer after receiving consumer’s cease communication notification but failed to present any evidence of redundancy or safeguards in its procedures to prevent such errors); Carrigan, 494 F. Supp. at 827 (denying bona fide error defense where debt collector communicated with consumer after receiving consumer’s cease communication notification but failed to provide evidence that it maintained proper procedures governing mail handling). PO 00000 Frm 00063 Fmt 4701 Sfmt 4700 76795 communicate with the consumer. Some industry commenters asked whether a § 1006.6(e) opt-out request should be treated as a request to cease all communication regardless of medium, while other industry commenters asked whether a consumer’s request that a debt collector cease sending text messages to a particular telephone number should also be treated as request to cease telephone calls to that number. A consumer advocate commenter and a local government commenter asked whether a § 1006.6(e) opt-out request made to one debt collector binds future debt collectors collecting the same debt. Consistent with proposed § 1006.6(e), final § 1006.6(e) requires a debt collector to describe how to opt out of further electronic communications or attempts to communicate by the debt collector to a particular address or telephone number. In general, the Bureau determines that a consumer who requests that a debt collector cease using a particular address or telephone number to communicate electronically about one of the consumer’s debts likely wishes the debt collector to cease using that particular address or telephone number to communicate about any other debt being collected by the debt collector. Comment 14(h)(1)–3.ii addresses this issue further. Moreover, absent evidence to the contrary, a consumer’s request to opt out of electronic communications to a particular address or telephone number is not a request to opt out of electronic communications to a different address or telephone number, a request to opt out of all electronic communications, or a request to opt out of communications altogether. A consumer who objects to receiving electronic communications sent to a particular address or telephone number (because, for example, that address or number has been provided by the consumer’s employer or is subject to usage fees) may not object to a debt collector’s use of a different address or number or to a debt collector’s use of a different medium of communication. Similarly, absent evidence to the contrary, a consumer’s request to opt out of text messages to a particular telephone number is not a request to opt out of telephone calls to that number. A consumer who objects to receiving text messages from a debt collector (because, for example, the consumer is charged for each such message) may not object to receiving telephone calls. Nor does a consumer’s request to opt out under § 1006.6(e) bind a subsequent debt E:\FR\FM\30NOR3.SGM 30NOR3 76796 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 collector.347 A consumer who objects to one debt collector’s use of electronic communications might not object to another debt collector’s use of such communications if, for example, the timing and frequency of the communications differ or the consumer’s personal circumstances have changed. In the proposal, the Bureau requested comment on whether to identify in the final rule a non-exclusive list of words or phrases—such as ‘‘stop,’’ ‘‘unsubscribe,’’ ‘‘end,’’ ‘‘quit,’’ or ‘‘cancel’’—that express an opt-out instruction. Several industry commenters requested that the final rule include such a list. Two industry commenters argued that the final rule should allow debt collectors to identify for consumers the exact words needed to opt out and that, if a consumer uses different words, a debt collector should have more time to process the request. Another industry commenter suggested that the Bureau identify an exclusive list of words that express an opt-out request. An industry commenter suggested that debt collectors should be required to treat only two words as expressing an opt-out instruction: ‘‘stop’’ and ‘‘opt out.’’ A group of consumer advocate commenters urged the Bureau to require debt collectors to honor standard optout phrases, such as ‘‘stop,’’ ‘‘unsubscribe,’’ ‘‘end,’’ ‘‘quit,’’ and ‘‘cancel.’’ The Bureau determines that words such as ‘‘stop,’’ ‘‘unsubscribe,’’ ‘‘end,’’ ‘‘quit,’’ or ‘‘cancel’’ generally express a consumer’s intent to opt out. But these are not the only words that express such an intent. A consumer may respond to a debt collector’s electronic communication with an email or text message that makes the consumer’s desire to opt out clear without using one of these words. Given the variety of ways in which a consumer may express an intent to opt out, the Bureau declines to identify an exclusive list of words that express such an intention. Conversely, a debt collector who 347 The Bureau notes, however, that, as explained above, § 1006.6(d)(4)(iii) provides that a debt collector may obtain a safe harbor from civil liability for an unintentional third-party disclosure when sending an email to an email address if: (1) Any prior debt collector obtained the email address in accordance § 1006.6(d)(4)(i) or (ii); (2) the immediately prior debt collector used the email address to communicate with the consumer about the debt; and (3) the consumer did not opt out of such communications. Thus, if a consumer opts out of the immediately prior debt collector’s use of an email address by following instructions provided pursuant to § 1006.6(e), a subsequent debt collector who uses that email address to communicate with the consumer would not be covered by § 1006.6(d)(4)(iii). Such a debt collector may, however, be covered by § 1006.6(d)(4)(i) or (ii). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 receives a request to ‘‘stop,’’ ‘‘unsubscribe,’’ ‘‘end,’’ ‘‘quit,’’ or ‘‘cancel’’ will be considered to have received an opt-out request even though the specific term the consumer used does not conform precisely to the optout instructions provided by the debt collector pursuant to § 1006.6(e). Proposed § 1006.6(e) would have required a debt collector to describe how to opt out clearly and conspicuously, and proposed comment 6(e)–1 would have clarified, among other things, that an email would comply with the clear and conspicuous requirement by including instructions in a textual format, in a type size no smaller than the other text in the email. Several industry and consumer advocate commenters requested that the Bureau elaborate on the clear and conspicuous requirement, including by specifying a minimum type size for instructions contained in emails and clarifying whether a font comparison to the rest of an email should exclude graphics, logos, or other non-substantive content within the message. Several industry commenters also urged the Bureau to provide model instructions that would satisfy the clear and conspicuous requirement. Final § 1006.6(e) retains the clear and conspicuous requirement. The Bureau also is adopting commentary that refers to comment 6(d)(4)(ii)(C)–1 for guidance on the meaning of clear and conspicuous and provides examples illustrating how to comply with the rule when sending a text message or email. The Bureau declines, however, to specify precisely where in an electronic communication the instructions required by § 1006.6(e) must be placed or how large the type size must be. Different debt collectors may design their electronic communications in different ways, and the Bureau does not believe it is necessary or warranted to specify such details, as long as the disclosure satisfies the clear and conspicuous standard. An industry commenter asked the Bureau to clarify whether a debt collector who receives an opt-out request under § 1006.6(e) may send the consumer a single reply to acknowledge the request and advise the consumer that the request applies only to the specific communication medium used by the debt collector and the specific debt being collected. The same commenter also asked the Bureau to provide model language. As noted above, and as comment 14(h)(1)–3.ii illustrates, a consumer’s request to opt out under § 1006.6(e) applies to any of the consumer’s debts being collected by the debt collector—not just the specific PO 00000 Frm 00064 Fmt 4701 Sfmt 4700 debt being collected. Further, although § 1006.14(h)(2)(i) permits a debt collector to send an electronic confirmation of a consumer’s request to opt out provided that the confirmation contains no information other than a statement confirming the person’s request and that the debt collector will honor it, the Bureau does not believe it is necessary or warranted to provide model language given the brevity of the communication. A group of consumer advocate commenters observed that, although proposed § 1006.6(e) would have required a debt collector to describe how to opt out of electronic communications directed to a particular address or telephone number, it would not have explicitly required the debt collector to honor such a request; instead, the requirement to honor an opt-out request would have appeared in proposed § 1006.14(h). The final rule retains the same structure, with the requirement to disclose an opt-out method appearing in § 1006.6(e) and the requirement to honor an opt-out request appearing in § 1006.14(h)(1). Section 1006.14(h)(1) broadly prohibits debt collectors from communicating or attempting to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person, and comment 14(h)(1)–3.ii illustrates that such a request includes an opt-out request made pursuant to the § 1006.6(e) instructions. Another consumer advocate commenter recommended that the Bureau permit consumers to provide debt collectors with a list of third parties who should not be contacted for any reason, including for location-call purposes. Although nothing in the final rule would prohibit a consumer from offering such a list or a debt collector from requesting or accepting such a list, the commenter’s request is outside the scope of this rulemaking. A local government commenter recommended that the Bureau require debt collectors to disclose to consumers additional information about how to limit debt collection communications. For example, the commenter suggested that the Bureau require debt collectors to disclose that consumers can cease all telephone communications or cease telephone communications to a particular number. As the Bureau noted in the proposal, § 1006.6(e) addresses a group of concerns that are unique to electronic communications and attempts to communicate. With respect to telephone calls in particular, consumers likely know how to ask debt E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations collectors to stop placing unwanted telephone calls; § 1006.14(h)(1) would require debt collectors to honor such requests; and the rebuttable presumptions established by § 1006.14(b)(2) would address the frequency of such calls. For these reasons, the Bureau declines the commenter’s suggestion to require debt collectors to provide more detailed information about how consumers may limit telephone communications. An industry commenter asked the Bureau to create an exception to § 1006.6(e) for electronic communications sent to an email address provided by the consumer to a court pursuant to a State’s e-filing rules, arguing that there may be a potential conflict with some State court e-filing rules. The Bureau declines the commenter’s request. As discussed above, § 1006.6(e) requires a debt collector to disclose an opt-out method, whereas § 1006.14(h)(1) requires a debt collector to honor an opt-out request. The Bureau believes that the situation raised by the commenter is addressed by final § 1006.14(h)(2)(iii), which provides that, notwithstanding the prohibition in § 1006.14(h)(1), a debt collector may, if required by applicable law, communicate or attempt to communicate with a person in connection with the collection of any debt using a medium that the person has requested the debt collector not use.348 For all of the reasons discussed above, the Bureau is finalizing § 1006.6(e), which provides that a debt collector who communicates or attempts to communicate with a consumer electronically in connection with the collection of a debt using a specific email address, telephone number for text messages, or other electronicmedium address must include in such communication or attempt to communicate a clear and conspicuous statement describing a reasonable and simple method by which the consumer can opt out of further electronic communications or attempts to communicate by the debt collector to that address or telephone number. Final § 1006.6(e) also provides that the debt collector may not require, directly or indirectly, that the consumer, in order to opt out, pay any fee to the debt collector or provide any information other than the consumer’s opt-out preferences and the email address, telephone number for text messages, or other electronic-medium address subject to the opt-out request. In addition, the Bureau is adopting comment 6(e)–1, 348 For additional discussion, see the section-bysection analysis of § 1006.14(h)(2)(iii). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 which refers to comment 6(d)(4)(ii)(C)– 1 for guidance on the meaning of clear and conspicuous and to comment 6(d)(4)(ii)(C)(4)–1 for guidance on the meaning of reasonable and simple, and provides examples illustrating the rule. The Bureau is finalizing § 1006.6(e) as an interpretation of FDCPA sections 806 and 808, pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors. FDCPA section 806 prohibits conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Because the marginal cost of transmitting electronic communications to consumers is low, particularly when compared to mail communications, debt collectors have less economic incentive to limit the number of such communications. As multiple consumer advocate commenters confirmed, a reasonable and simple mechanism to opt out allows some consumers to protect themselves from emails and text messages they believe are harassing, oppressive, or abusive. Section 1006.6(e) provides consumers with such a mechanism. FDCPA section 808 prohibits the use of unfair or unconscionable means to collect or attempt to collect any debt. It is unfair or unconscionable under the FDCPA for a debt collector to send a consumer an electronic communication, such as an email or text message, without providing a reasonable and simple method to opt out. Because the marginal cost of transmitting electronic communications to consumers is low, particularly when compared to mail communications, debt collectors have less economic incentive to limit the number of such communications. Moreover, as multiple consumer advocate commenters confirmed, for a consumer who does not maintain an unlimited data plan, emails and text messages can lead to charges the consumer does not want to incur. In the absence of a reasonable and simple optout method, a consumer who wants to unsubscribe from electronic communications may incur time and cost doing so. On balance, in the Bureau’s view, these costs to consumers do not outweigh the benefits to debt collectors of omitting opt-out instructions from electronic communications. The Bureau also is finalizing § 1006.6(e) pursuant to its authority under section 1032(a) of the Dodd-Frank Act to prescribe rules to ensure that the features of any consumer financial product or service are fully, accurately, and effectively disclosed to consumers PO 00000 Frm 00065 Fmt 4701 Sfmt 4700 76797 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. A consumer’s ability to opt out of electronic communications from a debt collector is a feature of debt collection, and the opt-out instructions required by proposed § 1006.6(e) disclose that feature to consumers. Section 1006.10 Acquisition of Location Information FDCPA section 804 imposes certain requirements and limitations on a debt collector who communicates with any person other than the consumer for the purpose of acquiring location information about the consumer.349 FDCPA section 803(7) defines the term location information.350 The Bureau proposed § 1006.10 to implement FDCPA sections 803(7) and 804.351 Proposed § 1006.10 generally mirrored the statute, with minor wording and organizational changes for clarity. In addition, proposed § 1006.10(c) would have clarified that proposed § 1006.14(b)’s limits on telephone calls also apply to location calls, and proposed comments 10(a)–1 and 10(b)(2)–1 would have clarified how § 1006.10 applies in the decedent debt context. The Bureau received two overarching comments regarding proposed § 1006.10. First, several consumer advocates recommended prohibiting any communications with third parties, including for location purposes. These commenters argued that such communications risk violating the privacy of consumers, subjecting the third parties to harassment, and giving domestic abusers the opportunity to learn details of a consumer’s financial situation or to manipulate the debt collector into revealing other private information about the consumer. The Bureau declines to adopt such a prohibition because FDCPA section 804 expressly allows debt collectors to contact third parties to seek location information and, as discussed below, includes restrictions on the form, content, and frequency of location communications that are specifically designed to protect consumers’ privacy and third parties from harassment. FDCPA section 805(c) provides that, subject to certain exceptions, if a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further 349 15 U.S.C. 1692b. U.S.C. 1692a(7). 351 See 84 FR 23274, 23307 (May 21, 2019). 350 15 E:\FR\FM\30NOR3.SGM 30NOR3 76798 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 communication with the consumer, the debt collector shall cease further communication with the consumer with respect to such debt.352 A group of State Attorneys General recommended giving third parties (i.e., parties who are not consumers under either FDCPA section 803(3) or 805(d)) the right to cease communications from debt collectors. The Bureau declines to include such a provision—which does not appear in the FDCPA and which the Bureau did not propose—in this final rule. However, several other provisions in the statute or the final rule (or both) apply to location communications and may provide third parties similar protection. For example, under the final rule, a third party’s request to never be contacted again is a factor that may rebut a debt collector’s presumption of compliance with § 1006.14(b)(1) and FDCPA section 806(5) when telephone call volume is at or below the levels specified in § 1006.14(b)(2)(i).353 Moreover, as discussed below, FDCPA section 804(3) and final § 1006.10(c) prohibit debt collectors from communicating more than once with a third party to seek location information unless requested to do so by such person, or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information. For these reasons, and for the reasons discussed below, the Bureau is finalizing proposed § 1006.10 largely as proposed, with minor changes for clarity. The Bureau is finalizing proposed § 1006.10 pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors and to interpret FDCPA section 804. 10(a) Definition Consistent with the statute, the Bureau proposed § 1006.10(a) to provide that location information means a consumer’s place of abode and telephone number at such place or the consumer’s place of employment. The Bureau received several comments on this proposed definition. Several industry commenters asked the Bureau to clarify that location information includes a consumer’s mobile telephone number and email address. Other commenters noted that proposed § 1006.10(a) mirrored the FDCPA section 803(7)’s disjunctive definition of location information, i.e., the consumer’s place of abode and 352 15 U.S.C. 1692c(c). the section-by-section analysis of § 1006.14(b)(2). 353 See VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 telephone number at such place, ‘‘or’’ the consumer’s place of employment. An industry commenter asked whether debt collectors could continue seeking one element of location information if they already had the other, while a consumer advocate asked the Bureau to clarify that possessing one element prohibits a debt collector from further location communications. Finally, consumer advocates recommended that the Bureau prohibit a debt collector from calling third parties under the pretense of gaining information that the debt collector already possesses. The Bureau declines to finalize the types of clarifications the commenters requested. The Bureau believes the definition of ‘‘location information’’ currently does not present a serious source of harm to consumers or burden to debt collectors. For example, the Bureau is unaware of significant recent litigation or enforcement actions concerning the definition of location information. While the Bureau understands that there may be some uncertainty regarding mobile telephone numbers and email addresses, the Bureau notes that nothing in the final rule prohibits a debt collector who is engaged in a permissible location communication from requesting other pieces of contact information for the consumer. Finally, the Bureau does not believe that it is necessary or warranted to provide additional interpretation regarding the pretext for location communications. The Bureau notes that § 1006.10(b) specifies that communications under this section must be ‘‘for the purpose of acquiring location information.’’ The Bureau will monitor this definitional issue for any potential consumer harm or compliance concerns and revisit at a later time if needed. 10(b) Form and Content of Location Communications The Bureau proposed § 1006.10(b) to implement the paragraphs of FDCPA section 804 that address the form and content of location communications.354 Proposed § 1006.10(b) generally mirrored the statute, and the Bureau received only a few comments addressing it. For the reasons discussed below, the Bureau is finalizing § 1006.10(b) as proposed. Two industry commenters expressed dissatisfaction with FDCPA section 804(1), proposed to be implemented as § 1006.10(b)(1), which requires that, during location communications, debt 354 See FDCPA section 804(1)–(2) and (4)–(6), 15 U.S.C. 1692b(1)–(2) and (4)–(6) (proposed as § 1006.10(b)(1) through (5)). PO 00000 Frm 00066 Fmt 4701 Sfmt 4700 collectors state, among other things, ‘‘that [they are] confirming or correcting location information’’ for the consumer. The commenters believed that such language reveals that the consumer owes a debt. A group of State Attorneys General asked the Bureau to adopt a broad interpretation of FDCPA section 804(5) (proposed to be implemented as § 1006.10(b)(4)). FDCPA section 804(5) restricts debt collectors from using any language or symbol in mailed location communications that indicates the debt collector is in the debt collection business. The commenter requested that the Bureau interpret this restriction as applying to location communications sent by media in addition to mail. The Bureau has considered these comments but declines to interpret the statutory requirement related to these provisions. The Bureau did not propose changes to these statutory provisions and concludes that additional information, including through public comment, would be advisable before adopting any such interpretations. One industry commenter asked for clarity on proposed § 1006.10(b)(5), which would have implemented FDCPA section 804(6), and provided, in relevant part that, if a debt collector knows that a consumer is represented by an attorney, the debt collector must not communicate with any person other than the attorney, unless the attorney fails to respond ‘‘within a reasonable period of time.’’ The commenter asked the Bureau to clarify the meaning of a ‘‘reasonable period of time.’’ The Bureau believes that reasonableness generally depends upon the facts and circumstances surrounding a debt collector’s communications with a consumer’s attorney. Accordingly, the Bureau declines to identify a blanket period of time after which all communications with persons other than a consumer’s attorney are permissible in all cases. Finally, in its Policy Statement on Decedent Debt, the FTC stated that it would refrain from taking enforcement action under FDCPA section 804(2) against debt collectors who state that they are seeking to locate a person ‘‘with the authority to pay any outstanding bills of the decedent out of the decedent’s estate.’’ 355 The Bureau requested comment on the language debt collectors may use to locate a person handling the decedent’s affairs in the FTC’s Policy Statement (‘‘with the authority to pay any outstanding bills of the decedent out of the decedent’s estate’’) compared to proposed comment 355 FTC Policy Statement on Decedent Debt, supra note 157, at 44918–23. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 76799 10(b)(2)–1 (‘‘authorized to act on behalf of the deceased consumer’s estate’’). An industry commenter supported the Bureau’s language, while a trade group commenter and a group of consumer advocates stated that they had no concerns with the proposal. Several commenters, however, preferred that debt collectors use other language to locate the person authorized to act on behalf of the deceased consumer’s estate. Most of these commenters preferred the FTC’s language for several reasons, including that some individuals might be authorized to act on behalf of the estate only in limited ways that do not involve paying the deceased consumer’s debts; that the privacy interests the FDCPA aimed to protect were lower in the decedent debt context; and that referring to the authority to act on behalf of the estate was likely to prompt clarifying questions that might reveal that the consumer owes a debt. One industry commenter stated that it asked for the person ‘‘handling the financial affairs’’ of the deceased consumer and that the Bureau should adopt this language. A trade group commenter asked the Bureau to allow debt collectors to use the FTC’s language in response to follow-up questions during a location communication, while another trade group commenter suggested that the rule allow both the FTC’s and the Bureau’s language. The Bureau understands commenters’ policy arguments but remains concerned about the phrase ‘‘outstanding bills’’ from the FTC’s Policy Statement. FDCPA section 803(5) defines debt broadly to include ‘‘any obligation or alleged obligation of a consumer to pay money arising out of a transaction . . . primarily for personal, family, or household purposes.’’ 356 Because the definition is not limited to delinquent or defaulted obligations, even references to outstanding bills may reveal that the consumer owes a debt under the FDCPA. Accordingly, the Bureau is finalizing comment 10(b)(2)– 1, in relevant part, as proposed. To increase flexibility, final comment 10(b)(2)–1 also permits debt collectors to identify the person authorized to act on behalf of the deceased consumer’s estate as the person handling the financial affairs of the deceased consumer because the Bureau notes that this language is also unlikely to reveal the existence of a debt. Two commenters made additional suggestions. A trade group commenter requested that the Bureau exempt location communications from the definition of communication in the decedent debt context. And consumer advocates asked the Bureau to require debt collectors to check whether public records listed an executor or administrator, and if so, to prohibit communications with anyone other than that individual. The Bureau declines to interpret communications so as not to include any location communications in the decedent debt context. The Bureau also declines to adopt a requirement to check public records. The Bureau supports the FTC’s encouragement for debt collectors to make good-faith efforts to search public records before communicating with a deceased consumer’s estate.357 Nevertheless, the Bureau concludes that final § 1006.10’s provisions regulating location communications, combined with final § 1006.6(a)’s restrictions on the individuals with whom debt collectors may communicate, provides sufficient restrictions on communications consistent with the statutory provisions, without the need for definitional changes or new record-checking requirements. For the reasons discussed above, the Bureau is finalizing § 1006.10 and comments 10(a)–1 and 10(b)(2)–1 largely as proposed, with minor changes for clarity. Comment 10(a)–1 provides that, if a consumer obligated or allegedly obligated to pay any debt is deceased, location information includes the information described in § 1006.10(a) for a person who is authorized to act on behalf of the deceased consumer’s estate, as described in § 1006.6(a)(4) and its associated commentary. Comment 10(b)(2)–1 provides that, if the consumer obligated or allegedly obligated to pay the debt is deceased, and the debt collector is attempting to locate the person who is authorized to act on behalf of the deceased consumer’s estate, the debt collector does not violate § 1006.10(b)(2) by stating that the debt collector is seeking to identify and locate the person who is authorized to act on behalf of the deceased consumer’s estate. The debt collector may also state that the debt collector is seeking to identify and locate the person handling the financial affairs of the deceased consumer. must not communicate with a person for the purpose of obtaining location information more than once, unless the debt collector reasonably believes that the person’s earlier response was erroneous or incomplete and that the person now has correct or complete information. Proposed § 1006.10(c) also specified that debt collectors engaging in location communications by telephone must comply with the telephone frequency limits in § 1006.14(b). A government commenter and several consumers and consumer advocates objected to the proposal to apply the same frequency limits to location calls as to telephone calls generally (i.e., up to seven unanswered telephone calls to a person during a seven-day period).358 These commenters stated that the proposed frequency limits were too high for any person, but especially for third parties receiving location calls, who may be more likely to find such calls harassing because they do not owe the debt. Consumer advocates also suggested that third parties were unlikely to answer location telephone calls and therefore would not receive the benefit of proposed § 1006.10(c)’s restriction on debt collectors communicating more than once with third parties for location information purposes. Some of these commenters proposed various alternative frequency limits, such as one attempt per third party per week. The Bureau declines to revise § 1006.10(c) to set forth unique telephone calling frequencies for third parties. As discussed in the section-bysection analysis of § 1006.14, the Bureau finds that the frequency standards described in that section are appropriate for third parties as well as consumers. Moreover, as discussed above, debt collectors’ telephone calls to third parties are cabined by the general statutory prohibition, implemented in § 1006.6(d), against communicating with third parties unless they have the purpose of obtaining location information. The Bureau acknowledges that, as suggested by some consumer advocates, some third parties could receive excess telephone calls. The Bureau is not aware, however, that debt collectors are routinely or successfully claiming in litigation or enforcement 10(c) Frequency of Location Communications Proposed § 1006.10(c) would have implemented FDCPA section 804(3), which provides that a debt collector 356 15 U.S.C. 1692a(5). See also the section-bysection analysis of § 1006.2(h). 357 FTC Policy Statement on Decedent Debt, supra note 157, at 44919–20. 358 Specifically, proposed § 1006.14(b) provided a bright-line rule that a debt collector does not violate FDCPA section 806(5)’s prohibition against repeated or continuous telephone calls if the debt collector places seven or fewer telephone calls to a person about a debt during a seven-day period (and does not place another telephone call to the person after having had a telephone conversation with the person during the seven-day period). 84 FR 23274, 23401 (May 21, 2019). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 76800 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations actions that such telephone calls are properly placed for the purpose of acquiring location information and consistent with the prohibition against communicating more than once with a third party to seek location information. Finally, location communications are subject to § 1006.14’s general prohibition on harassing, oppressive, or abusive conduct. Section 1006.14 Harassing, Oppressive, or Abusive Conduct FDCPA section 806 359 prohibits a debt collector from engaging in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. It lists six nonexhaustive examples of such prohibited conduct. The Bureau proposed § 1006.14 to implement and interpret FDCPA section 806.360 Except with respect to § 1006.14(b) and (h), proposed § 1006.14 generally restated the statute, with only minor wording and organizational changes for clarity. The following section-by-section analyses summarize and address comments related to proposed § 1006.14(a), (b), and (h). Apart from one comment related to proposed § 1006.14(g) that does not require any changes to regulation text or commentary,361 the Bureau did not receive feedback specifically addressing proposed § 1006.14(c) through (g) and therefore is finalizing these paragraphs as proposed. The Bureau is finalizing § 1006.14 pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors, as well as pursuant to its authority to implement and interpret FDCPA section 806. The Bureau notes that it received many comments from individual and consumer advocate commenters 359 15 U.S.C. 1692d. 84 FR 23274, 23307–22 (May 21, 2019). 361 The commenter requested guidance on a debt collector’s responsibility to identify the person the debt collector has reached during a telephone call (i.e., whether the debt collector has reached, or is being contacted by, the consumer or a third party). The commenter noted that this question is relevant to complying with the requirement under FDCPA section 806(6) (proposed as § 1006.14(g)) to meaningfully disclose, except with respect to location information calls, the debt collector’s identity on telephone calls, as well as with respect to other requirements and prohibitions under the FDCPA and the regulation (as proposed). In response to this comment, the Bureau confirms that there are a number of contexts, including the meaningful disclosure of identity provision, in which the statute (and final rule) requires a debt collector to determine the identity of the person to whom the debt collector is speaking; the Bureau declines to provide detailed guidance as to how debt collectors should make such a determination. TKELLEY on DSKBCP9HB2PROD with RULES3 360 See VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 describing harassing conduct that they or their clients have experienced by debt collectors. For example, some commenters stated that they are afraid to answer telephone calls because debt collectors have called them repeatedly and used profane language. Other commenters described feeling shame when debt collectors disclosed information to neighbors and friends about debts they allegedly owed. Commenters described debt collectors threatening them with criminal prosecution or bodily harm if they did not pay an alleged debt immediately. Some commenters explained that these types of behaviors by debt collectors cause them stress that manifests into physical symptoms such as increased blood pressure, heavy breathing, pain, and loss of sleep. The Bureau emphasizes that the conduct described by commenters above is prohibited by FDCPA section 806 and final § 1006.14, even if specific examples of such conduct are not discussed in the regulation text or commentary. 14(a) In General As noted, FDCPA section 806 generally prohibits a debt collector from engaging in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt, and FDCPA section 806(1) through (6) lists six non-exhaustive examples of such prohibited conduct. Proposed § 1006.14(a) would have largely restated FDCPA section 806.362 For the reasons discussed below, the Bureau is finalizing § 1006.14(a) generally as proposed but is adopting new comments 14(a)–1 and –2 in response to feedback requesting clarity about its scope. The Bureau received a number of comments requesting clarification about the scope of FDCPA section 806 as it would have been implemented in proposed § 1006.14(a). For example, a group of consumer advocates asked that the Bureau include in the rule text or commentary the statement the Bureau made in the preamble to the proposal that § 1006.14(a) applies to communication media other than telephone calls. The same group of consumer advocates asked the Bureau to clarify that § 1006.14(a) applies based on the cumulative effect of a debt collector’s conduct across multiple communication media. An industry commenter asked the Bureau to confirm the opposite—i.e., that § 1006.14(a) applies separately to each communication method used by the debt collector. 362 See PO 00000 84 FR 23274, 23307 (May 21, 2019). Frm 00068 Fmt 4701 Sfmt 4700 In light of these comments, the Bureau is adopting two comments to clarify that the general prohibition on harassing conduct in FDCPA section 806, as implemented in § 1006.14(a), applies whether debt collectors place telephone calls or use other communication media. In addition, the comments clarify that all communication media are analyzed individually as well as cumulatively.363 Comment 14(a)–1 clarifies that § 1006.14(a), which implements FDCPA section 806, sets forth a general standard that prohibits a debt collector from engaging in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. The comment clarifies, further, that the general prohibition covers the specific conduct described in § 1006.14(b) through (h), as well as any conduct by the debt collector that is not specifically prohibited by § 1006.14(b) through (h) but that the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. The comment explains that the conduct can occur regardless of the communication media the debt collector uses, including inperson interactions, telephone calls, audio recordings, paper documents, mail, email, text messages, social media, or other electronic media, even if not specifically addressed by § 1006.14(b) through (h). Comment 14(a)–1 also includes an example involving a scenario in which, in connection with the collection of a debt: A debt collector sends a consumer numerous, unsolicited text messages per day for several consecutive days; the consumer does not respond; the debt collector does not communicate or attempt to communicate with the consumer using any other communication medium; and that, by sending the text messages, the debt collector has not violated § 1006.14(b) through (h). The comment clarifies that even though the debt collector has not violated any specific prohibition under § 1006.14(b) through (h), it is likely that the natural consequence of the debt collector’s text messages is to harass, 363 As provided for in comment 14(b)(1)–1, a debt collector who complies with § 1006.14(b)(1) and FDCPA section 806(5) complies with § 1006.14(a) and FDCPA section 806 solely with respect to the frequency of its telephone calls. When a debt collector both places telephone calls and uses at least one other type of communication media, compliance with § 1006.14(a) depends on the whether the cumulative communications involving telephone calls and any other communication media have the natural consequence of harassing, oppressing, or abusing any person in connection with the collection of a debt. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations oppress, or abuse the person receiving them and that when such natural consequence occurs, the debt collector has violated § 1006.14(a) and FDCPA section 806. Comment 14(a)–2 addresses cumulative communications by the debt collector, and clarifies that, depending on the facts and circumstances, conduct that on its own would violate neither the general prohibition in § 1006.14(a), nor any specific prohibition in § 1006.14(b) through (h), nonetheless may violate § 1006.14(a) when such conduct is evaluated cumulatively with other conduct. The comment further clarifies that such conduct can occur through any communication medium the debt collector uses, including inperson interactions, telephone calls, audio recordings, paper documents, mail, email, text messages, social media, or other electronic media. The comment then provides an example in which the debt collector places seven unanswered telephone calls within seven consecutive days to a consumer in connection with the collection of a debt and, during the same time period, sends multiple additional unsolicited emails about the debt to the consumer, to which the consumer does not respond. The comment notes that it is likely that the natural consequence of the cumulative effect of the debt collector’s telephone calls and emails is to harass, oppress, or abuse the person receiving them; when such natural consequence occurs, the debt collector has violated § 1006.14(a) and FDCPA section 806. The Bureau notes that, as discussed in the section-by-section analysis of § 1006.14(b) setting forth the Bureau’s final rule regarding telephone call frequencies, the Bureau received thousands of comments from consumers, consumer advocates, a local government, a group of State Attorneys General, members of Congress, and other commenters expressing concern that the proposal—which included numeric limits for debt collection telephone calls but did not include numeric limits for debt collection contacts through other communication media—would have allowed debt collectors to send excessive or unlimited text messages and emails, or otherwise inundate consumers with these electronic communications. Some commenters expressed concern, for example, that debt collectors would program their systems to send multiple emails per second and cause consumers’ data and text messaging plans to be maxed out, preventing consumers from using their devices. The Bureau understands that few debt collectors currently send electronic VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 communications, and the Bureau is not aware of these debt collectors sending excessive electronic communications. Even if, as a result of this final rule, debt collectors choose to send electronic communications more frequently than they currently do, the Bureau does not believe that sending excessive electronic communications, including by programming systems to send multiple emails per second, generally would be a profitable strategy for debt collectors. Additionally, this type of conduct would undoubtedly harm consumers. It would not have been permitted by the proposal and is not permitted by the final rule. FDCPA section 806, as implemented by § 1006.14(a), covers, among other things, the debt collector’s use of any communication medium in connection with the collection of a debt. Consequently, a debt collector would violate the FDCPA and Regulation F by sending text messages or emails, making social media posts, or the like, if the natural consequence of that conduct is to harass, oppress, or abuse any person in connection with the collection of a debt. New final comments 14(a)–1 and –2 further clarify this point. Finally, the Bureau received a request to clarify that § 1006.14(a) applies even if a consumer does not opt out of receiving electronic debt collection communications or communication attempts pursuant to the instructions in § 1006.6(e) or exercise the right to request that the debt collector stop using a particular communication medium under § 1006.14(h). The Bureau affirms that it does. Sections 1006.6(e) 364 and 1006.14(h) 365 provide consumers with tools to limit or stop debt collectors from communicating or attempting to communicate with them.366 Regardless of whether a consumer uses such tools, the final rule prohibits a debt collector 364 Pursuant to § 1006.6(e), a debt collector who communicates or attempts to communicate with a consumer electronically in connection with the collection of a debt using a specific email address, telephone number for text messages, or other electronic-medium address must include in such communication or attempt to communicate a clear and conspicuous statement describing a reasonable and simple method by which the consumer can opt out of further electronic communications or attempts to communicate by the debt collector to that address or telephone number. 365 Section 1006.14(h)(1) provides that, in connection with the collection of any debt, a debt collector must not communicate or attempt to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person. 366 A consumer may also notify a debt collector in writing that the consumer wants the debt collector to cease further communication with the consumer, and pursuant to § 1006.6(c)(1), a debt collector must not communicate or attempt to communicate further with a consumer with respect to such debt. PO 00000 Frm 00069 Fmt 4701 Sfmt 4700 76801 from engaging in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt, as provided for in FDCPA section 806 and § 1006.14(a). Because neither the text of § 1006.14(a) nor the text of § 1006.6(e) or § 1006.14(h) states or implies that a consumer would have to opt out of receiving electronic communications or request the debt collector stop using a particular communication medium to trigger § 1006.14(a)’s general prohibition against harassing, oppressive, or abusive conduct, the Bureau concludes that it is not necessary or warranted to add new commentary to specify this fact. For the reasons discussed above, the Bureau is finalizing § 1006.14(a) largely as proposed, but with a minor grammatical revision to more closely align with the statute. Final § 1006.14(a) thus provides that a debt collector must not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt, including, but not limited to, the conduct described in § 1006.14(b) through (h). In addition, as discussed, the Bureau is finalizing new comments 14(a)–1 and –2 to clarify that § 1006.14(a) applies, among other things, to a debt collector’s conduct in using any medium of communication in connection with the collection of a debt. 14(b) Repeated or Continuous Telephone Calls or Telephone Conversations FDCPA section 806(5) 367 describes one example of conduct prohibited by section 806: Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. Proposed § 1006.14(b) would have implemented and interpreted FDCPA section 806(5)—and, by extension, the general prohibition on harassing conduct in FDCPA section 806.368 Specifically, proposed § 1006.14(b)(1) set forth the prohibition on placing telephone calls or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass; § 1006.14(b)(2) described bright-line frequency limits for telephone calls and telephone conversations during a seven-day period; and proposed § 1006.14(b)(3) through (5) described telephone calls excluded from the frequency limits, the 367 15 U.S.C. 1692d(5). 84 FR 23274, 23308–21 (May 21, 2019). 368 See E:\FR\FM\30NOR3.SGM 30NOR3 76802 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations effect of complying with the frequency limits, and a definition, respectively. As discussed in detail in the sectionby-section analysis of final § 1006.14(b)(1) through (4), the Bureau is finalizing its proposal regarding telephone call frequencies with revisions in light of feedback. Among other things, rather than finalizing a bright-line rule for permissible and prohibited telephone call frequency, the Bureau is finalizing telephone call frequencies in the form of a rebuttable presumption that a debt collector has either complied with or violated the prohibition in § 1006.14(b)(1) regarding repeated or continuous telephone calls and telephone conversations. In this section-by-section analysis, the Bureau addresses feedback regarding proposed comment 14(b)(1)–1, which, for the reasons discussed below, the Bureau is finalizing, with revisions, as comment 14(b)–1. The Bureau also addresses feedback regarding proposed § 1006.14(b)(1)(ii) and (4), which the Bureau is not finalizing as part of this rule. Public comments regarding all other aspects of proposed § 1006.14(b) are addressed in turn in the section-bysection analysis of final § 1006.14(b)(1) through (4). TKELLEY on DSKBCP9HB2PROD with RULES3 Final Comment 14(b)–1 As noted, proposed § 1006.14(b)(1) contained the provision implementing FDCPA section 806(5). Specifically, as proposed, § 1006.14(b)(1)(i) provided that, in connection with the collection of a debt, a debt collector must not place telephone calls or engage any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.369 As discussed further in the section-by-section analysis of final § 1006.14(b)(1), proposed § 1006.14(b)(1)(i) thus largely restated FDCPA section 806(5), except that, whereas the statute prohibits ‘‘[c]ausing a telephone to ring,’’ proposed § 1006.14(b)(1)(i) would have applied when a debt collector ‘‘place[s] telephone calls.’’ This interpretation meant that the proposed prohibition would have applied even if a debt collector’s telephone call did not cause a traditional ring, as long as the telephone call connected to the dialed number. Proposed comment 14(b)(1)–1 would have clarified that, for purposes of the proposed telephone call frequency limits, ‘‘placing a telephone call’’ includes conveying a ringless voicemail (or ‘‘voicemail drop’’) but does not include sending an electronic 369 See id. at 23308. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 message (e.g., a text message or an email) to a mobile telephone. The Bureau received comments questioning whether the phrase ‘‘placing a telephone call’’ in proposed commentary to § 1006.14(b)(1) also applied to the bright-line telephone call frequency limits in proposed § 1006.14(b)(2), which used similar language. The Bureau intended proposed comment 14(b)(1)–1 to apply to the concept of placing a telephone call everywhere that concept is used in § 1006.14(b). Therefore, the Bureau is renumbering proposed comment 14(b)(1)–1 as comment 14(b)–1 and is revising it to clarify that the interpretation applies throughout § 1006.14(b). Ringless voicemails. The Bureau received a number of comments regarding its proposal in comment 14(b)(1)–1 to interpret the phrase ‘‘placing a telephone call’’ to apply to ringless voicemails. Some industry commenters argued that the consumer experience with ringless voicemails is fundamentally different—and better— than with telephone calls and that ringless voicemails therefore should not be subject to telephone call frequency limits. They explained that a ringless voicemail is more like an email or text message than a telephone call. As described by one commenter, with a ringless voicemail, a consumer only receives a new voicemail according to the consumer’s prescribed preferences, and, after receiving a new voicemail, the consumer can then choose if, when, and how the actual voicemail message content is presented. The commenter explained that, in most ringless voicemail applications, a consumer can swipe away any voicemail the consumer does not wish to read, listen to, or otherwise engage with, just like a consumer can do with an email or text message. This commenter also noted compliance challenges with tracking the cumulative number of telephone calls and ringless voicemails, given that the two types of calls are placed through independent systems run by different vendors. The commenter said that, if debt collectors have to track both telephone calls and ringless voicemails, they will opt to use one over the other instead of dealing with the complexities of cross channel frequency limit tracking. However, other industry commenters, Federal government agency staff, local government commenters, a group of consumer advocate commenters, and other commenters supported the proposal to clarify that ‘‘placing a telephone call’’ includes conveying a ringless voicemail. PO 00000 Frm 00070 Fmt 4701 Sfmt 4700 As noted above, section 806(5) of the FDCPA prohibits a debt collector from ‘‘causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.’’ 370 The focus on telephone calls suggests that the provision was meant to apply to communications that present the opportunity for the parties to engage in a live telephone conversation or that result in an audio message. Ringless voicemails are audio messages that allow debt collectors to bypass a person’s opportunity to answer the telephone by connecting directly to the person’s voicemail. Even telephone calls that result in an audio message without an audible ring, if made repeatedly and continuously, nonetheless may be intended to harass or may have the natural consequence of harassing a person in ways that the FDCPA prohibits, particularly if, for example, the messages contain similar content and do not provide new information to the person receiving the messages. The Bureau recognizes that its interpretation of FDCPA section 806(5) may result in compliance challenges for a small number of debt collectors who place telephone calls and ringless voicemails using different systems and different vendors. However, the Bureau expects that those debt collectors will be able to overcome such challenges by developing new tracking systems; modifying their business models to use either telephone calls or ringless voicemails but not both; or using both in volumes that, even if combined, would be unlikely to create a violation. Communication media other than telephone calls. The Bureau received a large number of comments regarding its proposal in comment 14(b)(1)–1 to interpret the phrase ‘‘placing a telephone call’’ not to include sending an electronic message (e.g., a text message or an email) to a mobile telephone, as well as its decision to not otherwise propose specific frequency limits for communication media other than telephone calls. Consumer, consumer advocate, State and local government, and State Attorneys General commenters stated that the Bureau should impose frequency limits on electronic communication media.371 State Attorneys General commenters described the prohibition in proposed § 1006.14(a)—which would have 370 15 U.S.C. 1692d(5). of these commenters stated more broadly that the Bureau should apply frequency limits to all forms of communication media. 371 Some E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations covered, and as finalized does cover, electronic communications—as insufficient to protect consumers from excessive electronic communications, noting that FDCPA section 806 has been difficult to apply in any context and has resulted in a significant amount of litigation and conflicting court opinions. One Federal government commenter reasoned that ‘‘placing a telephone call’’ should include sending a text message because the FCC has interpreted the phrase ‘‘mak[ing] any call’’ in the TCPA as encompassing the sending of text messages.372 Commenters criticized the Bureau’s rationale for not proposing to impose numeric limits on electronic communications. In the proposal, the Bureau grounded its justification in the specific language of FDCPA section 806(5), which the Bureau believed indicated Congress’s intention to apply the provision to communications that present the opportunity for the parties to engage in a live telephone conversation or that result in an audio message. The Bureau also explained that it was not aware of debt collectors sending electronic messages to consumers repeatedly or continuously with intent to harass them or to cause substantial injury. Commenters asserted that the Bureau’s reasoning for proposing telephone call frequency limits is equally applicable to electronic communication media, arguing that electronic communications are not less intrusive than telephone calls because consumers often receive notifications when they get text messages or emails that interrupt what they are doing and require them to assess whether such communications need immediate attention. Some commenters also criticized the Bureau’s justification that there is little, if any, evidence that electronic communications harm consumers, arguing that the only reason evidence is lacking is because such communication media are not specifically contemplated under current law and thus not yet widely used by industry. A group of State Attorneys General and State and local government commenters, among others, predicted that, if the Bureau did not impose numeric limits on electronic debt collection communications or communication attempts, debt collectors would rely on them heavily; some of these commenters explained that electronic communications are 372 See, e.g., In re Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, 18 FCC Rcd. 14,014, 14,115 ¶ 165 (2003). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 virtually costless.373 Some commenters also observed that, absent a numeric limit on electronic communications, consumers with limited or pay-perservice plans—who tend to be lowerincome and more likely to be subject to debt collection—will incur costs when debt collectors send text messages and emails.374 Consumer advocates recommended that, if the Bureau does not impose numeric frequency limits on electronic communications, the Bureau should at least require debt collectors to report on their use of emails, text messages, and direct messages. Consumer advocates also encouraged the Bureau to consider specific limits in the future if debt collectors abuse these communication media. The Bureau received a large number of comments from the credit and collections industry expressing general support for the Bureau’s proposal not to apply numeric frequency limits to communication media other than telephone calls.375 Many industry commenters distinguished electronic communications from telephone calls, arguing that, unlike telephone calls, electronic communication media do not harass consumers because they are passive communications that consumers can engage with at their convenience or can opt out of receiving entirely.376 Industry commenters argued that the 373 Some commenters recommended specific numeric limits for electronic communications, ranging from one per week to two per day, or specific numeric limits for cumulative communications across all communication media, ranging from two per week to one per day. 374 To address concerns about the cost of text messaging, at least one consumer advocate commenter requested that the Bureau require debt collectors to use FTEU text messaging. Members of Congress stated that the Bureau, by not requiring FTEU text messaging, is placing the cost burden of text messages on consumers. More generally, a large number of commenters identified a consumer’s lack of consent to electronic communications as a significant concern and requested that the Bureau require consumers to opt into receiving such communications from debt collectors. The Bureau addresses these comments in the section-by-section analysis of § 1006.6, which discusses communications in debt collection generally. 375 However, one industry commenter acknowledged that the scope of FDCPA section 806 and 806(5) is broad enough to include modern communication media such as emails and text messages if they are used to harass, oppress, or abuse a person in connection with the collection of a debt. Another industry commenter agreed but cautioned the Bureau against attributing carrier errors, such as sending the same text message multiple times, to the debt collector. 376 See the section-by-section analysis of § 1006.6. Industry commenters made similar points about communications by mail. Since the Bureau did not receive comments suggesting that communications solely by mail should be subject to particular weekly frequency limits, the Bureau does not further address those comments in this section-bysection analysis. PO 00000 Frm 00071 Fmt 4701 Sfmt 4700 76803 proposed opt-out provision in § 1006.6(e) and the general prohibition against conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt in proposed § 1006.14(a), along with FDCPA section 806, would impose sufficient limits on a debt collector’s use of electronic communications. Industry commenters asserted that a numeric frequency limit on electronic communication media would harm consumers.377 Many of these industry commenters explained that consumers prefer to communicate through electronic media because they can interact with and respond to an electronic message when it is most convenient. If the Bureau were to impose numeric frequency limits on electronic communications, it could discourage debt collectors from utilizing such media to communicate with consumers. Other industry commenters explained that the ability to communicate by email and text message will offset the negative impacts of the proposed telephone call frequency limits, such as the inability to establish contact with consumers.378 Some industry commenters cautioned that, if communications are restricted too much, debt collectors will instead file lawsuits against consumers to collect the debts. The Bureau declines to impose numeric limitations on a debt collector’s use of electronic communication media or of a combination of telephone calls and electronic communication media. Because debt collectors do not presently engage in widespread use of electronic communications, the Bureau concludes that it does not have sufficient information to warrant applying numeric limitations to electronic communications. However, the Bureau reiterates that FDCPA section 806 and § 1006.14(a) apply to debt collectors’ conduct in using such media,379 and the final rule contains several other provisions designed to curb harassment 377 One industry commenter asked the Bureau to provide a safe harbor when the frequency of a debt collector’s electronic communications is at or below the proposed telephone call frequency limits without a corresponding per se violation or presumption of a violation when the frequency of a debt collector’s electronic communications is above the proposed limits. 378 However, at least one industry commenter disagreed and explained that debt collectors may not have valid, personal email addresses for all accounts and may be unable to send text messages to certain telephone numbers. 379 In particular, new comments 14(a)–1 and –2 address many policy concerns raised by stakeholders about how the proposal would have treated debt collectors’ use of text messages and other electronic communication media. E:\FR\FM\30NOR3.SGM 30NOR3 76804 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations from electronic communications and empower consumers to restrict debt collection communications.380 The Bureau also intends to actively monitor the market and to gather information on these electronic communications in general so that it may determine in the future whether numeric limitations on electronic communications are necessary and warranted and, if so, what specific numeric limitations the Bureau should consider. For the reasons discussed above, the Bureau is finalizing proposed comment 14(b)(1)–1 as final comment 14(b)–1 with minor revisions to provide that ‘‘placing a telephone call’’ for purposes of § 1006.14(b) includes conveying a ringless voicemail but does not include sending an electronic message (e.g., a text message or an email) that may be received on a mobile telephone.381 TKELLEY on DSKBCP9HB2PROD with RULES3 Proposed Provisions Not Finalized Identification and prevention of Dodd-Frank Act unfair act or practice. As noted above, proposed § 1006.14(b)(1) set forth the prohibition regarding repeated or continuous telephone calls and telephone conversations, with proposed § 1006.14(b)(1)(i) largely restating the text of the prohibition in FDCPA section 806(5). The Bureau proposed § 1006.14(b)(1)(ii), in turn, to identify, for FDCPA debt collectors who were also covered by the Dodd-Frank Act, the conduct articulated in FDCPA section 806(5) as an unfair act or practice under section 1031 of the Dodd-Frank Act.382 As proposed, § 1006.14(b)(1)(ii) provided that, to prevent the unfair act 380 For example, under § 1006.6(e), a debt collector who communicates or attempts to communicate with a consumer electronically in connection with the collection of a debt using a specific email address, telephone number for text messages, or other electronic-medium address must include in such communication or attempt to communicate a clear and conspicuous statement describing a reasonable and simple method by which the consumer can opt out of further electronic communications or attempts to communicate by the debt collector to that address or telephone number. In addition, § 1006.14(h)(1) provides that, in connection with the collection of any debt, a debt collector must not communicate or attempt to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person. A consumer may also notify a debt collector in writing that the consumer wants the debt collector to cease further communication with the consumer, and pursuant to § 1006.6(c)(1), a debt collector must not communicate or attempt to communicate further with a consumer with respect to such debt. 381 Unlike proposed comment 14(b)(1)–1, final comment 14(b)–1 does not refer to section 1031 of the Dodd-Frank Act because, as discussed elsewhere in this section-by-section analysis, the Bureau is not relying on its Dodd-Frank Act section 1031 authority to finalize any part of § 1006.14. 382 12 U.S.C. 5531(b), (c). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 or practice, a debt collector must not exceed the bright-line telephone call frequency limits that were set forth in proposed § 1006.14(b)(2).383 As discussed in the section-by-section analysis of § 1006.1(c), while some commenters supported the Bureau’s proposed use of its Dodd-Frank Act section 1031 authority, a number of industry commenters expressed concern that the Bureau’s proposed use of its Dodd-Frank Act section 1031 authority could—despite the stated limits of the proposal as only applying to FDCPA debt collectors—lead, if finalized, to provisions that relied on such authority, including the prohibitions on unfair, deceptive, and abusive acts and practices under section 1031 of the Dodd-Frank Act, being applied to firstparty debt collectors. These commenters urged the Bureau to adopt proposed § 1006.14(b)(1) using only its FDCPA authority. The Bureau understands commenters’ concerns that conduct the Bureau deemed to be prohibited by the FDCPA and the Dodd-Frank Act when undertaken by FDCPA debt collectors could be construed also to be prohibited when undertaken by other entities collecting debts, even if they are not FDCPA debt collectors. In response to commenters’ concerns, the Bureau notes, as discussed elsewhere in this Notice,384 that the FDCPA recognizes the special sensitivity of communications by FDCPA debt collectors relative to communications by creditors, and, therefore, the FDCPA provides protections for consumers receiving such communications from debt collectors but not creditors. Moreover, as noted above, and as is discussed in detail below, the Bureau has determined to finalize a rebuttablepresumption approach in § 1006.14(b)(2), rather than a bright-line rule, regarding telephone call frequencies. As discussed in the sectionby-section analysis of § 1006.14(b)(2), whether the presumption of compliance or of a violation, as applicable, may be rebutted depends upon the relevant facts and circumstances. Furthermore, the final rule specifies non-exhaustive factors that, considered together with whether the frequency of a debt collector’s telephone calls exceeded or was within the rule’s specified frequencies, are relevant to determining whether a debt collector’s conduct violated the prohibition in FDCPA section 806(5) and final § 1006.14(b)(1), including whether the debt collector had the intent to annoy, abuse, or harass 383 See 84 FR 23274, 23309 (May 21, 2019). e.g., the section-by-section analysis of § 1006.6(d)(3) through (5). 384 See, PO 00000 Frm 00072 Fmt 4701 Sfmt 4700 the person at the called number. In light of this change, the Bureau has determined that it is not necessary to also identify the conduct described in FDCPA section 806(5) or § 1006.14(b) as an unfair, deceptive, or abusive act or practice under section 1031 of the Dodd-Frank Act or to find that the telephone call frequencies will prevent such an unfair act or practice. Accordingly, the Bureau is not finalizing proposed § 1006.14(b)(1)(ii) and is renumbering the FDCPA standard in proposed § 1006.14(b)(1)(i) as final § 1006.14(b)(1). Effect of complying with telephone call frequencies. Proposed § 1006.14(b)(4) 385 would have clarified that a debt collector who did not exceed the telephone call frequency limits described in proposed § 1006.14(b)(2) complied with § 1006.14(b)(1) and FDCPA section 806(5) and did not, based on the frequency of its telephone calls, violate § 1006.14(a), FDCPA section 806, or sections 1031 or 1036(a)(1)(B) of the Dodd-Frank Act.386 Because the Bureau is not finalizing the proposed bright-line frequency limits for telephone calls, the Bureau is not finalizing proposed § 1006.14(b)(4) regarding the effects of complying with those limits. As discussed in the section-by-section analysis of § 1006.14(b)(1), however, the Bureau is incorporating similar concepts in newly adopted comments 14(b)(1)–1 and –2 and as part of final § 1006.14(b)(2). 14(b)(1) In General Proposed § 1006.14(b)(1)(i) would have implemented the statutory prohibition in FDCPA section 806(5) by providing that, in connection with the collection of a debt, a debt collector must not place telephone calls or engage any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.387 As discussed above, the Bureau is finalizing proposed § 1006.14(b)(1)(i) renumbered as § 1006.14(b)(1). For the reasons discussed below, the Bureau is finalizing the text of § 1006.14(b)(1)(i) as proposed but is adopting new comments 14(b)(1)–1 and –2 to clarify the interaction of final § 1006.14(b)(1) and (2).388 385 See 84 FR 23274, 23319 (May 21, 2019). U.S.C. 5531, 5536(a)(1)(B). 387 See 84 FR 23274, 23308 (May 21, 2019). 388 In addition to the issues discussed in this section-by-section analysis, the Bureau reiterates that, for the reasons discussed in the section-bysection analysis of § 1006.14(b), the Bureau is finalizing the proposal to interpret FDCPA section 806(5)’s prohibition against ‘‘causing a telephone to ring’’ to be a prohibition against ‘‘placing telephone calls.’’ 386 12 E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 Consistent with FDCPA section 806(5), proposed § 1006.14(b)(1)(i) would have applied to telephone calls placed by a debt collector to any person, not just to the consumer. Thus, as proposed, § 1006.14(b)(1)(i) would have applied to, among other things, telephone calls placed to obtain location information about a consumer as described in § 1006.10. Federal government agency staff supported this approach. One individual commenter expressed concern that a consumer would be negatively affected if a debt collector placed numerous location information calls to the consumer’s employer. A group of consumer advocates recommended that the Bureau limit location information calls to third parties to one telephone call attempt per third party per week, while another consumer advocate commenter recommended that location information calls to third parties be prohibited altogether. Some commenters, including individuals and a consumer advocate commenter, incorrectly stated that the proposal would permit ‘‘unlimited’’ telephone calls to third parties. In response to commenters’ concerns, the Bureau notes that FDCPA section 806(5) protects ‘‘any person’’ from such conduct. Because FDCPA section 806(5) does not distinguish between a debt collector’s conduct toward third parties and consumers, the Bureau is applying the same telephone call standards to all telephone calls placed by debt collectors in connection with the collection of a debt.389 Consistent with FDCPA section 804, the final rule places additional limits on telephone calls to third parties for the purpose of acquiring location information.390 The Bureau also notes that, as discussed in the section-bysection analysis of § 1006.14(b)(2), a debt collector’s presumption of compliance with § 1006.14(b)(1) and 389 Given the interplay between proposed § 1006.14(b)(1) and (2), the application of proposed § 1006.14(b)(1)(i) to any person would have meant that the proposed telephone call frequency limits in § 1006.14(b)(2) also would have applied to telephone calls placed by a debt collector to any person. Likewise, the telephone call frequencies in final § 1006.14(b)(2) apply to location information calls and balance a debt collector’s potential need to obtain information about a consumer necessary to establish right party contact with the potentially harassing effect such calls may have directly on the third party, or indirectly on the consumer. 390 See the section-by-section analysis of § 1006.10. Pursuant to § 1006.10(c), a debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer must not communicate more than once with such person unless requested to do so by such person, or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 FDCPA section 806(5) may be rebutted, based on the facts and circumstances. Some industry commenters asked the Bureau to define the term telephone conversation that appears in § 1006.14(b)(1). A group of consumer advocates suggested the term should include any time the consumer answers the debt collector’s telephone call, even if the debt is not discussed. The term telephone conversation in final § 1006.14(b)(1) comes directly from FDCPA section 806(5) and has the same meaning as it does in the statute. To be clear, however, the term is not synonymous with a debt collection communication, as defined in FDCPA section 803(2) and implemented in final § 1006.2(d). A debt collection communication occurs if information regarding a debt is conveyed directly or indirectly to any person through any medium. If a debt collector leaves a voicemail for a consumer that includes details about the debt, the debt collector has engaged in a debt collection communication with the consumer but has not had a telephone conversation. Likewise, if a consumer answers a debt collector’s telephone call and, before anything else is said, asks the debt collector to call back in 10 minutes, the debt collector has engaged in a telephone conversation with the consumer but may not have had a debt collection communication. Several industry commenters also raised hypothetical questions asking whether particular types of telephone calls would count as ‘‘placed’’ for purposes of § 1006.14(b)(1) and, in turn, for purposes of the proposed telephone call frequency limits in § 1006.14(b)(2). Elsewhere in § 1006.14(b), the Bureau is adopting new commentary clarifying how to count placed telephone calls. That commentary further clarifies when a debt collector has placed a telephone call or engaged in a telephone conversation for purposes of § 1006.14(b).391 For the reasons discussed above, the Bureau is finalizing the text of proposed § 1006.14(b)(1)(i) as final § 1006.14(b)(1). The Bureau is also adding new comments 14(b)(1)–1 and –2 to clarify the effect of complying with § 1006.14(b)(1).392 Specifically, comment 14(b)(1)–1 provides that a debt collector who complies with final § 1006.14(b)(1) and FDCPA section 806(5)’s specific prohibition also complies with final 391 See the section-by-section analysis of final § 1006.14(b)(4). 392 As discussed in the section-by-section analysis of § 1006.14(b), the Bureau is renumbering proposed comment 14(b)(1)–1 as comment 14(b)–1. PO 00000 Frm 00073 Fmt 4701 Sfmt 4700 76805 § 1006.14(a) and FDCPA section 806’s general prohibition solely with respect to the frequency of its telephone calls. The comment further clarifies that the debt collector nevertheless could violate § 1006.14(a) and FDCPA section 806 if the natural consequence of another aspect of its telephone calls, unrelated to frequency, is to harass, oppress, or abuse any person in connection with the collection of a debt. Comment 14(b)(1)– 2 provides an illustrative example. 14(b)(2) Telephone Call Frequencies; Presumptions of Compliance and of a Violation FDCPA section 806 393 prohibits a broad range of debt collection communication practices that harm consumers and others. Section 806(5),394 in particular, prohibits debt collectors from causing a telephone to ring or engaging a person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass. Proposed § 1006.14(b)(2) would have set forth bright-line frequency limits for debt collection telephone calls.395 Proposed § 1006.14(b)(2) provided that, subject to exclusions in proposed § 1006.14(b)(3), a debt collector violates the FDCPA section 806(5) prohibition implemented in proposed § 1006.14(b)(1)(i) and the unfair act or practice under section 1031 of the Dodd-Frank Act the Bureau proposed to identify in § 1006.14(b)(1)(ii) by exceeding the telephone call frequency limits in proposed § 1006.14(b)(2). Specifically, proposed § 1006.14(b)(2)(i) provided that, subject to exclusions, a debt collector must not place a telephone call to a person 396 more than seven times within seven consecutive days in connection with the collection of a particular debt. Proposed § 1006.14(b)(2)(ii) provided that, subject to exclusions, a debt collector must not place a telephone call to a person in connection with the collection of a particular debt within a period of seven consecutive days after having had a telephone conversation with that person in connection with the collection of such debt (with the date of the telephone conversation being the first 393 15 U.S.C. 1692d. U.S.C. 1692d(5). 395 See 84 FR 23274, 23309 (May 21, 2019). 396 Proposed § 1006.14(b)(2) would have applied not only to debt collection calls placed to consumers who owe or are alleged to owe debt, but to any person (with certain exceptions described below). See the section-by-section analysis of § 1006.14(b)(1) for further discussion on this aspect of the proposal. 394 15 E:\FR\FM\30NOR3.SGM 30NOR3 76806 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations day of the seven-consecutive-day period).397 The Bureau requested comment on all aspects of proposed § 1006.14(b)(2), including on whether the Bureau should adopt a rebuttable-presumption approach in lieu of the proposed bright lines,398 and if so, whether the Bureau should retain any of the exclusions described in proposed § 1006.14(b)(3). The Bureau received thousands of comments from a variety of stakeholders about the proposed telephone call frequency limits, including about the merits of a bright-line rule versus a rebuttable-presumption approach and about the specific proposed limits. Commenters addressed both the proposed seven telephone call weekly frequency limit and the proposed one telephone conversation weekly frequency limit. Notably, commenters voiced stronger criticisms of the proposed seven telephone call weekly frequency limit, with most commenters opposing it because in their view it was either too high (i.e., too permissive) or too low (i.e., too restrictive). In light of feedback, and for the reasons discussed below, the Bureau is finalizing proposed § 1006.14(b)(2) to retain the proposed telephone call frequencies but to replace the bright-line rule with an approach under which a debt collector who places telephone calls or engages in telephone conversations: (1) Within those frequencies has a rebuttable presumption of compliance with FDCPA section 806(5) and § 1006.14(b)(1); and (2) in excess of one or both of those frequencies has a rebuttable presumption of a violation of FDCPA section 806(5) and § 1006.14(b)(1). TKELLEY on DSKBCP9HB2PROD with RULES3 Comments Regarding Bright-Line Rule Commenters spanning a wide spectrum of stakeholders—including debt collectors, industry trade groups, consumer advocates, and a group of State Attorneys General—conceptually supported a bright-line rule. A variety of reasons were cited by the different commenters, including that FDCPA section 806(5) is vague, courts have not 397 For ease of reference in this part of the sectionby-section analysis, the Bureau sometimes refers to the limit in proposed § 1006.14(b)(2)(i) as the ‘‘proposed seven telephone call weekly frequency limit,’’ the limit in proposed § 1006.14(b)(2)(ii) as the ‘‘proposed one telephone conversation weekly frequency limit,’’ and the two limits together as the ‘‘proposed telephone call frequency limits.’’ 398 The Bureau requested comment on different variations, such as adopting only a rebuttable presumption of a violation or only a rebuttable presumption of compliance. In the proposal, the rebuttable-presumption alternative was discussed in the section-by-section analyses of proposed § 1006.14(b)(2) and § 1006.14(b)(4). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 consistently interpreted the provision, industry needs more clarity and certainty, and a bright-line limit will provide relief to consumers. One consumer advocate commented that a bright-line rule ran counter to the Bureau’s observations elsewhere in the proposal about the importance of context in determining whether a particular contact is abusive or harassing, but nonetheless found merit in the Bureau seeking to develop a bright-line rule on the number of permitted telephone calls. The SBA suggested that more exceptions were needed for a bright-line limit to work, particularly for law firms trying to negotiate settlements. Some industry commenters opposed a bright-line rule conceptually because they asserted that it would depart from the statutory language in FDCPA section 806(5), which contains an express intent requirement. They commented that FDCPA jurisprudence has established that there is no bright-line number of telephone calls to demonstrate whether a debt collector had the intent to harass and that courts have found that placing more than seven telephone call attempts in seven days is not harassing or abusive. These commenters described how case law has established factors to consider when determining whether a debt collector had the requisite intent, such as the pattern and frequency of telephone calls, the time between calls, the presence or absence of abusive language on those calls, the location to which those calls were placed, and whether the debt collector called back after the recipient hung up. One industry trade group commenter took a different approach, acknowledging that using a bright-line ‘‘number-of-calls’’ surrogate to determine either the debt collector’s awareness of natural consequences or the debt collector’s intent may be appropriate if the telephone number is known by the debt collector to belong to the consumer. This may be the case if the debt collector had prior contact with the consumer at that number or if the consumer is identified in a voicemail greeting. However, this commenter asserted that, if a telephone number is not known to belong to the consumer, and especially if the debt collector has several possible numbers for the consumer provided either by the creditor or a prior debt collector or obtained through the debt collector’s own location efforts, then the proposed bright-line rule is at odds with the statutory mandate because there would be no intent to annoy, abuse, or harass. Some industry commenters found the proposed bright-line rule to be too PO 00000 Frm 00074 Fmt 4701 Sfmt 4700 inflexible and noted a preference for a multi-factor approach to telephone call frequencies. These commenters were concerned that the bright-line approach would limit a debt collector’s ability to reach consumers at different times and on different dates, and that it would hinder communication particularly in the context of settlement negotiations, loss mitigation discussions, and litigation. A credit union commenter expressed concern that a bright-line approach ignored the nature and content of the telephone conversation, which the commenter asserted is more instructive as to whether successive telephone calls have the effect of harassment, oppression, or abuse. Several industry commenters advocated for a rule that would make telephone calls within particular limits per se compliant but allow debt collectors to rebut the presumption that calls in excess of any call frequency limit violate the FDCPA. One of these commenters claimed that the proposal would have deemed non-harassing telephone calls in excess of the proposed frequency limits a per se violation and therefore would have been inconsistent with FDCPA section 806(5). Another commenter disputed that the Bureau properly could conclude that every telephone call above the proposed limits would be problematic. The commenter urged the Bureau to permit a debt collector to make additional telephone calls if the debt collector concludes that there is a compelling reason to do so and that doing so will not harm the consumer, provided that the debt collector appropriately documents the basis for its decision. A group of consumer advocates commented that a bright-line rule is generally in the best interest of consumers. However, the group also pointed out that setting the limits on a per-debt basis, as proposed, would insulate from liability a debt collector who was collecting on seven accounts even if the debt collector made the maximum allowable 49 calls per week, every week, with the intent to annoy, abuse, or harass. These commenters urged the Bureau to provide in the rule that complying with the telephone call frequency limits would create only a rebuttable presumption of compliance with § 1006.14(b)(1) and FDCPA section 806(5).399 399 This commenter also argued that the telephone call frequency limits in proposed § 1006.14(b)(2) should not create a safe harbor under the general prohibition in proposed § 1006.14(a) or FDCPA section 806, because it would be possible to violate these general prohibitions even while complying with the telephone call frequency limits. As support, the E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 The same group of consumer advocates expressed concern that under the proposed bright-line rule, debt collectors who placed telephone calls within the specific proposed frequency limits would not be liable even if they placed those calls in rapid succession. The group also noted that debt collectors could target their successive telephone calls on weekends or holidays, which might be more likely to harass consumers. Another consumer advocate commented that it was less likely that a debt collector would use all of its permissible telephone calls on the same day if the frequency limit for weekly telephone calls was lower than what the Bureau proposed (this commenter suggested an alternative limit of three), but cautioned that, if a debt collector made seven telephone calls in one day, it would often be perceived as harassment by the consumer. A few industry commenters stated that it would be unlikely for debt collectors to make rapid succession telephone calls under a bright-line rule because that would use up the limited number of weekly telephone call attempts available to debt collectors. One commenter asserted that debt collectors would strategically space their telephone calls throughout the seven-day period to establish contact with the consumer. A nonprofit commenter, writing on behalf of a variety of stakeholders, expressed concern that imposing a bright-line limit on telephone calls and providing a safe harbor for compliance under that limit might encourage debt collectors to place the maximum permissible telephone call attempts, perhaps more than they would have placed without such a limit in place. willingness to pay their debts to connect by telephone with a representative to achieve a voluntary repayment schedule and thus avoid legal collection efforts. Industry commenters wrote that the proposed limit would provide a debt collector with multiple opportunities to connect with the consumer and give the debt collector time to work through multiple telephone numbers. Other commenters, including some consumers, believed the proposed limit would prevent harassment. Some industry commenters thought the proposed limit would reduce unnecessary litigation. Others urged the Bureau not to impose a lower limit than proposed because doing so, they asserted, would mean less opportunity for consumers to work out a payment plan and might lead to unintended harmful impacts on consumers and the economy if it were to hamper the efficiency of the debt collection process. In contrast, as noted above, a significant number of commenters opposed the proposed seven telephone call weekly frequency limit. Many commenters argued that the proposed limit was too high (i.e., too permissive). Many others argued that it was too low (i.e., too restrictive). A diverse group of stakeholders criticized the proposed seven telephone call weekly frequency limit as too permissive to provide meaningful consumer protection. Thousands of consumers opposed the proposed seven telephone call weekly frequency limit because it would, in their view, allow debt collectors to harass consumers by calling them up to seven times per week, per debt. Other commenters criticized the proposed limit as applied to a consumer with multiple debts in collection, observing, for example, that Comments Regarding Proposed Seven the proposed limit would have Telephone Call Weekly Frequency Limit permitted debt collectors to call a Some consumer and industry consumer with eight medical debts 56 commenters supported the proposed times per week, or a consumer with five seven telephone call weekly frequency overdue bills 35 times per week. Commenters, including consumers, limit in proposed § 1006.14(b)(2)(i).400 A consumer advocates, legal aid providers, debt buyer commenter stated the belief members of Congress, State Attorneys that the proposed limit would strike an General, academic institutions, an FTC appropriate balance by enabling Commissioner, and local governments, consumers who demonstrate a expressed concern that the proposed commenter pointed to rapid succession calling. limit would lead to an excessive number Comments about the interplay between proposed of telephone calls. Some commenters § 1006.14(a) and (b) are addressed in the section-bybelieved this proposed limit would section analysis of final § 1006.14(b)(1). encourage debt collectors to engage in 400 In some instances, where commenters addressed the proposed telephone call frequency FDCPA-prohibited behavior. For limits, it was not clear whether they were example, a group of State Attorneys addressing the proposed seven telephone call weekly frequency limit, the proposed one telephone General noted that the proposal acknowledged that debt collectors are conversation weekly frequency limit, or both proposed limits. Where it was not clear which aware that many consumers have proposed limit the commenter was addressing, multiple debts in collection and are generally the comments are summarized in the receiving telephone calls from other section-by-section analysis describing the proposed seven telephone call weekly frequency limit. debt collectors and thus may place VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00075 Fmt 4701 Sfmt 4700 76807 additional telephone calls with intent to annoy, abuse, or harass. Some commenters raised the concern that, for a consumer with five debts being collected by the same debt collector, the permissible call volume for that debt collector would surpass the threshold for potential violations of FDCPA section 806(5). These commenters explained that courts have found as few as three to six telephone calls per week to be harassing and cited to existing frequency limits in Massachusetts, Washington State, and New York City as models for the Bureau. Some commenters discussed how technology advances may make consumers’ experience of receiving repeated telephone calls more harassing. They noted that consumers often carry their mobile telephones with them, making frequent calls less necessary and more harassing; that the use of cloudbased services to link devices means that one message can notify a consumer multiple times; and that dialers can lead to repeated and annoying telephone calls. Commenters, including legal aid providers, consumer advocates, and consumers, among others, described a plethora of ways that the proposed seven telephone call weekly frequency limit would negatively impact consumers. Some commenters claimed the number of potential telephone calls would cause various social and emotional effects, such as overwhelming stress; anxiety; emotional distress, withdrawal, and social isolation; harms to one’s social well-being and mental health; and physical health problems, including susceptibility to disease as a result of chronic stress and sleep disruptions. Some commenters cited lower work productivity as an effect of the number of potential telephone calls, because consumers could not easily turn off their mobile telephones to avoid telephone calls due to their need to remain reachable to work colleagues and family. Commenters also stated that the number of potential telephone calls would negatively affect certain subsets of consumers. Some expressed concern that the number of potential telephone calls would lead to consumers being pressured or coerced into paying even if their income is exempt from garnishment under Federal law— especially seniors and disabled individuals who are particularly vulnerable to abusive debt collection practices and who may be unaware of such protection. One local government commenter asserted that the proposed limit would disproportionately affect lower-income and minority consumers. Several commenters explained that E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76808 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations lower-income consumers often have limited telephone plans, meaning that a high number of telephone calls may cause their plans to trigger a maximum limit or fill their voicemail boxes. Some commenters argued that there is little to no evidence that debt collectors’ ability to collect would be negatively impacted if the proposed limit was set at a number less than seven. Several consumer and nonprofit commenters asserted that a high number of telephone calls does not result in increased collections, with one commenter noting that a consumer’s ability to pay will not increase regardless of how frequently the debt collector contacts the consumer. A State Attorney General and a nonprofit commenter suggested that the number of telephone calls that would be permitted under the proposed limit could result in consumers disengaging or being too stressed to answer the telephone, which would frustrate, rather than facilitate, debt resolution. One commenter noted how the Bureau of the Fiscal Service of the U.S. Department of Treasury conducted a pilot program focused on servicing defaulted student loans; the program found that borrowers answered less than 2 percent of telephone calls, which the commenter argued shows the ineffectiveness of repeated calls. An FTC Commissioner commented that, with each successive telephone call after the first, the value decreases to the consumer because the consumer is less likely to answer and receive information, yet the value increases to the debt collector because it causes undue stress to the alleged debtor; thus, by the time a sixth or seventh call comes in, harassing rather than informing seems to be the marginal utility. Consumer, legal aid provider, and consumer advocate commenters asserted that the proposed seven telephone call weekly frequency limit would increase telephone call volume from the status quo, particularly, as some noted, for location information calls. Some commenters acknowledged that the proposal would appear to limit or decrease telephone call volume for consumers with one debt but noted that telephone call volume would likely increase overall for consumers with multiple debts in collection. Relatedly, some commenters focused their criticism on how the proposed seven telephone call weekly frequency limit would not have covered the cumulative number of communications, particularly electronic communications, and how the proposed limit was structured as a per-debt limit, not a perperson limit. Some commenters expressed the view that allowing up to VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 seven telephone calls per week per debt would be excessive and permit harassing tactics in the absence of additional limits on electronic communications. A group of State legislators and several consumer advocate commenters identified the number of telephone calls for student loan and medical debt that would be permitted under the proposal as particularly concerning. Others explained that it is common for seniors in particular to have several medical debts placed with the same debt collector, and that it is common for a debt collection agency to collect numerous separate accounts for the same consumer. A legal aid provider noted that consumers seeking its assistance with debt collection issues usually have more than one debt, which multiplies the number of telephone calls they receive daily. The commenter asserted that this situation increases the chance that any one debt collector will say or do something untruthful or threatening, which in turn increases the probability that consumers will act hastily and not understand their rights. Commenters suggested a variety of lower limits for permissible telephone call frequency. A large number of consumer commenters urged specific limits, such as two or three telephone call attempts per consumer, per week.401 Consumer advocate and nonprofit commenters also recommended the Bureau limit debt collectors to three telephone call attempts per consumer, per week. Other suggestions included: Seven attempts per week, per type of debt (i.e., medical, credit card); three cumulative attempts across all communication media per week, per consumer; and three attempts per week, per debt. One nonprofit and one local government commenter urged the Bureau to follow the limits discussed in the Small Business Review Panel Outline.402 A local government agency commenter noted the local 401 Over a thousand commenters supported a limit of one telephone conversation per week and two telephone call attempts per consumer (not per debt). Other commenters supported limiting telephone call attempts to three per week, per consumer, or to one telephone conversation and three attempts per week, per consumer (not per debt). 402 The Small Business Review Panel Outline described a proposal under consideration that would have limited a debt collector’s weekly contact attempts with consumers by any communication medium. The proposal under consideration would have specifically limited debt collectors to three contact attempts per unique communication medium and six total contact attempts before confirming consumer contact; and to two contact attempts per unique communication medium and three total contact attempts after confirming consumer contact. See Small Business Review Panel Outline, supra note 36, at 25–26. PO 00000 Frm 00076 Fmt 4701 Sfmt 4700 government has operated for decades under a limit of two contacts about a debt per seven-day calendar period. Industry trade groups and other industry commenters generally opposed the proposed seven telephone call weekly frequency limit, arguing it was too restrictive. The Bureau received hundreds of comments from industry stakeholders who expressed concern that the proposed telephone call frequency limits were too constraining. Hundreds of creditor and collections industry commenters stated that reaching consumers by telephone is very difficult because most consumers have several telephone numbers and are often unavailable to speak. They wrote that the proposed limit would make it harder to connect with consumers and asserted that consumers would face various unintended consequences, including failure to reach workable repayment plans, additional interest and fees, negative credit reporting, and debt collection litigation. Separately, many accounts receivable management industry commenters stated that limiting communication would harm consumers because consumers fare best when they know their full financial situation and all available options. Industry commenters asserted that, based on their experience, the proposed limit would not have permitted enough telephone call attempts to establish contact with consumers. Some commenters argued that the Bureau should not limit telephone call attempts because debt collectors must attempt to contact multiple numbers at various times of the day in order to establish right party contact, while other commenters requested that the proposed limit be increased for the same reasons. One industry trade group commenter, citing a 2016 survey of its members, noted that certain debt categories have an average of more than six telephone numbers per account and that student loans have an average of four telephone numbers per account. Another industry trade group commenter, representing debt collectors for student loans, among other members, cited data from one of its members that it takes 20 attempts on average to reach a consumer. A debt collector commented that it typically receives one to two telephone numbers from the creditor from which its debts are purchased and three to five new telephone numbers when trying to locate a consumer, meaning that it takes approximately 50 to 75 telephone calls to reach a single consumer. One commenter explained that, because consumers can always request that a debt collector stop calling, there is no need for a limit on weekly telephone E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations calls. A debt collector commenter suggested limiting only actual communications and not attempts, noting that debt collectors often have multiple telephone numbers to work through. Industry stakeholders and other commenters expressed various concerns about the proposed seven telephone call weekly frequency limit and stated it could have negative impacts on consumers. Some asserted that it would be overly burdensome; explained that a different approach may be needed based on the type of consumer, debt, or account status; and suggested the limit should account for smartphone technology and call blocking rules that have increased blocked calls from legitimate financial service providers. Some commenters expressed concern that the proposed limit would increase debt collectors’ costs or more broadly have a negative impact on the economy, especially for small businesses. Commenters asserted that the limit would lengthen the debt resolution process and provide fewer opportunities to resolve debts in the manner best suited for the situation and, as a result, increase interest, fees, and penalties for consumers. Commenters wrote that consumers would be unable to obtain critical information about their accounts in collections, including when they ask a debt collector to call them back at a different, more convenient time or after they gather more information. Commenters also stated that consumers would experience increases in litigation, credit reporting, and wage garnishment and offsets. Commenters explained that the proposed limit would negatively affect access to credit and increase the cost of credit for all consumers. They also argued that the proposed limit would lead to an increase in letters, text messages, and emails, even though some consumers may prefer telephone calls to other communication media. Some industry commenters argued that the Bureau lacked data and other evidence to support the proposed seven telephone call weekly frequency limit. Some urged the Bureau to study more thoroughly the number of telephone call attempts that would be necessary to ensure that effective communication is not needlessly hindered. Some commenters requested that the Bureau impose different limits on telephone call frequency to address different circumstances. For example, some commenters argued that the proposed telephone call frequency limits should not apply once litigation or other civil action is initiated (or, as the SBA urged, specifically while a settlement is being negotiated) to enable VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 communication between consumers and attorneys to resolve the matter quickly before going to court. These commenters explained that a debtor may need to consult with someone else before agreeing to a repayment plan and may need additional telephone calls with the debt collector during the week. One debt collector commenter suggested an alternative frequency limit of 15 telephone call attempts per consumer, per debt, which the commenter wrote was based on an internal data analysis. An industry trade group pointed to specific circumstances necessitating additional calls, such as resolving a dishonored check or correcting a deficiency in loan consolidation or rehabilitation paperwork. Some commenters also identified reverse mortgages and student loans as specific markets that would be negatively affected by the proposed limit. Several commenters challenged the Bureau’s exercise of FDCPA authority to impose the proposed telephone call frequency limits.403 Commenters focused on what they believed was the failure of the proposed telephone call frequency limits to properly reflect the FDCPA section 806(5) ‘‘intent’’ standard. Some noted that there are a number of reasons why debt collectors would make such telephone calls, most of which are not intended to intimidate or pressure the consumer. Another commenter argued that Congress considered and rejected telephone call frequency limits when it passed the FDCPA. Comments Regarding Proposed One Telephone Conversation Weekly Frequency Limit Many commenters, including comments from approximately 500 credit unions, expressed support for the proposed one telephone conversation weekly frequency limit. Some commenters stated agreement with the Bureau’s reasoning in the proposal that a debt collector who has been able to engage in a telephone conversation with a consumer about a debt generally has less reason to communicate with the 403 Some industry commenters also criticized the Bureau’s proposed use of unfairness authority under Dodd-Frank Act section 1031 to impose the proposed telephone call frequency limits. As discussed in the section-by-section analysis of § 1006.14(b), commenters raised several concerns about how the proposal, if finalized, could be applied to first-party debt collectors. A few commenters, moreover, challenged the Bureau’s proposed identification of an unfair practice and the necessity of imposing telephone call frequency limits to prevent the identified unfair practice. As noted earlier, the Bureau is finalizing § 1006.14(b)(1) through (4) pursuant to its authority under the FDCPA only and not section 1031(b) of the Dodd-Frank Act. PO 00000 Frm 00077 Fmt 4701 Sfmt 4700 76809 consumer within the following week and expressed the belief that the proposed limit would permit regular communication while also preventing harassment. An industry commenter noted that, if there is a legitimate reason for another telephone call, proposed § 1006.14(b)(3) provided for several reasonable exceptions. A consumer advocate commenter noted that the proposed limit was intuitive because it would permit a weekly reminder to consumers who owe a debt, but nevertheless stated a belief that the limit would be problematic when coupled with the proposed seven telephone call weekly frequency limit. Many commenters, including a group of consumer advocates, supported the proposed one telephone conversation weekly frequency limit but expressed the view that imposing such a limit on a per-debt basis would be too permissive because it could result in harassment for consumers who have multiple debts in collection.404 Some commenters noted that the proposed one telephone conversation weekly frequency limit is particularly concerning in the context of medical debt and student loan debt, where there are often several debts collected by the same debt collector. In contrast, a number of industry commenters expressed concern with the proposed one telephone conversation weekly frequency limit. They asserted that the proposed limit would undermine the proposal’s purpose of assisting consumers in making betterinformed decisions about debts they owe or allegedly owe and would instead harm consumers by causing them to miss information and opportunities to avoid negative consequences. Several industry commenters explained that, for debt collectors, consistency in communications and good customer service is essential to providing the best solutions. Others noted that, after successful communication has been established with a consumer, limiting continued communication is not in the best interest of the consumer or the debt collector. One industry trade group commenter cautioned that the proposed one telephone conversation weekly frequency limit would result in higher rates of delinquency, which in turn would cause creditors to tighten 404 Some commenters cited the CFPB Debt Collection Consumer Survey as support for this argument, noting that the Consumer Survey found that the majority of consumers who had been contacted about repaying a debt in the prior year had been contacted about more than one debt, with 57 percent contacted about two to four debts, and 15 percent contacted above five or more debts. Others cited the same fact without citing the Consumer Survey. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76810 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations underwriting and lend less money generally. Another commenter noted that the proposed limit would lead to increased credit reporting and litigation. Commenters identified a number of situations for which they believed more frequent communication would be particularly important. Industry trade group commenters cited the examples of a consumer working out a debt modification or forbearance and of debts involving motor vehicles if there is a risk of repossession. Several industry commenters described the scenario of a consumer asking for more time to pay or promising to pay but the consumer did not follow through. Some commenters pointed to if consumers are at risk of foreclosure or engaged in loss mitigation. In the proposal, the Bureau sought comment on the alternative of limiting only the total number of telephone calls a debt collector could place about a debt during a defined time period, regardless of whether the debt collector had engaged in a conversation with that person about that debt during the relevant period. At least one commenter supported this alternative approach of limiting the total number of telephone calls, but not conversations, while another commenter supported the inverse—limiting actual conversations, but not the total number of telephone calls. A small number of commenters addressed how the proposal generally would have counted a consumerinitiated conversation as the debt collector’s one permissible telephone call for the next seven consecutive days. A group of consumer advocates supported this aspect of the proposal, asking the Bureau to specify that the proposed one telephone conversation weekly frequency limit applies regardless of whether the debt collector or consumer initiated the conversation. On the other hand, an industry trade group requested that the Bureau exempt consumer-initiated calls from the proposed one telephone conversation weekly frequency limit. See the sectionby-section analysis of § 1006.14(b)(4) for more detail on how these comments are addressed. Commenters also addressed the exclusions in proposed § 1006.14(b)(3) in the context of the proposed one telephone conversation weekly frequency limit. The Bureau discusses comments relating to the proposed exclusions in more detail in the sectionby-section analysis of § 1006.14(b)(3) below. Some commenters suggested alternative time periods for the proposed one telephone conversation VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 weekly frequency limit. A group of nonprofit commenters suggested a limit of one telephone call every two weeks, explaining that a biweekly limit would decrease the overall frequency of telephone calls directed toward consumers, while still allowing debt collectors the opportunity to collect payment based on a timeframe whereby the consumer is more likely to have the funds to pay the debt. Other comments suggesting alternative time periods are described under the subheading Comments Regarding Proposed Seven Telephone Call Weekly Frequency Limit above. The Final Rule The Bureau is not finalizing the proposed telephone call frequency limits, which would have imposed bright-line rules regarding telephone calls. Rather, final § 1006.14(b)(2) includes telephone call frequencies as part of a more flexible rebuttablepresumption framework. Final § 1006.14(b)(2)(i) provides that, subject to the exclusions in § 1006.14(b)(3), a debt collector is presumed to comply with § 1006.14(b)(1) and FDCPA section 806(5) if the debt collector places a telephone call to a particular person in connection with the collection of a particular debt neither: (1) More than seven times within seven consecutive days; nor (2) within a period of seven consecutive days after having had a telephone conversation with the person in connection with the collection of such debt (with the date of the telephone conversation being the first day of the seven-consecutive-day period).405 Section 1006.14(b)(2)(ii) provides that, subject to the exclusions in § 1006.14(b)(3), a debt collector is presumed to violate § 1006.14(b)(1) and FDCPA section 806(5) if a debt collector places a telephone call to a particular person in connection with the collection of a particular debt in excess of either of the telephone call frequencies described in § 1006.14(b)(2)(i). Comments 14(b)(2)(i)–1 and 14(b)(2)(ii)– 1 include examples illustrating when a debt collector has a presumption of compliance or of a violation, respectively. Comments 14(b)(2)(i)–2 and 14(b)(2)(ii)–2 clarify how the presumptions can be rebutted and include non-exhaustive lists of factors that may rebut the respective presumptions. More detail on the operation of the rebuttable-presumption 405 A debt collector who places no telephone calls during this time period would similarly be presumed to comply with the telephone call frequency limits under § 1006.14(b)(2)(i), and in fact would comply with them, for such time period. PO 00000 Frm 00078 Fmt 4701 Sfmt 4700 framework and the rebuttal factors described in the commentary is provided below. Rebuttable-presumption approach generally; rationale for change from proposed bright-line rule. The Bureau proposed § 1006.14(b)(2) to specify a bright-line rule for telephone call frequencies that would have violated FDCPA section 806 and 806(5) and Regulation F, with narrow exceptions in proposed § 1006.14(b)(3). As noted earlier, FDCPA section 806 prohibits a broad range of debt collection communication practices that harm consumers and others, and section 806(5) in particular prohibits debt collectors from making telephone calls or engaging a person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass. FDCPA section 806(5) does not identify a specific number of telephone calls or telephone conversations within any particular timeframe that would violate the statute. In the FTC Staff Commentary on the FDCPA, the FTC noted, among other interpretations, that ‘‘ ‘[c]ontinuously’ means making a series of telephone calls, one right after the other’’ and ‘‘ ‘[r]epeatedly’ means calling with excessive frequency under the circumstances.’’ 406 Since the FDCPA was enacted in 1977, courts interpreting FDCPA section 806(5) have not developed a consensus or bright-line test for telephone call frequency that would violate that provision. Moreover, while several States and localities have imposed numerical limits on debt collection contacts, the limits vary, and most jurisdictions have not established any numerical limits.407 Technological developments also have intensified the consumer-protection concerns underlying FDCPA section 806(5), as described in the proposal.408 In light of these developments, numerous problems with telephone call frequency persist. As the proposal described, frequent telephone calls are a consistent source of consumer-initiated litigation and consumer complaints to Federal and State regulators, and consumers’ lawsuits allege injuries such as feeling harassed, stressed, intimidated, or threatened, and sometimes allege adverse impacts on employment.409 In addition, from 2011 through 2018, the Bureau and the FTC received over 100,000 complaints about repeated debt collection telephone 406 See 53 FR 50097, 50105 (Dec. 13, 1988). 84 FR 23274, 23309 (May 21, 2019). 408 See id. at 23309–10 (describing the development of the predictive dialer). 409 See id. at 23310. 407 See E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 calls.410 As described in the FDCPA 2020 Annual Report, during 2019, consumers submitted complaints about communication tactics used when collecting debts, and the majority of complaints about communication tactics concerned communication over the telephone. Common categories of complaints about communication tactics were frequent or repeated calls (55 percent) and continued contact attempts despite requests to stop contact (29 percent).411 Consumers’ experiences with, and complaints about, repeated or continuous debt collection telephone calls do not necessarily establish that the conduct in each instance would have violated FDCPA section 806(5).412 But they do suggest, as described in the proposal, a widespread consumer protection problem that has persisted for 40 years notwithstanding the FDCPA’s existing prohibitions and caseby-case enforcement by the FTC and the Bureau as well as private FDCPA actions.413 To address this persistent harm, the Bureau proposed § 1006.14(b)(2) as described above. The proposed telephone call frequency limits accounted for a number of competing considerations, as described in the proposal. On the one hand, even a small number of debt collection calls may have the natural consequence of causing a consumer to experience harassment, oppression, or abuse, and therefore, assuming the debt collector is aware of this effect, the debt collector’s placement of even a small number of such calls to that consumer may indicate that the debt collector has the requisite intent to annoy, abuse, or 410 See id. Citing the Bureau’s FDCPA Annual Reports published from 2012 through 2019 and the Bureau’s consumer complaint database generally, the proposal described how some consumers describe being called multiple times per day, every day of the week, for weeks or months at a time and how some consumers report that repeated calls make them feel upset, stressed, intimidated, hounded, or weary, or that such calls interfere with their health or sleep or—when debt collection voicemails fill their inboxes—their ability to receive other important messages. The proposal noted certain caveats about the counts of consumer complaints. See id. at 23310 n.287. 411 2020 FDCPA Annual Report, supra note 9, at 15 (see Line 4 of Table 1). 412 For example, consumers may complain about telephone calls they do not want to receive, but this does not necessarily mean that the debt collector who placed the calls had the intent to annoy, harass, or abuse necessary to establish a violation of FDCPA section 806(5), or that the telephone calls had the natural consequence of harassing, oppressing, or abusing the consumer in violation of FDCPA section 806. 413 See 84 FR 23274, 23310 n.292 (May 21, 2019) (detailing examples of FTC complaints alleging FDCPA section 806(5) violations based on frequency of telephone calls to consumers). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 harass.414 At the same time, debt collectors have a legitimate interest in reaching consumers because communicating with consumers is central to their ability to recover amounts owed to creditors, and too greatly restricting debt collectors’ and consumers’ ability to communicate with one another could prevent debt collectors from establishing right-party contact and resolving debts, even when doing so is in the interests of both consumers and debt collectors.415 The Bureau also considered whether debt collectors’ reliance on making repeated telephone calls to establish contact with consumers could be reduced by other aspects of the proposal designed to address legal uncertainty regarding how and when debt collectors may communicate with consumers 416 and regarding how debt collectors may use 414 See id. at 23311–12. The proposal described how in the Bureau’s Debt Collection Consumer Survey, nearly 90 percent of respondents who said they were contacted more than three times per week indicated that they were contacted too often; 74 percent of respondents who said they were contacted one to three times per week indicated that that they were contacted too often; and 22 percent of respondents who said that they were contacted less than once per week indicated that even this level of contact was too often. The Bureau notes, however, that a consumer reporting that a debt collector called too frequently does not necessarily establish that the debt collector called in violation of the FDCPA. 415 See id. at 23312. In the proposal, the Bureau described feedback from small entity representatives that consumers who do not communicate with a debt collector may have negative information furnished to consumer reporting agencies or may face additional fees or a collection lawsuit, which has financial or opportunity costs. The Bureau also noted that as much as some consumers might prefer to avoid speaking to debt collectors, many consumers benefit from communications that enable them to promptly resolve a debt through partial or full payment or an acknowledgement that the consumer does not owe some or all of the alleged debt. 416 Id. In the proposal, the Bureau described how, for example, debt collectors who leave voicemails for consumers currently face a dilemma about whether to risk liability under FDCPA sections 806(6) and 807(11) by omitting disclosures required under those sections, or to risk liability under FDCPA section 805(b) by including the disclosures and potentially disclosing a debt to a third party who might overhear the message. The Bureau proposed § 1006.2(j) to address that dilemma by defining a limited-content message that debt collectors may leave for consumers without violating FDCPA sections 805(b), 806(6), or 807(11). The Bureau wrote that permitting such messages should ensure that debt collectors can leave voicemails with a return call number for a consumer to use at the consumer’s convenience, which may help reduce the need for debt collectors to place repeated telephone calls to contact consumers. As described in more detail in the section-by-section analysis for § 1006.2(j), the Bureau is finalizing § 1006.2(j) with a few changes to the scope of the definition—limiting the definition of limited-content message to voicemail messages that are not knowingly left with third parties—as well as to the required and optional content. PO 00000 Frm 00079 Fmt 4701 Sfmt 4700 76811 electronic communication media.417 In view of all these considerations, the Bureau proposed to draw the line at which a debt collector places telephone calls repeatedly or continuously with the intent to annoy, abuse, or harass any person at the called number (and the line at which such calls have the natural consequence of harassing, oppressing, or abusing any person) at seven telephone calls in a seven-day period about a particular debt. The proposal would have allowed debt collectors to call up to seven times per week across multiple telephone numbers (e.g., a home landline, mobile, work), and to leave a limited-content message each time, and it would have not placed a specific numerical limit on how many letters, emails, and text messages debt collectors could send. The Bureau similarly balanced a variety of policy considerations in proposing the one telephone conversation weekly frequency limit, as described in the proposal. The Bureau considered both the legitimate interests of consumers and debt collectors in resolving debts and the potentially harmful effects on consumers of repeated or continuous telephone calls after a telephone conversation. A debt collector who already has engaged in a telephone conversation with a consumer about a debt may have less of a need to place additional telephone calls to that consumer about that debt within the next seven days than a debt collector who has yet to reach a consumer. As a result, a debt collector who has already conversed with a consumer may be more likely to intend to annoy, abuse, or harass the consumer by placing additional telephone calls within one week after a telephone conversation. At the same time, a consumer who has spoken by telephone to a debt collector about a debt may be more likely than a consumer who has not spoken by telephone to a debt collector about a debt to experience annoyance, abuse, or harassment if the debt collector places additional, unwanted telephone calls to the consumer about that debt again within the next seven days.418 417 Id. The Bureau’s proposals in §§ 1006.6(d)(3) and 1006.42 were designed to clarify that debt collectors may communicate electronically with consumers who prefer to communicate that way. Further, the Bureau did not propose to subject email, text messages, or other electronic communications to numerical frequency limits. See the discussion of electronic communications in the section-by-section analysis of § 1006.14(a) and (b). 418 See 84 FR 23274, 23316–17 (May 21, 2019). The Bureau explained further that a consumer may experience, and a debt collector may intend to cause, such annoyance, abuse, or harassment from a second telephone conversation within one week E:\FR\FM\30NOR3.SGM Continued 30NOR3 76812 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 In the proposal, the Bureau sought comment on a rebuttable-presumption approach as an alternative to a brightline rule where: (1) A debt collector who places telephone calls at or below the frequency limits presumptively would comply with § 1006.14(b)(1); (2) a debt collector who exceeds the frequency limits presumptively would violate § 1006.14(b)(1); and (3) the presumptions could be rebutted based on the facts and circumstances of a particular situation. The Bureau explained that it did not propose the rebuttable-presumption approach because the benefits of such an approach were unclear. The Bureau stated its preliminary view that most, if not all, of the circumstances that might require a debt collector to exceed the proposed telephone call frequency limits could be addressed by specific exceptions to a bright-line rule; and the Bureau wrote that a well-defined, bright-line rule with specific exceptions could provide needed flexibility without sacrificing the clarity of a bright-line rule. The Bureau noted that a bright-line rule may also promote predictability and reduce the risk and uncertainty of litigation.419 The comments from thousands of stakeholders, evidencing a range of viewpoints on the issue of telephone call frequency limits, reflect the inherent challenges in trying to craft a rule for telephone call frequencies that appropriately balances consumer protection with the interests of debt collectors and consumers in efficient operation of the debt collection process. The Bureau proposed to draw a bright line, reasoning that the certainty and predictability of telephone call frequency limits outweighed the benefits of a more flexible approach, such as a rebuttable-presumption rule. After considering the robust comments on the proposal, the Bureau now has decided to adopt a different approach. As described earlier, consumer advocates, State Attorneys General, legal aid providers, consumers, and various other stakeholders strongly opposed the proposed telephone call frequency limits, arguing that the proposed brightline rule would insufficiently protect consumers. They cited various scenarios in which seven or fewer telephone calls within a week could still annoy, harass, even if the consumer, rather than the debt collector, initiated the first telephone conversation. Therefore, under the proposal, if a consumer initiated a telephone conversation with the debt collector, that telephone conversation generally would have counted as the debt collector’s one permissible telephone conversation for the next week, subject to certain exclusions in proposed § 1006.14(b)(3). 419 See id. at 23311, 23319–20. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 or abuse consumers and indicate the debt collector’s intent to do so. One scenario commenters highlighted was rapid succession calling, in which a debt collector places a series of telephone calls in rapid succession over the course of just a few minutes as a potential way of harassing, annoying, or abusing a consumer, even if the cumulative number of telephone calls did not exceed the proposed seven telephone call weekly frequency limit. Commenters also argued, for example, that consumers could be harassed, annoyed, or abused if a debt collector placed up to seven telephone calls over the course of a week even after the consumer had indicated the consumer did not want to be contacted again or did not owe the debt in question.420 The consistent theme in these comments was that the proposed telephone call frequency limits still left room for consumers to be annoyed, harassed, or abused depending on the circumstances of the telephone calls. At the same time, debt collectors, industry trade groups, and other industry commenters provided a variety of arguments for why a bright-line rule for telephone call frequencies would be potentially detrimental to consumers and unworkable from an operational perspective. They asserted that various types of telephone calls warranted a more permissive approach, such as telephone calls required by applicable law (e.g., to alert the consumer of lossmitigation options) or placed as part of active litigation. Others argued that the rule should permit debt collectors to place telephone calls that would enable the consumer to avoid imminent, demonstrable negative consequences, such as an impending foreclosure or automobile repossession. Having considered these comments, the Bureau has decided that the proposed brightline rule may not have adequately accounted for situations in which the purpose, context, and effect of certain telephone calls may reflect not an intent to harass, annoy, or abuse the consumer, but rather an intent to help the consumer avoid a negative outcome or an intent to comply with law. Although the Bureau did propose a handful of exclusions from the telephone call frequency limits,421 the Bureau recognizes that it is difficult to anticipate all scenarios that would merit exclusion or more lenient treatment and 420 This scenario would be a violation of the cease-communication provision in final § 1006.6(c)(1). 421 See the section-by-section analysis of § 1006.14(b)(3). PO 00000 Frm 00080 Fmt 4701 Sfmt 4700 has decided that the proposal’s list of exclusions was insufficient. The Bureau also recognizes the arguments made by stakeholders about the weight of the evidence the Bureau used to justify the proposed telephone call frequency limits and the particular legal authorities on which the Bureau proposed to rely. Consumer advocates and other commenters challenging the proposed telephone call frequency limits cited, among other sources, language in the proposal’s preamble, Bureau and FTC consumer complaint data, certain judicial decisions, and some State and local laws to argue for stricter limits. On the other hand, industry commenters challenged the Bureau’s basis for setting the limits in the proposal by citing different case law, internal data analyses in some cases, and other sources. Moreover, as discussed above, under the proposal the Bureau would have interpreted the FDCPA to set bright-line limits at the specified levels; the Bureau also proposed that such limits were necessary to prevent an identified unfair practice under section 1031 of the Dodd-Frank Act, premises which were challenged by some stakeholders. As discussed above, there are competing considerations inherent in crafting a workable telephone call frequency standard that adequately protects consumers. During this rulemaking process, telephone call frequency limits generated strong reaction from stakeholders who possess different and reasonably held views on what the limits should be, or whether there even should be limits at all. And as noted above, case law is unsettled on the question of how FDCPA section 806(5) draws the line at permissible telephone call frequency,422 which is 422 See, e.g., Rigby v. Crosscheck Servs., LLC, No. 19–cv–36–jdp, 2020 WL 1492893, at *5–6 (W.D. Wis. Mar. 27, 2020) (concluding that it was a genuine issue of fact whether a debt collector intended to annoy, abuse, or harass the consumer by placing a total of 76 telephone calls over a period of four-and-a-half months, sometimes repeatedly within the span of a few minutes, and when the debt collector was asked to pause or stop the calls on three occasions); Bruner v. AllianceOne Receivables Mgmt., Inc., No. 15 C 9726, 2017 WL 770993, at *2–3 (N.D. Ill. Feb. 28, 2017) (finding that 11 telephone calls made over six weeks ‘‘plausibly indicates intent to harass or annoy’’ under the circumstances). But see, e.g., Martin v. Allied Interstate, LLC, 192 F. Supp. 3d 1296, 1307 (S.D. Fla. 2016) (finding that 19 telephone calls over a month, the majority unanswered, without more— e.g., where derogatory language was used during the call—is not sufficient to sustain a claim of harassment under FDCPA section section 806(5)); Carman v. CBE Grp., Inc., 782 F. Supp. 2d 1223, 1229, 1232 (D. Kan. 2011) (granting summary judgment on FDCPA section 806(5) claim in debt collector’s favor even though the debt collector called the debtor 149 times during two months, E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 reinforced by the fact that commenters cited different opinions to buttress their respective positions on the proposed limits.423 The Bureau has reconsidered the bright-line rule approach and has decided to finalize instead a rebuttablepresumption approach to telephone call frequency. The rebuttable-presumption framework provides additional flexibility, as well as enhanced consumer protections in certain respects. The telephone call frequencies remain as proposed—i.e., seven telephone calls and one conversation per week, per debt—but, under the final rule, the debt collector is only presumed to comply with or violate § 1006.14(b)(1) and FDCPA section 806(5) based on those frequency levels. As discussed below, the commentary being adopted in the final rule clarifies the operation of the rebuttable presumption and includes lists of non-exhaustive factors that stakeholders may use to rebut the presumptions, along with examples. The Bureau has determined that the rebuttable-presumption framework better balances the competing considerations regarding telephone call frequency. As the Bureau noted in the proposal, a rebuttable-presumption approach does not provide the same level of predictability or litigation-risk reduction as a bright-line rule. But the final rule does provide greater certainty than the status quo. The Bureau is adopting a standard that anchors the telephone call frequency limits at specified levels—seven telephone calls per week, per debt, and one conversation per week, per debt—while permitting variances from those frequency levels when stakeholders can prove that specific factual circumstances merit them. Moreover, the detailed commentary being adopted in the final rule clarifying the operation of the rebuttable presumption and including examples will inform judicial analysis of line-drawing questions in because there was ‘‘no evidence of an unacceptable pattern of calls’’). 423 One Federal district court opinion cited by a group of consumer advocates urging the Bureau to impose stricter telephone call frequency limits illustrates this point. The court allowed an FDCPA section 806(5) claim to proceed based on a consumer’s receipt of 15 telephone calls over a three-week period. See Ambroise v. Am. Credit Adjusters, LLC, No. 15–22444–CIV–ALTONAGA/ O’Sullivan, 2016 WL 6080454, at *3 (S.D. Fla. Mar. 22, 2016). The court, however, noted that while the telephone call frequency ‘‘weighs in favor of granting the maximum statutory damages,’’ it could not conclude ‘‘the violations were intentional or particularly egregious,’’ pointing to (among other things) how the debt collector did not make any additional telephone calls after the consumer told the debt collector to stop calling. For this reason, the court declined to allow recovery of the statutory maximum for damages. Id. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 applying FDCPA section 806(5). More broadly, the Bureau is now persuaded that the additional flexibility afforded by the rebuttable-presumption approach outweighs the enhanced certainty and clarity that would have been provided by the proposed bright-line rule. The final rule also contains certain enhanced consumer protections. For example, the proposed bright-line rule would not have addressed circumstances in which debt collectors engage in rapid succession calling while still complying with the proposed seven telephone call weekly frequency limit. This final rule addresses this conduct.424 Notwithstanding the final rule’s shift to a rebuttable-presumption approach, the Bureau is retaining the specific numeric frequency limits that it proposed. The Bureau determines as a general matter that the FDCPA case law, the high volume of consumer complaints in this area, the evidence described in the Bureau’s FDCPA Reports, technological developments, and other policy considerations described in this section-by-section analysis and in the proposal support a regulatory intervention that clarifies the limits on telephone call frequency. In addition, as discussed in the proposal, when Congress conferred FDCPA rulemaking authority on the Bureau through the Dodd-Frank Act in 2010, it relied, in part, on consumers’ experiences with repeated or continuous debt collection telephone calls to observe that case-by-case enforcement of the FDCPA had not ended the consumer harms that the statute was designed to address.425 424 The final rule contains a presumption of compliance under final § 1006.14(b)(2)(i) which the commentary clarifies may be rebutted where there is evidence of rapid succession calling. See comment 14(b)(2)(i)–2.i. The Bureau notes that, in addition to commenters raising concerns about rapid succession calling, various judicial decisions have recognized this practice as a potential basis for an FDCPA section 806(5) violation. See, e.g., Neu v. Genpact Servs., LLC, No. 11–CV–2246 W(KSC), 2013 WL 1773822, at *4–5 (S.D. Cal. Apr. 25, 2013) (holding that 150 telephone calls in 51 days raised a triable issue of fact as to the debt collector’s intent to harass and observing that ‘‘[a] reasonable trier of fact could find that [calling the consumer six times in one day] alone, apart from the sheer volume of calls placed by [the debt collector], is sufficient to find that [the debt collector] had the ‘intent to annoy, abuse or harass’’’); Arteaga v. Asset Acceptance, LLC, 733 F. Supp. 2d 1218, 1228 (E.D. Cal. 2010) (‘‘Calling a debtor numerous times in the same day, or multiple times in a short period of time, can constitute harassment under the FDCPA.’’). 425 See 84 FR 23274, 23310 (May 21, 2019). The proposal described how in a 2010 report prepared in connection with the Restoring American Financial Stability Act of 2010 (the Senate’s predecessor bill to the Dodd-Frank Act), the Senate Committee on Banking, Housing, and Urban Affairs cited consumer complaints to the FTC about, among other things, debt collectors ‘‘bombarding [them] PO 00000 Frm 00081 Fmt 4701 Sfmt 4700 76813 Relatedly, the Bureau declines to change the specific levels for the telephone call frequency in § 1006.14(b)(2) in response to certain commenters’ suggestions to set lower or higher limits. As noted above, a common suggestion by commenters urging stricter limits was three telephone call attempts per week, per consumer. Conversely, industry commenters urged the Bureau to adopt more permissive limits, such as 15 telephone calls per week, per debt. The Bureau has determined that the specific levels proposed as telephone call frequency limits—seven telephone calls and one conversation, per debt, in each seven-consecutive-day period—are reasonable policy judgments in view of the existing evidence and the competing considerations discussed above (and in the proposal), within a rebuttablepresumption framework. The final rule allows rebuttal of the presumption of compliance or of a violation, respectively, even if the debt collector places telephone calls at or below, or in excess of, the telephone call frequency levels. Consequently, the rebuttablepresumption framework addresses many of the policy concerns animating the requests for higher or lower limits under a bright-line rule.426 The Bureau recognizes that many commenters—particularly consumer advocates, State Attorneys General, and consumers—criticized the proposal for imposing limits on a per-debt, rather than per-person, basis. The per-debt approach is unchanged in the final rule. The section-by-section analysis of § 1006.14(b)(4) discusses the Bureau’s reasoning for finalizing the per-debt approach as proposed. with continuous calls’’ to conclude that abusive debt collection practices had continued to proliferate since the FDCPA’s passage. S. Rep. No. 111–176, at 19 (2010). In connection with that finding, among others, Congress granted the Bureau the authority to prescribe rules with respect to the activities of FDCPA debt collectors. 15 U.S.C. 1692l. The Bureau also cites these Dodd-Frank Act legislative history and FDCPA provisions in response to commenters who argued that the FDCPA legislative history does not support the imposition of the telephone call frequency limits proposed by the Bureau. 426 Although the Bureau’s adoption of a rebuttable-presumption framework using the same proposed frequency levels could, as some commenters asserted, lead to an increase in letters, text messages, and emails for consumers who may have preferred telephone calls, the general prohibition against harassing, oppressive, or abusive conduct in § 1006.14(a) and FDCPA section 806 would protect consumers from undue increases in debt collectors’ use of such communication media, and the Bureau has clarified in newly adopted commentary to § 1006.14(a) that the general prohibition addresses communications and attempted communications involving other types of media. See comments 14(a)–1 and –2. E:\FR\FM\30NOR3.SGM 30NOR3 76814 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 The Bureau also is not finalizing any of the variations of the rebuttablepresumption approach on which the Bureau sought comment in the proposal, such as finalizing only a presumption of compliance or violation (but not both), or finalizing a safe harbor for telephone calls below the specified frequency paired with a presumption of a violation for telephone calls above the specified frequency (or the opposite). The Bureau believes these variations would add needless complexity to the framework without clear benefits, in comparison to the rebuttable-presumption approach adopted in the final rule. Further, any variation that includes a per se rule as an element of the framework would suffer from the same disadvantages as commenters identified with the proposed bright-line rule. Rebuttable Presumption of Compliance As noted above, § 1006.14(b)(2)(i) provides for a rebuttable presumption of compliance. Under § 1006.14(b)(2)(i), subject to the exclusions in § 1006.14(b)(3), a debt collector is presumed to comply with § 1006.14(b)(1) and FDCPA section 806(5) if the debt collector places a telephone call to a particular person in connection with the collection of a particular debt neither: (1) More than seven times within seven consecutive days; nor (2) within a period of seven consecutive days after having had a telephone conversation with the person in connection with the collection of such debt. The date of the telephone conversation is the first day of the seven-consecutive-day period. The final rule includes new commentary to clarify various aspects of the telephone call frequency provisions and the rebuttable-presumption framework.427 Comment 14(b)(2)(i)–1 describes the rebuttable presumption of compliance and emphasizes that, to have the presumption of compliance, the debt collector’s telephone call frequencies must not exceed the limits set in either prong of § 1006.14(b)(2)(i). The comment also includes three examples illustrating the application of the rule and the circumstances in which the debt collector would be presumed to comply with § 1006.14(b)(1) and FDCPA section 806(5). Comment 14(b)(2)(i)–2 clarifies how the presumption of compliance can be 427 While the final rule retains aspects of the proposed commentary for § 1006.14(b)(2), including some similar examples, the commentary has been revised to such a degree in light of the rebuttablepresumption approach that this section-by-section analysis does not describe particular differences from the proposed language and instead just focuses on the final content. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 rebutted and includes a non-exhaustive list of factors that may rebut the presumption of compliance. The comment first clarifies that, to rebut a presumption of compliance, it must be proven that a debt collector who did not place a telephone call in excess of either of the telephone call frequencies described in § 1006.14(b)(2)(i) nevertheless placed a telephone call or engaged a person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. This language in the comment generally tracks the language of FDCPA section 806(5). Comment 14(b)(2)(i)–2 also explains that, for purposes of determining whether the presumption of compliance has been rebutted, it is assumed that debt collectors intend the natural consequence of their actions. The Bureau has included this language to clarify how the rebuttable presumption relates to the ‘‘natural consequence’’ language in FDCPA section 806 and the intent requirement in FDCPA section 806(5). The Bureau notes that some commenters criticized the proposed telephone call frequency limits as not incorporating the FDCPA section 806(5) intent requirement. In the proposal, the Bureau cited judicial decisions to support the interpretation that debt collectors generally intend the natural consequence of their actions.428 The Bureau finds the two opinions cited in the proposal persuasive because one logically harmonizes the ‘‘natural consequence’’ language in FDCPA section 806 with the intent requirement in FDCPA section 806(5),429 while the other recognizes ‘‘perhaps the oldest rule of evidence’’ applied across areas of law—that a person ‘‘is presumed to intend the natural and probable consequences of [that person’s] acts.’’ 430 Accordingly, the Bureau has incorporated this concept in comment 14(b)(2)(i)–2.431 428 See 84 FR 23274, 23312 n.304 (May 21, 2019) (citing Litt v. Portfolio Recovery Assocs. LLC, 146 F. Supp. 3d 857, 873 (E.D. Mich. 2015); United States v. Falstaff Brewing Corp., 410 U.S. 526, 570 n.22 (1973) (Marshall, J., concurring in result)). 429 See Litt, 146 F. Supp. 3d at 873 (‘‘[W]hile the general proscription of § 1692d does not use the word ‘intent,’ such a requirement is inferred from the necessity to establish that the natural tendency of the conduct is to embarrass, upset or frighten a debtor. If the natural tendency of certain conduct is to embarrass, upset or frighten, then one who engages in such conduct can be presumed to have intended the natural consequences of his acts.’’). 430 Falstaff, 410 U.S. at 570 n.22 (Marshall, J., concurring in result). 431 In the proposal, the Bureau posited that the alternative rebuttable-presumption approach could allow a consumer to show that the debt collector knew or should have known that the proposed telephone call frequency limits would have the PO 00000 Frm 00082 Fmt 4701 Sfmt 4700 Comment 14(b)(2)(i)–2 also clarifies that the non-exhaustive list of factors in comments 14(b)(2)(i)–2.i through .iv may be considered either individually or in combination with one another or with other, non-specified factors. The comment further clarifies that the factors may be viewed in light of any other relevant facts and circumstances and therefore may apply to varying degrees. The Bureau notes that the factors included in comments 14(b)(2)(i)–2.i through .iv are generally aligned with circumstances cited by courts as relevant to the determination of whether FDCPA section 806(5) has been violated.432 Comment 14(b)(2)(i)–2.i clarifies that the frequency and pattern of telephone calls the debt collector places to a person, including the intervals between them, is a factor that may rebut the presumption of compliance. The comment further clarifies the considerations relevant to this factor include whether the debt collector placed telephone calls to a person in rapid succession (e.g., two unanswered telephone calls to the same telephone number within five minutes) or in a natural consequence of harassing, oppressing, or abusing the consumer. However, the Bureau declines to specify a more particularized intent standard under § 1006.14(b)(2), such as ‘‘know or have reason to know’’ because the Bureau believes doing so would entail significant legal and practical complexity. The Bureau also has concern that imposing a more particularized intent standard could lead to evasion if debt collectors could then try to disclaim an intent to harass, annoy, or abuse the consumer after the fact by attesting to their lack of intent. 432 See, e.g., Davis v. Diversified Consultants, Inc., 36 F. Supp. 3d 217, 228 (D. Mass. 2014) (‘‘[T]here are no bright-line rules as to what constitutes harassment or what demonstrates intent to annoy. Instead, such findings have been based on a consideration of multiple factors. For example, in determining whether the intent requirement is met, courts often look to the volume, frequency, and persistence of calls, to whether defendant continued to call after plaintiff requested it cease, and to whether plaintiff actually owed the alleged debt.’’); Valle v. Nat’l Recovery Agency, No. 8:10– cv–2775–T–23MAP, 2012 WL 1831156, at *1 (M.D. Fla. May 18, 2012) (‘‘Factors often examined in assessing a claimed violation of Section 1692d and Section 1692d(5) include (1) the volume and frequency of attempts to contact the debtor, (2) the volume and frequency of contacts with the debtor, (3) the duration of the debt collector’s attempted communication and collection, (4) the debt collector’s use of abusive language, (5) the medium of the debt collector’s communication, (6) the debtor’s disputing the debt or the amount due, (7) the debtor’s demanding a cessation of the communication, (8) the debt collector’s leaving a message, (9) the debt collector’s calling at an unreasonable hour, (10) the debt collector’s calling the debtor at work, (11) the debt collector’s threatening the debtor, (12) the debt collector’s lying to the debtor, (13) the debt collector’s impersonating an attorney or a public official, (14) the debt collector’s contacting a friend, co-worker, employee, employer, or family member, and (15) the debt collector’s simulating or threatening legal process.’’). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 highly concentrated manner (e.g., seven telephone calls to the same telephone number within one day). Comment 14(b)(2)(i)–2.i then provides an example illustrating application of this factor. The Bureau has included this factor because many commenters raised the pattern and frequency of telephone calls as relevant to determining intent under FDCPA section 806(5), and courts have often cited this factor as well, as described above. The Bureau believes that the frequency and pattern of the telephone calls, including the intervals between them, are indicative of both the intent of the debt collector and the natural consequence on the person called. The Bureau has also included specific language in the comment to address concerns raised by commenters about debt collectors engaging in rapid succession calling or placing telephone calls in a concentrated matter on days that may be less convenient for some consumers (such as Sundays or holidays).433 Application of this factor is not limited to rapid succession or highly concentrated calling, however, and is dependent on all of the relevant facts and circumstances that may indicate an intent on the part of the debt collector to harass, annoy, or abuse the consumer. Comment 14(b)(2)(i)–2.ii clarifies that the frequency and pattern of any voicemails the debt collector leaves for a person, including the intervals between them, is another factor that may rebut the presumption of compliance. The comment notes that the considerations relevant to this factor include whether the debt collector left voicemails for a person in rapid succession (e.g., two voicemails within five minutes left at the same telephone number) or in a highly concentrated manner (e.g., seven voicemails left at the same telephone number within one day). The Bureau included this factor for similar reasons to those underlying inclusion of the factor in comment 14(b)(2)(i)–2.i. Comment 14(b)(2)(i)–2.iii clarifies that another factor that may rebut the presumption of compliance is the content of a person’s prior communications with the debt collector. The comment explains that among the considerations relevant to this factor are whether the person previously informed 433 Courts evaluating FDCPA section 806(5) claims sometimes have focused on rapid succession calling as well, as noted in some of the cases cited earlier in this section-by-section analysis. The FTC Staff Commentary on the FDCPA, while not binding on the Bureau, also provides support for interpreting FDCPA section 806(5) to prohibit rapid succession calling under the ‘‘continuously’’ prong. See 53 FR 50097, 50105 (Dec. 13, 1988). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 the debt collector, for example, that the person did not wish to be contacted again about the particular debt, that the person refused to pay the particular debt, or that the person did not owe the particular debt. The comment clarifies that this factor also includes a consumer’s cease communication notification described in § 1006.6(c) and a consumer’s request under § 1006.14(h) that the debt collector not use telephone calls to communicate or attempt to communicate with the consumer. The comment also clarifies that the amount of time elapsed since any such prior communications may be relevant to this factor. The Bureau has included this factor based on concerns raised by commenters that a debt collector could annoy, harass, or abuse consumers by continuing to place telephone calls even after the person informed the debt collector about the person’s desire not to be contacted again about the particular debt or that the consumer does not owe or refuses to pay the particular debt. Although the number of additional telephone calls at issue would not exceed the telephone call frequencies, in view of the prior conversation, especially a recent prior conversation, the person may be more likely to find the additional telephone calls annoying, harassing, or abusive. Moreover, the Bureau believes that in this circumstance it generally would be more likely that the debt collector intended to annoy, harass, or abuse the person.434 Comment 14(b)(2)(i)–2.iv clarifies that a factor that may be used to rebut the presumption of compliance is the debt collector’s conduct in prior communications or attempts to communicate with the person. The comment explains that among the considerations relevant to this factor are whether, during a prior communication or attempt to communicate with a person, the debt collector, for example, used obscene, profane, or otherwise abusive language (see § 1006.14(d)), used or threatened to use violence or other criminal means to harm the person (see § 1006.14(c)), or called at an unusual or inconvenient time or place (see § 1006.6(b)(1)). The comment also clarifies that the amount of time elapsed since any such prior communications or attempts to communicate may be relevant to this factor. The Bureau has included this factor for similar reasons as comment 14(b)(2)(i)–2.iii. The Bureau 434 The Bureau notes the comment it received from a credit union pointing out that the nature and content of a conversation may be instructive as to whether successive calls may harass, annoy, or abuse consumers. PO 00000 Frm 00083 Fmt 4701 Sfmt 4700 76815 believes that, if a debt collector previously used obscene language or threatened violence during a debt collection telephone call, or called at an inconvenient place or time, and thereby violated another rule provision (and the FDCPA itself), then the person receiving the subsequent telephone calls may be more likely to find they are annoying, harassing, or abusive. The Bureau also believes that by placing the subsequent telephone calls, it generally would be more likely that the debt collector intended to annoy, harass, or abuse the person. Comment 14(b)(2)(i)–3, which is substantively unchanged from proposed comment 14(b)(2)–2, addresses misdirected telephone calls. The comment explains that, for purposes of the telephone call frequencies in § 1006.14(b)(2)(i), if within a period of seven consecutive days, a debt collector attempts to communicate with a particular person by placing telephone calls to a particular telephone number, and the debt collector then learns that the telephone number is not that person’s number, the telephone calls that the debt collector made to that number are not considered to have been telephone calls placed to that person during that seven-day period for purposes of § 1006.14(b)(2)(i). The comment also provides an example illustrating application of the rule. As the Bureau wrote in the proposal, a person is unlikely to be harassed by debt collection calls that are placed to a telephone number that belongs to someone else.435 Rebuttable Presumption of a Violation As noted above, § 1006.14(b)(2)(ii) provides that a debt collector is presumed to violate § 1006.14(b)(1) and FDCPA section 806(5) if the debt collector places a telephone call to a particular person in connection with the collection of a particular debt in excess of either of the telephone call frequencies described in 435 A small number of comments discussed whether the Bureau should provide additional clarification about how a debt collector determines that a telephone number is not associated with a particular person. A compliance consulting firm commented that the Bureau should let company policy dictate the determination, while another commenter believed that the Bureau should give additional clarification. Consumer advocate commenters urged the Bureau to require debt collectors to check the telephone number against the FCC’s Reassigned Number Database or one of the commercial databases that is already available to see if it has been reassigned since the debt collector last verified that it belonged to the consumer. The Bureau declines to mandate any particular method by which a debt collector must learn that the telephone number is not associated with a particular person within the meaning of the comment. E:\FR\FM\30NOR3.SGM 30NOR3 76816 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 § 1006.14(b)(2)(i). The telephone call frequencies are subject to the exclusions in § 1006.14(b)(3). Comment 14(b)(2)(ii)–1 provides two examples illustrating the rule. Comment 14(b)(2)(ii)–2 clarifies how the presumption of a violation can be rebutted and includes a non-exhaustive list of factors that may rebut the presumption of a violation. The comment clarifies that, to rebut the presumption of a violation, it must be proven that a debt collector who placed a telephone call in excess of either of the frequencies described in § 1006.14(b)(2)(i) nevertheless did not place a telephone call or engage any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. The comment clarifies that, for purposes of determining whether a presumption of a violation has been rebutted, it is assumed that debt collectors intend the natural consequence of their actions. The comment notes that comments 14(b)(2)(ii)–2.i through .iv provide a non-exhaustive list of factors that may rebut the presumption of a violation.436 The comment explains that the factors may be considered either individually or in combination with one another or other non-specified factors.437 The comment also clarifies that the factors may be viewed in light of any other relevant facts and circumstances and therefore may apply to varying degrees.438 Comment 14(b)(2)(ii)–2.i clarifies that one factor that may rebut the presumption of a violation is whether a 436 While the Bureau believes that telephone calls placed under these four circumstances generally would not reflect an intent on the part of the debt collector to harass, annoy, or abuse the consumer, it is possible that there could be factual circumstances where such a telephone call is placed with that intent. Therefore, the Bureau is including such telephone calls within the rebuttable presumption rather than excluding them from the telephone call frequencies altogether under final § 1006.14(b)(3). 437 As suggested by commenters, there may be other circumstances where it may be proven that a debt collector who placed telephone calls in excess of either of the telephone call frequencies described in § 1006.14(b)(2)(i) nevertheless did not place a telephone call or engage any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. Because the list of factors identified in comments 14(b)(2)(ii)–2.i through .iv is not exhaustive, other factors may be considered, if warranted by the relevant facts and circumstances. 438 The language in comment 14(b)(2)(ii)–2, including how debt collectors are assumed to intend the natural consequence of their actions and how the factors may apply to varying degrees, parallels the language in comment 14(b)(2)(i)–2 describing the rebuttable presumption of compliance. This reflects how operation of the two presumptions under the rule—but not the factors themselves—is intended to be the same. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 debt collector placed a telephone call to comply with, or as required by, applicable law. The comment provides an example in which a debt collector placed one telephone call above the applicable telephone call frequency limit to inform the consumer of available loss mitigation options in compliance with the Bureau’s mortgage servicing rules under Regulation X, 12 CFR 1024.39(a). The comment clarifies that the debt collector’s compliance with applicable law is a factor that may rebut the presumption of a violation. The Bureau includes this factor because telephone calls placed to comply with or as required by applicable law generally would not reflect an intent on the part of the debt collector to harass, annoy, or abuse a consumer. Numerous commenters cited compliance with applicable law as a basis for excluding a telephone call from the proposed bright-line telephone call frequency limits pursuant to § 1006.14(b)(3). The Bureau is not excluding this category of telephone calls from the frequency limits entirely, however, because, as stated in the proposal, the Bureau understands that legally required communications infrequently are delivered over the telephone, in contrast to by mail or other means. Comment 14(b)(2)(ii)–2.ii describes that another factor that may rebut the presumption of a violation is whether a debt collector placed a telephone call that was directly related to active litigation involving the collection of a particular debt. The comment provides an example in which an additional telephone call beyond the applicable telephone call frequency was placed to complete a court-ordered communication with the consumer about the debt, or as part of negotiations to settle active debt collection litigation regarding the debt. The comment explains that the direct relationship between the additional telephone call and the active debt collection litigation is a factor that may rebut the presumption of a violation.439 The Bureau has included this factor because these types of telephone calls may enable communication between consumers and debt collectors to resolve a debt collection matter during litigation and, depending on the facts and circumstances, may not reflect an intent on the part of the debt collector to harass, annoy, or abuse the consumer. 439 Commenters, including the SBA, suggested that the proposed telephone call frequency limits should not apply once litigation or other civil action is initiated (or specifically while a settlement is being negotiated). This factor responds to the commenters’ suggestion. PO 00000 Frm 00084 Fmt 4701 Sfmt 4700 Comment 14(b)(2)(ii)–2.iii clarifies that another factor that may rebut the presumption of a violation is whether a debt collector placed a telephone call in response to a consumer’s request for additional information when the exclusion in § 1006.14(b)(3)(i) for telephone calls made with the consumer’s prior consent given directly to the debt collector did not apply. The comment includes an example in which, during a telephone conversation, the consumer tells the debt collector that the consumer would like more information about the amount of the debt but that the consumer cannot talk at that moment, and the consumer ends the telephone call before the debt collector can seek prior consent under § 1006.14(b)(3)(i) to call back with the requested information.440 The fact that the debt collector placed the additional call in response to the consumer’s request is a factor that may rebut the presumption of a violation. The Bureau has included this factor based on consideration of circumstances in which the debt collector places a telephone call in response to the consumer’s request, and thus may be placing the call without intent to harass, annoy, or abuse the consumer, but where the exclusion under § 1006.14(b)(3)(i) does not apply because the debt collector has not obtained the consumer’s consent. Comment 14(b)(2)(ii)–2.iv clarifies that a factor that may rebut the presumption of a violation is whether a debt collector placed a telephone call to convey information to the consumer that, as shown through evidence, would provide the consumer with an opportunity to avoid a demonstrably negative effect relating to the collection of the particular debt, where the negative effect was not in the debt collector’s control, and where time was of the essence.441 Comment 14(b)(2)(ii)– 2.iv.A provides the following example: A debt collector and consumer engage in a lengthy conversation regarding settlement terms; the call drops toward the end of the conversation; and the debt collector immediately places an additional telephone call to complete 440 This factor addresses concerns raised by some commenters that the proposed seven telephone call weekly frequency limit would harm consumers by preventing a debt collector from calling a consumer back, at the consumer’s request, at a different, more convenient, time or after they gather more information; and ultimately lead to increases in litigation, negative credit reporting, and wage garnishment and offsets. 441 This factor addresses concerns raised by some commenters that the proposed seven telephone call weekly frequency limit would provide fewer opportunities to resolve debts in manner best suited for the situation, and as a result, would increase interest, fees, and penalties for consumers. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations the conversation. As explained in the comment, the fact that the debt collector placed the telephone call to permit the debt collector and the consumer to complete the conversation about settlement terms, which provides the consumer an opportunity to avoid a demonstrably negative effect that was not in the debt collector’s control (i.e., having to repeat a substantive conversation with a potentially different representative of the debt collector) and where time was of the essence (i.e., to prevent the delay of settlement negotiations by seven days), is a factor that may rebut the presumption of a violation. Comment 14(b)(2)(ii)–2.iv.B provides an example in which: A consumer previously entered into a payment plan with the debt collector regarding a debt; the conditions for the payment plan were set by the creditor; among those conditions is that only the creditor, in its sole discretion, may approve waivers of late fees; the debt collector learns on a Monday that the consumer’s payment failed to process, and the applicable grace period is set to expire the next day; and the debt collector places a telephone call to the consumer on that Monday to remind the consumer that a late fee will be applied by the creditor for non-payment unless the consumer makes the payment by the next day. As explained in the comment, the fact that the debt collector placed the telephone call to alert the consumer to the pending penalty, giving the consumer an opportunity to avoid a demonstrably negative effect that was not in the debt collector’s control and where time was of the essence, is a factor that may rebut the presumption of a violation. Comment 14(b)(2)(ii)–2.iv.C provides a counterexample to the first two scenarios in which: On a Monday, a debt collector placed a telephone call to a consumer to offer a ‘‘one-time only’’ discount on the payment of a debt; the debt collector stated that the offer would expire the next day; yet, in fact, the debt collector could have offered the same or a similar discount through the end of the month. The comment explains that because the negative effect on the consumer was in the debt collector’s control, the discount offer is not a factor that may rebut the presumption of a violation. The Bureau has included the rebuttal factor described in comment 14(b)(2)(ii)–2.iv and the illustrative examples in comments 14(b)(2)(ii)– 2.iv.A through .C based on consideration of comments to the proposal. As noted earlier in this section-by-section analysis, industry commenters presented a variety of fact VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 patterns that they believed called for exclusions because the consumer would avoid harm or potentially would benefit from the communication. However, the Bureau declines to include categorical exclusions for these types of telephone calls. Because the rebuttal factors are non-exhaustive, the Bureau need not address each scenario raised by commenters; the question of whether the presumption can be rebutted in a given case ultimately depends on the circumstances. Furthermore, the Bureau has included language and structured the examples in this comment to emphasize the factor’s limitations: That evidence must show that the additional telephone call provided the consumer with an opportunity to avoid a demonstrably negative effect; that the negative effect was not in the debt collector’s control; and that time was of the essence. The Bureau concludes that cabining the factor in this manner is necessary for clarity and to avoid circumvention. 14(b)(3) Certain Telephone Calls Excluded From the Telephone Call Frequencies Proposed § 1006.14(b)(3) would have excluded four types of telephone calls from the telephone call frequency limits in proposed § 1006.14(b)(2).442 Specifically, proposed § 1006.14(b)(3)(i) would have excluded telephone calls made to respond to a request for information from the person whom the debt collector is calling; proposed § 1006.14(b)(3)(ii) would have excluded telephone calls made with such person’s prior consent given directly to the debt collector; proposed § 1006.14(b)(3)(iii) would have excluded telephone calls that do not connect to the dialed number; and proposed § 1006.14(b)(3)(iv) would have excluded telephone calls placed to a person described in proposed § 1006.6(d)(1)(ii) through (vi).443 For the reasons discussed below, the Bureau is not finalizing the proposed § 1006.14(b)(3)(i) exclusion for telephone calls made to respond to a request for information from the person whom the debt collector is calling. The Bureau is finalizing the other proposed exclusions as § 1006.14(b)(3)(i) through (iii), with certain revisions discussed below. 442 See 84 FR 23274, 23317–19 (May 21, 2019). described in proposed § 1006.6(d)(1)(ii) through (vi) include the consumer’s attorney, a consumer reporting agency, the creditor, the creditor’s attorney, and the debt collector’s attorney. 443 Persons PO 00000 Frm 00085 Fmt 4701 Sfmt 4700 76817 Proposed Provision Not Finalized Proposed § 1006.14(b)(3)(i) would have excluded from the frequency limits telephone calls that a debt collector places to a person to respond to a request for information from that person.444 Proposed comment 14(b)(3)(i)–1 would have clarified that, once a debt collector responds to a person’s request for information, the exception in proposed § 1006.14(b)(3)(i) would not apply to subsequent telephone calls placed by the debt collector to the person, unless the person makes another request for information. Proposed comment 14(b)(3)(i)–2 provided an example of the rule. Industry commenters requested clarification on a variety of issues related to the proposed § 1006.14(b)(3)(i) exclusion. For example, commenters asked the Bureau to define ‘‘request for information’’; questioned whether certain scenarios fit within the exception; asked how specific the consumer’s request for information must be; and asked how many follow-up telephone call attempts are permitted under the proposed exclusion.445 A group of consumer advocate commenters recommended that the exclusion not apply if debt collectors placed telephone calls in response to requests for information that consumers submitted through other communication media. The Bureau is not providing the requested clarifications or making the recommended changes because the Bureau is not finalizing proposed § 1006.14(b)(3)(i). After considering the comments, the Bureau recognizes that a telephone call that a debt collector places to a person to respond to a request for information from that person usually also fits under the exclusion for prior consent in proposed § 1006.14(b)(3)(ii). Therefore, in an effort to streamline the final rule, the Bureau is not finalizing proposed § 1006.14(b)(3)(i) and instead is expanding the examples in the commentary to the prior consent exclusion, renumbered as final § 1006.14(b)(3)(i), to describe a scenario in which a person, through a request for information, also provides prior consent for a debt collector to place additional telephone calls, and the debt collector then places telephone calls to the 444 See 84 FR 23274, 23318 (May 21, 2019). one industry commenter stated it was not necessary to clarify how to determine whether a debt collector makes a particular telephone call in response to a request for information, as opposed to for some other purpose, or how to determine whether the debt collector has responded to a request for information. 445 However, E:\FR\FM\30NOR3.SGM 30NOR3 76818 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations person to respond to a request for information from that person.446 The Bureau also is specifying in comment 14(b)(2)(ii)–2.iii that, in the unlikely event that a person’s request for information from a debt collector does not meet the requirements of the prior consent exclusion in final § 1006.14(b)(3)(i), the fact that a debt collector placed a telephone call in response to a consumer’s request for additional information is a factor that may be used by a debt collector to rebut a presumption of a violation under § 1006.14(b)(2)(ii).447 TKELLEY on DSKBCP9HB2PROD with RULES3 Scope of Exclusions Industry commenters and the SBA asked the Bureau to exclude additional types of telephone calls from the proposed § 1006.14(b)(2) telephone call frequency limits.448 For example, industry commenters requested that the Bureau add an exclusion for telephone calls required by, or made to comply with, applicable law, as well as telephone calls related to litigation.449 Industry commenters also requested exclusions for other types of telephone calls such as telephone calls that would be ‘‘beneficial’’ to the consumer; telephone calls placed to a consumer after a consumer does not follow through with an agreed-upon payment or the consumer’s payment is declined; telephone calls placed before a debt collector has established contact with a person; and ringless voicemails. The SBA requested that the Bureau exclude all telephone calls placed by small entity debt collectors from the proposed § 1006.14(b)(2) telephone call frequency limits. The Bureau declines to add additional exclusions to § 1006.14(b)(3). As discussed in the section-by-section analysis of § 1006.14(b)(3)(i) through (iii), the Bureau is finalizing three of the proposed exclusions. These exclusions cover telephone calls placed with a person’s prior consent (§ 1006.14(b)(3)(i)), telephone calls that do not connect to the dialed number (§ 1006.14(b)(3)(ii)), and telephone calls placed to certain professional persons 446 See the section-by-section analysis of § 1006.14(b)(3)(i) for more information on the exclusion for telephone calls placed with a person’s prior consent. 447 See the section-by-section analysis of § 1006.14(b)(2) for more information on the telephone call frequencies and the factors that may rebut the presumption of a violation. 448 The Bureau specifically requested comment on this topic. See also the section-by-section analysis of § 1006.14(b)(2) for further discussion of comments relating to potential exclusions from the proposed telephone call frequency limits. 449 The SBA requested an exclusion for telephone calls made while a debt collector is trying to negotiate a settlement. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 (§ 1006.14(b)(3)(iii)). The Bureau is excluding these categories of telephone calls from the § 1006.14(b)(2)(i) telephone call frequencies because the Bureau concludes that such telephone calls are not placed by debt collectors with intent to annoy, abuse, or harass a person and generally do not have the natural consequence of harassing, oppressing, or abusing any person.450 As discussed in the section-by-section analysis of § 1006.14(b)(2), the Bureau is finalizing a rebuttable-presumption approach instead of the proposed telephone call frequency limits. The rebuttable-presumption approach inherently acknowledges that there are individual circumstances, beyond the categorical exclusions identified in § 1006.14(b)(3), in which telephone calls exceeding the final § 1006.14(b)(2)(i) frequencies are not placed with the intent to annoy, abuse, or harass, and do not have the natural consequence harassing, oppressing, or abusing any person. The rebuttable-presumption approach will provide debt collectors with many of the flexibilities that they sought from the requested exclusions, while also allowing for consideration of the particular facts and circumstances surrounding a telephone call that exceeds the final § 1006.14(b)(2)(i) frequencies. Depending on the facts and circumstances, the Bureau’s rebuttablepresumption approach to telephone call frequencies may, in fact, provide more flexibility to debt collectors with respect to other scenarios for which commenters requested exclusions, such as telephone calls that would be beneficial to the consumer and telephone calls placed to a consumer after a consumer does not follow through with an agreed upon payment or the consumer’s payment is declined. More specifically, as described in comment 14(b)(2)(ii)–2.iv, another factor that may be used to rebut a presumption of a violation is whether a debt collector placed a telephone call to convey information to the consumer that, as shown through evidence, would provide the consumer with an opportunity to avoid a demonstrably negative effect relating to the collection of the particular debt, where the negative effect was not in the debt collector’s control, and where time was of the essence. 450 The Bureau is finalizing certain limits on telephone calls placed with a person’s prior consent so that such telephone calls do not have the natural consequence of harassing, oppressing, or abusing the person who consented to the additional telephone calls. See the section-by-section analysis of § 1006.14(b)(3)(i). PO 00000 Frm 00086 Fmt 4701 Sfmt 4700 Regarding other specific requests for exclusions, industry commenters explained that the proposed § 1006.14(b)(2) telephone call frequency limits are in tension with the Bureau’s mortgage servicing rules’ live contact and early intervention requirements in Regulation X, 12 CFR part 1024. Another industry commenter identified tension with the U.S. Department of Housing and Urban Development’s Home Equity Conversion Mortgage program regulations, 24 CFR part 206, and State servicing laws that require a servicer to attempt to contact a borrower when a loan is initially called due and payable. Industry commenters also explained that, during litigation, attorneys may be directed to notify the consumer of scheduling matters, to coordinate the date for a hearing or mediation, or to respond to settlement discussions. Industry commenters also stated that court rules may require parties to confer prior to scheduling a hearing. Industry commenters noted that it may be necessary to have multiple, time-sensitive discussions during settlement negotiations, and while the proposed consent exclusion would seem to address this concern, debt collectors may forget to request consent from a consumer to place additional telephone calls. The Bureau understands that very few legally required communications must be delivered by telephone. However, the Bureau also acknowledges that legally required communications delivered by telephone may facilitate consumer engagement and reach consumers more quickly than if other communication media are used. As discussed in more detail in the section-by-section analysis of § 1006.14(b)(2), the telephone calls that commenters describe could be covered by two factors that a debt collector may use to rebut a presumption of a violation of § 1006.14(b)(1), including: Whether a debt collector placed a telephone call to comply with, or as required by, applicable law, as discussed in comment 14(b)(2)(ii)–2.i; and whether a debt collector placed a telephone call that was directly related to active litigation involving the collection of a particular debt, as discussed in comment 14(b)(2)(ii)–2.ii.451 The Bureau also declines to add an exclusion for telephone calls placed before a debt collector has established contact with a person. FDCPA section 806(5) prohibits a debt collector from causing a telephone to ring or engaging any person in a telephone call 451 See the section-by-section analysis of § 1006.14(b)(2). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number, without regard to whether the debt collector has previously established contact with that person. At the same time, as described in the section-by-section analysis of § 1006.14(b)(2), the Bureau recognizes that debt collectors have a legitimate interest in reaching consumers, and that communicating with consumers is central to debt collectors’ ability to recover amounts owed to creditors. The Bureau expects that the flexibility provided by the rebuttable-presumption approach to telephone call frequencies, discussed in the section-by-section analysis of § 1006.14(b)(2), as well as debt collectors’ ability to leave limitedcontent messages, discussed in the section-by-section analysis of § 1006.2(j), will enable debt collectors to reach consumers in a timely manner without introducing additional consumer harms. The Bureau declines to add an exclusion for ringless voicemails for the reasons discussed in the section-bysection analysis of § 1006.14(b). In response to the SBA’s request to exclude small entities from the § 1006.14(b)(2)(i) telephone call frequencies, the Bureau notes that the final rule applies to debt collectors, as that term is used in the FDCPA. Small entities are only excluded from the definition of debt collector to the extent they meet the criteria for one of the specific exclusions from the general definition.452 Exclusions Under RebuttablePresumption Approach A few industry commenters asked the Bureau to maintain the proposed § 1006.14(b)(3) exclusions even if the final rule adopted a rebuttablepresumption approach. One commenter explained that maintaining the exclusions would aid courts in determining whether the debt collector has rebutted the presumption of a violation when excess telephone calls fall under one or more of the proposed § 1006.14(b)(3) exclusions. As discussed in the section-by-section analysis of § 1006.14(b)(2), the Bureau is implementing a rebuttable-presumption approach in this final rule and finalizing three of the proposed exclusions. Telephone calls placed by a debt collector that are excluded under § 1006.14(b)(3) do not count toward the telephone call frequencies in § 1006.14(b)(2)(i) that determine whether a debt collector is presumed to 452 See the section-by-section analysis of § 1006.2(i). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 comply with or violate § 1006.14(b)(1) and FDCPA section 806(5). Therefore, telephone calls excluded under § 1006.14(b)(3) will not be used to determine whether a debt collector has rebutted a presumption of a violation under § 1006.14(b)(2)(ii).453 14(b)(3)(i) Proposed § 1006.14(b)(3)(ii) would have excluded from the proposed telephone call frequency limits in § 1006.14(b)(2) telephone calls that a debt collector places to a person with the person’s prior consent given directly to the debt collector.454 Under the proposal, a debt collector would have been permitted to place as many telephone calls as necessary before reaching the consumer, but once the debt collector reached the consumer, further telephone calls would not have been covered by the prior consent exclusion. Proposed comment 14(b)(3)(ii)–1 would have referred to the commentary to proposed § 1006.6(b)(4)(i) for guidance concerning a person giving prior consent directly to a debt collector, and proposed comment 14(b)(3)(ii)–2 provided an example of the rule. For the reasons discussed below, the Bureau is revising the proposed prior consent exclusion, renumbered as § 1006.14(b)(3)(i), to limit the duration of prior consent to no more than seven consecutive days. One industry commenter recommended that the Bureau limit the number of telephone calls permitted per day and per week under the § 1006.14(b)(3) exclusions, including the prior consent exclusion, while another industry commenter opposed such limits. Some industry commenters explained that it is not necessary to limit telephone calls made under the prior consent exclusion because consumers can withdraw consent at any time. One industry commenter recommended that the proposed § 1006.14(b)(2) telephone call frequency limits reset when a consumer asks a debt collector to call back at another time. Industry commenters also requested clarification about what constitutes prior consent, whether certain scenarios fit within the exclusion, and how to document prior consent. Consumer advocate commenters requested that the Bureau limit the prior consent exclusion to one additional telephone call and expressed concern that debt collectors could 453 See the section-by-section analysis of, and commentary to, § 1006.14(b)(2)(i) and (ii) for a nonexhaustive list of factors that may be used to rebut presumptions of compliance with, and violation of, § 1006.14(b)(1) and FDCPA section 806(5). 454 See 84 FR 23274, 23318 (May 21, 2019). PO 00000 Frm 00087 Fmt 4701 Sfmt 4700 76819 otherwise pressure consumers into providing blanket consent for unlimited additional telephone calls over an unspecified period of time. In general, the Bureau believes that a person can determine when additional telephone calls from, or telephone conversations with, a debt collector would not be harassing, and that a debt collector who has a person’s prior consent to place additional telephone calls does not place such calls with intent to annoy, abuse, or harass the person. In the proposal, the prior consent exclusion would have lasted until the debt collector reached the person who consented to the additional telephone calls. Therefore, if the debt collector were unable to reach the person, the person’s prior consent to additional telephone calls would have lasted indefinitely. The Bureau recognizes that the debt collector’s additional telephone calls, placed indefinitely, may have the natural consequence of which is to harass, oppress, or abuse the person in connection with the collection of a debt. The Bureau considered limiting the number of telephone calls a debt collector may place under the prior consent exclusion, as suggested by consumer advocate commenters, but concluded that such an approach would be impractical, given that it often takes debt collectors multiple telephone calls to reach a person. Instead, the Bureau is amending proposed § 1006.14(b)(3)(ii), renumbered as § 1006.14(b)(3)(i), to limit the duration of prior consent to no more than seven consecutive days, which is the same time period to which the telephone call frequencies in § 1006.14(b)(2)(i) apply. Specifically, final § 1006.14(b)(3)(i) provides that telephone calls placed to a person do not count toward the § 1006.14(b)(2)(i) telephone call frequencies if they are placed with such person’s prior consent given directly to the debt collector and within a period no longer than seven consecutive days after receiving the prior consent.455 In addition, as explained in new comment 14(b)(3)(i)– 2, a person’s seven-consecutive-day prior consent described in § 1006.14(b)(3)(i) will expire sooner, if any of the following occurs prior to the conclusion of the seven-consecutive-day period: (1) The person consented to the additional telephone calls for a shorter time period and such time period has ended; (2) the person revokes such prior consent; or (3) the debt collector has a 455 The date the debt collector receives prior consent counts as the first day of the sevenconsecutive-day period. E:\FR\FM\30NOR3.SGM 30NOR3 76820 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations telephone conversation with the person regarding the particular debt. In response to commenters’ requests for clarification about what constitutes prior consent, the Bureau is amending proposed comment 14(b)(3)(ii)–1, renumbered as comment 14(b)(3)(i)–1. The comment continues to refer to § 1006.6(b)(4)(i) and its associated commentary for guidance about giving prior consent directly to a debt collector, but it also clarifies that nothing in § 1006.14(b)(3)(i) regarding prior consent for telephone call frequencies permits a debt collector to communicate, or attempt to communicate, with a consumer as prohibited by §§ 1006.6(b) and 1006.14(h). Industry commenters raised a variety of hypothetical scenarios and asked whether the consent exclusion would apply to specific fact patterns. The Bureau is revising proposed comment 14(b)(3)(ii)–2, renumbered as comment 14(b)(3)(i)–3.i through .iii, to address how the consent exclusion applies in a number of scenarios raised by commenters. For example, the Bureau is adding an illustrative example in comment 14(b)(3)(i)–3.iii that describes a situation in which a consumer provides prior consent to receive additional telephone calls by sending an email to the debt collector requesting additional information. Industry commenters also asked about how to document a consumer’s prior consent. The Bureau declines to prescribe a specific manner in which debt collectors could document a consumer’s prior consent. However, as discussed in the section-by-section analysis of § 1006.100(a), debt collectors must retain records created in the ordinary course of business that evidence compliance with the FDCPA and Regulation F, as well as records created in the ordinary course of business that evidence that the debt collector refrained from conduct prohibited by the FDCPA and the regulation.456 TKELLEY on DSKBCP9HB2PROD with RULES3 14(b)(3)(ii) Proposed § 1006.14(b)(3)(iii) would have excluded from the frequency limits 456 See comment 100(a)–1 for examples of evidence a debt collector could retain. Comment 100(a)–2 explains that a debt collector need not create and maintain additional records, for the sole purpose of evidencing compliance, that the debt collector would not have created in the ordinary course of its business in the absence of the record retention requirement set forth in § 1006.100(a). Comment 100(a)–3 explains that records may be retained by any method that reproduces the records accurately (including computer programs) and that ensures that the debt collector can easily access the records (including a contractual right to access records possessed by another entity). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 telephone calls that a debt collector places to a person that do not connect to the dialed number (e.g., that result in a busy signal or are placed to an out-ofservice number).457 Proposed comments 14(b)(3)(iii)–1 and –2 provided examples of telephone calls that do and do not connect to the dialed number. For the reasons discussed below, the Bureau is finalizing the exclusion as proposed, but renumbered as § 1006.14(b)(3)(ii) and with certain revisions to the proposed commentary. Some industry commenters expressed support for the proposed exclusion for telephone calls that do not connect to the dialed number, and no commenters opposed the proposed exclusion. As described above, one industry commenter recommended that the Bureau place limits on the number of telephone calls permitted per day and per week under the § 1006.14(b)(3) exclusions, while another industry commenter opposed such limits. Several industry commenters raised hypothetical questions regarding the operation of the proposed exclusion, such as whether it would cover telephone calls to a full voicemail, dropped telephone calls, telephone calls to a disconnected number, and forwarded telephone calls. The Bureau determines that a person is unlikely to know about, and is not harassed by, a debt collector’s telephone call in response to which the debt collector receives a busy signal or a message indicating that the dialed number is not in service. Similarly, a debt collector who places several telephone calls to a person in response to which the debt collector receives a busy signal or out-of-service notification likely places additional telephone calls to the person in an effort to contact the person and not with the intent to annoy, abuse, or harass the person. For these reasons, the Bureau is finalizing the proposed exclusion for telephone calls that do not connect to the dialed number, without additional limits. The Bureau is finalizing proposed comment 14(b)(3)(iii)–1, with revisions and renumbered as comment 14(b)(3)(ii)–1, in response to a number of the hypothetical questions raised by commenters regarding the operation of the exclusion. With respect to such questions, the Bureau is addressing only the most likely scenarios, as follows. First, commenters asked about debt collectors placing telephone calls to a disconnected telephone number. As in the proposal, final comment 14(b)(3)(ii)– 1 covers such scenarios by explaining that a debt collector’s telephone call 457 See PO 00000 84 FR 23274, 23318 (May 21, 2019). Frm 00088 Fmt 4701 Sfmt 4700 does not connect to the dialed number if, for example, the debt collector receives a busy signal or an indication that the dialed number is not in service. Final comment 14(b)(3)(ii)–1 also clarifies a number of situations in which a telephone call connects to the dialed number. First, the comment specifies that a telephone call that is answered, even if it subsequently drops, has connected to the dialed number. The Bureau understands that dropped telephone calls pose unique challenges to debt collectors. Although such calls do not fit under the exclusion for telephone calls not connected to the dialed number, dropped calls may be addressed by other provisions in this final rule. For example, if a debt collector, at the outset of the telephone call, seeks consent to place additional telephone calls to a person if the telephone call disconnects, the telephone call placed by the debt collector following a disconnection would be excluded from the § 1006.14(b)(2)(i) telephone call frequencies pursuant to the prior consent exclusion in final § 1006.14(b)(3)(i). Moreover, if a debt collector does not seek consent, or the telephone call disconnects before a debt collector receives a person’s prior consent, a debt collector who places another telephone call to the person shortly after the disconnection may be able to rebut the presumption of a violation under § 1006.14(b)(2)(ii), depending on the facts and circumstances surrounding the followup telephone call.458 Second, commenters presented variations of the scenario where a debt collector places a telephone call to a consumer and then hears nothing. In this scenario, if the telephone call is connected to the dialed number, even if the debt collector hears only silence, the telephone call does not meet the § 1006.14(b)(3)(ii) exclusion criteria. If a debt collector is unsure whether the telephone call connected to the dialed number, the debt collector should treat the telephone call as connected to the dialed number and count the telephone call toward the § 1006.14(b)(2)(i) frequencies. Lastly, final comment 14(b)(3)(ii)–1 clarifies that a debt collector’s telephone 458 As discussed in the section-by-section analysis of § 1006.14(b)(2)(ii), one factor for rebutting the presumption of a violation as described in comment 14(b)(2)(ii)–2.iv is whether a debt collector placed a telephone call to convey information to the consumer that, as shown through evidence, would provide the consumer with an opportunity to avoid a demonstrably negative effect relating to the collection of the particular debt, where the negative effect was not in the debt collector’s control, and where time was of the essence. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 call connects to the dialed number if the telephone call is connected to a voicemail or other recorded message, even if the debt collector is unable to leave a voicemail. In situations where a debt collector is unable to leave a voicemail, the debt collector’s telephone call may have caused the consumer’s telephone to ring or may otherwise leave evidence of the telephone call. The same is not true of telephone calls that do not connect to the dialed number. The comment also specifies that a telephone call has connected to the dialed number if the telephone call is connected to a voicemail or other recorded message even if the call did not cause the telephone to ring. Based on feedback, another likely scenario involves a debt collector placing a telephone call that is forwarded to another telephone number. Although not clarified in commentary, the Bureau believes that, in this situation, the exclusion for unconnected telephone calls in final § 1006.14(b)(3)(ii) would not apply because the forwarded telephone call is handled by the dialed number; thus, the telephone call connects to the dialed number. 14(b)(3)(iii) Proposed § 1006.14(b)(3)(iv) would have excluded from the frequency limits telephone calls that a debt collector places to the consumer’s attorney, a consumer reporting agency, the creditor, the creditor’s attorney, or the debt collector’s attorney (i.e., the persons described in proposed and final § 1006.6(d)(1)(ii) through (vi)).459 As discussed in the proposal, debt collectors may have non-harassing reasons for calling these persons more often than the § 1006.14(b)(2)(i) telephone call frequencies. For example, during litigation, a debt collector may need to speak frequently with its own attorneys, as well as with the creditor’s or the consumer’s attorneys. Telephone calls to these persons also are highly unlikely to have the natural consequence of harassing, oppressing, or abusing them for purposes of the FDCPA and final rule. A consumer advocate and industry commenter supported this proposed exclusion. As described above, one industry commenter recommended that the Bureau place limits on the number of telephone calls permitted per day and per week under the § 1006.14(b)(3) exclusions, while another industry commenter opposed such limits. The Bureau concludes that additional limits are not necessary because these 459 See 84 FR 23274, 23318 (May 21, 2019). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 telephone calls are not placed by debt collectors with intent to annoy, abuse, or harass a person, and are highly unlikely to have the natural consequence of which is to harass, oppress, or abuse a person for purposes of the FDCPA and final rule. The Bureau therefore is finalizing proposed § 1006.14(b)(3)(iv) with minor grammatical changes and renumbered as § 1006.14(b)(3)(iii). 14(b)(4) Definition Proposed § 1006.14(b)(5) would have defined the term particular debt for purposes of proposed § 1006.14(b) to mean each of a consumer’s debts in collection, except for student loan debts.460 With respect to student loan debts, the Bureau proposed the term particular debt to mean all debts that a consumer owes or allegedly owes that were serviced under a single account number at the time the debts were obtained by the debt collector. The Bureau also proposed to clarify how the telephone call frequency limits in proposed § 1006.14(b)(2) would apply when a consumer has multiple debts being collected by the same debt collector at the same time.461 For the reasons discussed below, the Bureau is finalizing proposed § 1006.14(b)(5) with one minor grammatical change and renumbered as § 1006.14(b)(4). The Bureau is also revising the proposed commentary and adding additional examples of the rule. Per-Debt Versus Per-Person Telephone Call Frequencies Industry commenters generally supported the proposed per-debt approach to telephone call frequencies. The Bureau received hundreds of comments from the credit and collections industry stating that a perdebt approach is consistent with current debt collection practices and provides flexibility to use account-specific approaches and strategies for different types of debts, different account balances, and debts in different stages of collection. Some industry commenters explained that different clients have different data privacy requirements for the collection of their debts. Industry 460 See id. at 23320. 461 The Bureau proposed this clarification because most consumers with at least one debt in collection have multiple debts in collection. See CFPB Debt Collection Consumer Survey, supra note 16, at 13, table 1; see also Bureau of Consumer Fin. Prot., Consumer credit reports: A study of medical and non-medical collections, at 20 (Dec. 2014), https://files.consumerfinance.gov/f/201412_cfpb_ reports_consumer-credit-medical-and-non-medicalcollections.pdf (CFPB Medical Debt Report) (reporting that most consumers with one collections tradeline have multiple collections tradelines). PO 00000 Frm 00089 Fmt 4701 Sfmt 4700 76821 commenters warned that current system capabilities may not be able to support per-person telephone call frequencies because the systems are not set up to consolidate information about different debts owed by the same consumer, and any system changes would result in extensive reprogramming and training costs. Consumer and consumer advocate commenters argued that debt collectors’ systems should be able to consolidate account information for each consumer, and that debt collectors should be able to identify all debts a consumer owes and discuss them at the same time to prevent harassment through excessive telephone calls placed to consumers with multiple debts in collection. Some industry commenters cautioned that, if the Bureau adopted a per-person approach to telephone call frequencies, debt collectors’ calling practices would be too restricted when collecting on multiple debts owed by the same consumer. These industry commenters warned that the market would respond by selling different debts to different debt collectors or staging and prolonging debt collection—both outcomes that, they asserted, would harm consumers. On the other hand, consumer, consumer advocate, State Attorneys General, State legislator, and local government commenters, among others, generally urged the Bureau to adopt a per-person approach.462 Some commenters argued that the proposed per-debt approach permits an unreasonably high number of telephone calls and weakens the FDCPA’s consumer protections. Citing data from the CFPB Debt Collection Consumer Survey showing that 75 percent of people with one debt in collection have multiple debts in collection,463 some of these commenters argued that the proposed per-debt approach would allow debt collectors to harass consumers with multiple debts by potentially placing hundreds of telephone calls per week. Some commenters identified the ineffectiveness of repeated telephone calls as another reason to adopt a perperson approach.464 A State Attorney 462 The Bureau also received a large number of comments from consumers advocating for a perperson approach. 463 See CFPB Debt Collection Consumer Survey, supra note 16, at 13, table 1. 464 One commenter supported this assertion by pointing to a pilot program focused on servicing defaulted student loans where the Bureau of the Fiscal Service at the U.S. Department of the Treasury placed more than 21,000 telephone calls in an attempt to initiate a dialogue regarding the borrower’s debt. Borrowers answered the telephone calls less than 2 percent of the time. U.S. Dep’t of E:\FR\FM\30NOR3.SGM Continued 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76822 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations General commenter stated that debt collectors in a particular State that limits telephone call frequency to three telephone calls per week per consumer have not been hindered in their ability to collect debt responsibly. A number of commenters also argued that the consumer benefits of the proposed limit of one telephone conversation per week will become illusory with a per-debt approach because consumers with multiple debts in collection will continue to receive telephone calls about other debts from debt collectors. Some industry commenters believed that consumers would be overwhelmed and confused if, under a per-person approach, debt collectors were forced to discuss multiple debts in a single telephone call with a consumer. Consumer and consumer advocate commenters, among others, rejected this assertion, arguing instead that the proposed per-debt approach would overwhelm consumers financially and emotionally. Specifically, these commenters predicted that the proposed per-debt approach would cause an increased use of mobile telephone minutes and data; result in emotional harms such as chronic stress, shame, and anxiety; and manifest physically in the form of stress to the immune system and elevated blood pressure. The Bureau understands that, if a consumer has multiple debts in collection, either from one creditor or from multiple creditors, sometimes a single debt collector will attempt to collect some or all of them. Debt collectors in this situation typically make distinct efforts to collect each debt rather than, for example, asking the consumer about all debts during a single telephone call. Although some commenters argued that addressing all debts in one telephone call could be more consumer-protective and decrease telephone call frequency, there are legitimate reasons why debt collectors segregate debts. For example, larger debt collectors often collect multiple debts owed by the same consumer to different creditors, and many creditors require these debt collectors to work each account separately (e.g., a large collection firm may have a dedicated group of collectors exclusively working a particular credit card brand). Creditors impose these requirements, among other reasons, to direct and monitor more closely the activities and legal compliance of debt collectors working their accounts to avoid reputational Treasury, Report on Initial Observations from the Fiscal-Federal Student Aid Pilot for Servicing Defaulted Student Loan Debt, at 3 (July 2016), https://www.treasury.gov/connect/blog/Documents/ student-loan-pilot-report-july-2016.pdf. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 harm to themselves. A consumer’s debts also may enter collection at different times and thus be at different stages of the collections process, such that the different debts may be eligible for different types of settlement offers. The Bureau also recognizes that some consumers may not be able or prepared to discuss more than one debt during a single telephone call or may find it overwhelming, confusing, or simply too time consuming to discuss multiple debts, with different terms and offers, during a single telephone call. Debt collection conversations could become even more complicated if, for example, a consumer wanted to dispute one or some, but not all, of the debts. As discussed in the proposal, the Bureau considered proposing a perperson approach to the telephone call frequencies, but was concerned that creditors could sidestep a per-person limit by placing debts with debt collectors who collect for only one or a limited number of creditors or by assigning only a single debt to any one debt collector; or that debt collectors could sequence collection of a consumer’s debts, thereby prolonging the collections process for some debts. Industry commenters affirmed the likelihood of these outcomes if the Bureau were to adopt a per-person approach. So, while technology that would enable debt collectors to consolidate information about different debts owed by the same consumer, including across different creditorclients, may exist, a per-person approach may not actually alter the overall telephone call frequency experienced by consumers who have multiple debts in collection and may raise other concerns. For this reason, the Bureau declines to adopt a perconsumer approach and is finalizing the per-debt approach as proposed. Aggregating Student Loan Debts As noted, the Bureau proposed the term particular debt to mean, for student loan debts, all debts that a consumer owes or allegedly owes that were serviced under a single account number at the time the debts were obtained by the debt collector. One industry commenter specifically supported this proposal and also recommended that the Bureau adopt the same rule for all debts that are aggregated by a creditor and serviced under a single account-number before assignment to a debt collector. The Bureau declines to do so because the Bureau understands that debts other than student loan debts are often not serviced under the same account PO 00000 Frm 00090 Fmt 4701 Sfmt 4700 number, and therefore such an approach would provide little consumer benefit. Other industry commenters generally urged the Bureau to adopt a per-debt rule for all debts, including student loan debts. These commenters argued that all debt types should be treated the same in order to not confuse the consumer and to ensure that the debt collector can adequately provide accurate information to the consumer. They stated that because most debtors have more than one debt in collection, aggregating certain debts but not others will cause confusion, and that during some conversations with a debt collector, a consumer will need to distinguish between multiple debts. The Bureau also declines to adopt this approach. With respect to the collection of multiple student loan debts that were serviced under a single account number at the time the debts were obtained by a debt collector, the debt collector and consumer generally interact as if there were only a single debt. Multiple student loan debts are often serviced under a single account number and billed on a single, combined account statement; have a single total amount due; and require a single payment from the consumer. As a result, many consumers already experience multiple student loan debts as a single debt, and the Bureau concludes that adopting such an approach in the final rule is unlikely to confuse consumers or cause consumers to get inaccurate information. Some industry commenters also cautioned that the proposal to aggregate student loans could be problematic for a debt collector who is collecting on both Federal and private student loan debt. For example, the commenters noted that current regulations governing loans held by the Department of Education prohibit the sharing of information with any other debt collector database as well as the sharing of information with other debt collectors who may be attempting to contact the borrower. The commenters also explained that it would be unworkable for debt collectors to combine student loans that were originated with different lenders, and have different loan agreements, loan types, origination dates, fees, interest rates, and default dates. The Bureau believes that these commenters may have misunderstood the proposal. Because Federal and private student loans, and loans originated by different lenders, would not be serviced under the same account number at the time the debts were obtained by a debt collector, a debt collector would not be required to treat E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations those student loan debts as a single debt. Some commenters stated that the proposed approach was open to abuse by the industry. These commenters were concerned that lenders and servicers would assign different account numbers to student loan debts to prevent aggregation if the student loan debts were to end up in collection later on. One commenter suggested instead that the Bureau measure telephone call frequency by accounts as that term is described for purposes of the student loan servicing market in § 1090.106 of the Defining Larger Participants of Certain Consumer Financial Product and Service Markets regulation (Larger Participant Rule), rather than by particular debt.465 The Bureau believes that it is unlikely that its proposed approach will be exploited in the ways these commenters described. Whether a debt collector is required to aggregate student loan debts depends on whether the servicer serviced the student loans under the same account number at the time they were obtained by a debt collector. Servicers have little incentive to incur the cost of replacing their efficient practice of servicing multiple student loan debts under a single account number and billing such debts on a single, combined account statement that has a single total amount due and requires a single payment from the consumer, with the less efficient practice of billing each student loan debt individually, just so a possible future debt collector could place telephone calls in accordance with the § 1006.14(b)(2)(i) telephone call frequencies with respect to each individual student loan debt. In addition, the Bureau declines to use accounts as that term is described in § 1090.106 of the Larger Participant Rule. In the Larger Participant Rule, an individual account is one for which a financial institution is serving a specific borrower for a specific stream of fees from a creditor. As discussed in the preamble to the Larger Participant Rule, if a servicer is paid one fee by a lender for servicing both Federally insured loans and private education loans for a particular student, there would only be one account for the borrower for purposes of determining whether the servicer is considered a larger participant of the student loan servicing market.466 If implemented as described 465 Section 1090.106 describes an individual account as one where a financial institution is serving a specific borrower for a specific stream of fees from a creditor. 466 78 FR 73383, 73388 (Dec. 6, 2013). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 in the Larger Participant Rule, such an approach could require certain debt collectors to aggregate Federal and private student loan debt information, which, as commenters noted, may be prohibited by Federal law. Other commenters suggested that, instead of aggregating one type of debt, the Bureau should lower the telephone call frequencies and apply such frequencies on a per-person basis. As discussed in the section-by-section analysis of § 1006.14(b)(2), the Bureau is not finalizing the proposed telephone call frequency limits. Instead, the Bureau is finalizing a rebuttablepresumption approach to telephone call frequencies. The rebuttablepresumption approach contemplates that there may be circumstances in which telephone call frequencies below the limits proposed in § 1006.14(b)(2) may violate § 1006.14(b)(1) and FDCPA section 806(5).467 For all these reasons, the Bureau is finalizing the proposed approach to aggregate student loan debts serviced under a single account number at the time the debts were obtained by a debt collector. Aggregating Medical Debts Commenters, including consumer advocate commenters, expressed concern about potential excessive telephone call volume with respect to the collection of medical debts specifically. One commenter explained that it is not uncommon for a single medical appointment to result in bills from multiple providers, each of which could end up in collections if the patient is unable to pay. The commenter stated that the per-debt approach to telephone call frequencies would increase the likelihood that a single medical emergency would result in dozens of telephone calls each week, which the Bureau has recognized has a deleterious effect on consumer wellbeing. Commenters often cited a fact pattern in which a debt collector places 56 telephone calls to an alleged debtor in a week because the debt collector is collecting on eight medical debts stemming from the same medical incident. However, these commenters generally did not advocate for aggregation of medical debt. Instead, they advocated for a per-person approach to telephone call frequencies for all debt. Some industry commenters asserted that healthcare providers do not typically maintain a rolling total of 467 See the section-by-section analysis of § 1006.14(b)(2) for a more thorough discussion of the telephone call frequencies. PO 00000 Frm 00091 Fmt 4701 Sfmt 4700 76823 charges for a general service and instead individually bill each visit, which is further itemized by each provider, facility, and service performed or good provided. The commenters explained that a consumer’s medical debt from one creditor may have numerous unique account numbers. Another industry commenter identified the need to maintain compliance with State and Federal medical privacy laws, although the commenter did not identify specific challenges that the proposal or alternatives would create. According to the CFPB Debt Collection Consumer Survey, medical debt is the most common type of pastdue bill or payment for which consumers reported debt collectors contacted them. More than half of consumers who said they were contacted about a debt in collection noted that it was related to medical debt.468 The Bureau recognizes that consumers do not have control over how medical debt is billed to them and acknowledges that, under current medical debt billing practices, one medical event can result in multiple debts for a consumer. However, the Bureau also recognizes that there are significant operational challenges with aggregating medical debt. As discussed above, the Bureau has identified concerns with implementing a per-person approach to the § 1006.14(b)(2)(i) telephone call frequencies generally. In addition, in contrast to some student loans, medical debts from one creditor may have numerous unique account numbers. Therefore, the Bureau declines to aggregate medical debts by account number for purposes of the telephone call frequencies in § 1006.14(b)(2)(i). However, as discussed below, the Bureau is committed to monitoring this issue closely after the final rule is implemented and, if necessary, will reconsider how the § 1006.14(b)(2)(i) telephone call frequencies apply to medical debts. The Bureau also emphasizes that consumers can control when, how, and even if debt collectors can contact them. Section 1006.6(b)(1) prohibits a debt collector from, among other things, 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 addition, § 1006.14(h)(1) provides that, in connection with the collection of any debt, a debt collector must not 468 See CFPB Debt Collection Consumer Survey, supra note 16, at 21, figure 2. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76824 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations communicate or attempt to communicate with a person through a medium of communication, including telephone calls, if the person has requested that the debt collector not use that medium to communicate with the person. A consumer may also notify a debt collector in writing that the consumer wants the debt collector to cease further communication with the consumer with respect to a debt, and pursuant to § 1006.6(c)(1), a debt collector must not communicate or attempt to communicate further with the consumer with respect to that debt. For the reasons discussed above, the Bureau is renumbering § 1006.14(b)(5) as § 1006.14(b)(4) and finalizing it generally as proposed. The Bureau is making one minor grammatical amendment. Specifically, the Bureau is replacing the article ‘‘the’’ preceding the phrase ‘‘debt collector’’ with ‘‘a’’ to account for circumstances in which a debt collector collecting student loan debts is not the same debt collector that obtained such debts from the entity servicing the student loans. Final § 1006.14(b)(4) thus provides that the term particular debt means each of a consumer’s debts in collection, except that, in the case of student loan debts, the term means all student loan debts that a consumer owes or allegedly owes that were serviced under a single account number at the time the debts were obtained by a debt collector. The Bureau expects to monitor the market in response to the final rule. If substantial evidence develops that debt collectors who are placing telephone calls in compliance with the per-debt telephone call frequencies are nonetheless harassing consumers, the Bureau could potentially revisit the per-debt approach to telephone call frequencies for all or certain types of debts, such as medical debts, in a future rulemaking. The Bureau also is revising commentary to proposed § 1006.14(b)(5) in response to requests for clarification from several industry commenters. Some of these commenters asked whether particular types of calls would count toward the proposed telephone calling limits, while others asked how to aggregate or otherwise count such calls. A number of commenters offered suggestions for resolving such hypotheticals while others did not. In response to commenters’ questions, the Bureau is amending proposed comment 14(b)(5)–1, renumbered as comment 14(b)(4)–1, to include additional examples to illustrate the rule. The Bureau also is adding comments 14(b)(4)–1.i and .ii to explain if a debt collector has placed a telephone call for purposes of counting VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 the telephone call frequency under § 1006.14(b)(2)(i)(A) and if a debt collector has engaged in a telephone conversation for purposes of determining whether subsequent telephone calls meet the telephone call frequency under § 1006.14(b)(2)(i)(B). As provided in comment 14(b)(4)–1.i, if a debt collector places a telephone call to a person and initiates a conversation or leaves a voicemail about one particular debt, the debt collector counts the telephone call as a telephone call in connection with the collection of the particular debt, subject to the exclusions in § 1006.14(b)(3). If a debt collector places a telephone call to a person and initiates a conversation or leaves a voicemail about more than one particular debt, the debt collector counts the telephone call as a telephone call in connection with the collection of each such particular debt, subject to the exclusions in § 1006.14(b)(3). If a debt collector places a telephone call to a person but neither initiates a conversation about a particular debt nor leaves a voicemail that refers to a particular debt, or if the debt collector’s telephone call is unanswered, the debt collector counts the telephone call as a telephone call in connection with the collection of at least one particular debt, unless an exclusion in § 1006.14(b)(3) applies. As provided in comment 14(b)(4)–1.ii, if a debt collector and a person discuss one particular debt during a telephone conversation, the debt collector has engaged in a telephone conversation in connection with the collection of the particular debt, regardless of which party initiated the discussion about the particular debt, subject to the exclusions in § 1006.14(b)(3). If a debt collector and a person discuss more than one particular debt during a telephone conversation, the debt collector has engaged in a telephone conversation in connection with the collection of each such particular debt, regardless of which party initiated the discussion about the particular debts, subject to the exclusions in § 1006.14(b)(3). If no particular debt is discussed during a telephone conversation between a debt collector and a person, the debt collector counts the conversation as a telephone conversation in connection with the collection of at least one particular debt, unless an exclusion in § 1006.14(b)(3) applies. Final comment 14(b)(4)–2 provides examples of the rules for counting telephone calls under various scenarios. PO 00000 Frm 00092 Fmt 4701 Sfmt 4700 14(h) Prohibited Communication Media 469 14(h)(1) In General The Bureau proposed § 1006.14(h)(1) to prohibit a debt collector from communicating or attempting to communicate with a consumer through a medium of communication if the consumer has requested that the debt collector not use that medium to communicate with the consumer.470 Pursuant to its authority under FDCPA section 814(d) to write rules with respect to the collection of debts by debt collectors, the Bureau proposed § 1006.14(h)(1) as an interpretation of FDCPA section 806, which prohibits a debt collector from engaging in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. For the reasons discussed below, the Bureau is adopting this proposed interpretation and finalizing § 1006.14(h)(1) largely as proposed, while revising it to apply to a ‘‘person,’’ as defined under § 1006.2(k). Consumer commenters supported the proposal to permit a consumer to limit the communication media used by a debt collector, and consumer advocate, government, and industry commenters generally supported proposed § 1006.14(h)(1) as offering consumers more control over communications received from debt collectors. Consumer advocates agreed that a debt collector should be required to stop calling specific telephone numbers and sending email, text messages, or other electronic communications upon the consumer’s request. Describing proposed § 1006.14(h)(1) as a critical consumer protection, one consumer advocate stated that clarifying this right under the FDCPA will ensure that consumers are not harassed while also allowing them to communicate with debt collectors without requesting that the debt collector stop all communication, thus preventing unnecessary debt collection lawsuits from being filed. Consumer advocates also stated that the Bureau’s interpretation is consistent with FDCPA section 806, specifically FDCPA section 806(5) where some courts have found consumers stated a claim for violations of the FDCPA when debt collectors continued to call after being asked to stop. Other consumer advocates 469 As noted above, § 1006.14(c) through (g) generally mirror the statute, with minor wording and organizational changes for clarity and therefore are not further discussed in this section-by-section analysis. 470 84 FR 23274, 23321–22 (May 21, 2019). E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations suggested that consumers would benefit greatly from being able to specify contact through various communications media, allowing consumers the ability to stop telephone calls, for example, or other types of communication without stopping all communications. A group of State Attorneys General agreed that consumers should be able to put any limitations on the use of new technology that they desire, and that, because consumers already have an absolute right to demand that debt collection communications cease, they should have the right to place any lesser limitations on communication, such as limitations on medium or frequency of communication. Additionally, one academic commenter explained that people are sensitive to communication methods and that, even when internet access is reliable, many people may prefer to communicate in person, by telephone, or by letter, including some people with mental illness, who may struggle with electronic communication due to confusion about how to use it or concerns about safety and privacy. A number of industry commenters generally agreed with proposed § 1006.14(h)(1) on the basis that consumer requests must be respected when it comes to their preferred methods of communication. One industry commenter stated that the proposal would allow a debt collector to communicate with a consumer while also providing adequate consumer safeguards by prohibiting the debt collector from communicating with the consumer through communication media that the consumer requested the debt collector not use. And one trade group commenter supported proposed § 1006.14(h)(1) and agreed it is consistent with FDCPA section 806. Some industry commenters opposed the proposal in § 1006.14(h)(1) as needlessly restrictive and difficult to implement and stated that it would offer few, if any, countervailing consumer benefits. One industry commenter stated that proposed § 1006.14(h)(1) would limit a debt collector on how best to communicate with consumers who may have a preference of one communication method over another. One trade group commenter suggested that proposed § 1006.14(h)(1) impermissibly expands the scope of the FDCPA. The Bureau determines that § 1006.14(h)(1) affords various consumer benefits and protections. Since the enactment of the FDCPA, the possible media through which communications generally are conducted has expanded beyond telephone, mail, and in-person VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 conversations to include various mobile and portable technologies that were not contemplated in 1977. For example, with the advent of the mobile telephone, a person may receive a telephone call at any time or place. As the Bureau’s Consumer Survey indicated, consumers have varied but strong preferences about the media that debt collectors use to communicate with them.471 Once a person has requested that a debt collector not use a specific medium of communication to communicate with that person, the Bureau believes that the natural consequence of further communications or attempts to communicate from the debt collector to that person using that same medium likely is harassment, oppression, or abuse of that person. Consistent with this interpretation, the Bureau understands that some debt collectors currently refrain from communicating with a person through a medium that the person has requested the debt collector not use to communicate with that person, including, for example, specific telephone numbers that a person has asked the debt collector not to call. Accordingly, the Bureau is finalizing § 1006.14(h)(1) as proposed and revising it to apply to a ‘‘person.’’ Consistent with its authority under FDCPA section 814(d) to write rules with respect to the collection of debts by debt collectors, and because the Bureau is adopting § 1006.14(h)(1) as an interpretation of FDCPA section 806, which prohibits a debt collector from engaging in any conduct the natural consequence of which is to harass, oppress, or abuse ‘‘any person’’ in connection with the collection of a debt, the Bureau is finalizing § 1006.14(h)(1) to apply to a person, as defined under § 1006.2(k), and not to limit it as proposed to a consumer as defined under § 1006.6(a). One consumer advocate suggested that the rule should provide that a consumer’s demand to stop any one communication medium should stop all communications, unless the consumer affirmatively specifies otherwise, while a group of consumer advocates similarly suggested that one opt-out request (e.g., in response to an email) be applied to all types of communications from the creditor, debt collector, and debt buyer for a given debt. Two industry commenters, on the other hand, requested that the Bureau clarify that a consumer’s request to no longer receive communications through one medium is not to be treated as a blanket cease 471 See CFPB Debt Collection Consumer Survey, supra note 16, at 36–37. PO 00000 Frm 00093 Fmt 4701 Sfmt 4700 76825 communication request for purposes of § 1006.6(c). In response to commenters’ requests, the Bureau notes that, as discussed in the section-by-section analysis of § 1006.6(c), FDCPA section 805(c), as implemented by § 1006.6(c), provides that, subject to certain exceptions, if a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt.472 Separately, the Bureau is finalizing § 1006.14(h)(1) as an interpretation of FDCPA section 806, which, in relevant part, prohibits a debt collector from engaging in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.473 Therefore, whereas § 1006.6(c)(1) would prohibit a debt collector, subject to certain exceptions, from all further communications or attempts to communicate with a consumer regarding a particular debt, § 1006.14(h)(1) would prohibit a debt collector from communications or attempts to communicate with a person through a medium of communication that the person has requested the debt collector not use to communicate with the person for all debts. Although these provisions are distinct in their reliance on separate FDCPA authorities (FDCPA sections 805(c) versus 806), in principle they are similar in that they both afford an individual greater control over the communications received from a debt collector. However, final § 1006.14(h)(1) is narrower than final § 1006.6(c)(1) in that, depending on the request by the person, final § 1006.14(h)(1) prohibits a debt collector from communicating or attempting to communicate with that person only through a specific communication medium or media and does not constitute a broader communication restriction, whereas final § 1006.6(c)(1) prohibits a debt collector from all further communications or attempts to communicate with a consumer. One industry commenter requested that the Bureau adopt a safe harbor for up to seven days to allow a debt collector’s systems reasonable time to update a consumer request pursuant to proposed § 1006.14(h)(1). For reasons similar to those discussed in the section-by-section analysis of 472 See 15 U.S.C. 1692c(c). See the section-bysection analysis of § 1006.6(c) for additional discussion. 473 See 15 U.S.C. 1692d. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76826 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations § 1006.6(c)(1), this final rule does not specify the period of time afforded a debt collector to update its systems to reflect a person’s request under § 1006.14(h)(1). However, depending upon the circumstances, FDCPA section 813(c)’s bona fide error defense to civil liability may apply where, notwithstanding the maintenance of procedures reasonably adapted to avoid any such error, a debt collector communicates or attempts to communicate with a person through a medium of communication after the person has requested that the debt collector not use that medium but before the debt collector has implemented the person’s request.474 A group of consumer advocates stated that the Bureau should require all consumer requests to stop a debt collector’s communications through a particular medium be noted in the debt collector’s file and transferred to the creditor or a subsequent debt collector, and in turn, should provide that future debt collectors would be obligated to honor the consumer’s request. Similarly, one local government commenter requested that the Bureau require a debt collector selling or otherwise transferring a debt to another debt collector to share any instructions by the consumer opting out of any medium of communication. One trade group commenter suggested that, if a consumer requested a previous debt collector not use a particular medium, the subsequent debt collector should be granted a safe harbor until the consumer communicates that preference. The proposal would not have required a debt collector to transfer such information to a creditor or subsequent debt collector, and neither does this final rule.475 A debt collector thus would not be bound by a request that a person had submitted to a prior debt collector under § 1006.14(h). While this approach may require a person to again request that a medium of communication not be used if an account is transferred from one debt collector to another, the Bureau believes that, as described in the section-bysection analysis of § 1006.6(e), a person who objects to one debt collector’s use of a medium of communication might not object to another debt collector’s use of that same medium. A group of consumer advocates requested that the Bureau address how consumers will learn of their right to ask debt collectors not to use certain 474 See the section-by-section analysis of § 1006.6(c)(1). 475 See the section-by-section analysis of § 1006.6(b)(1). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 communication media, suggesting that the Bureau require debt collectors to orally notify consumers in each debt collection call about the right to opt out of receiving telephone calls. Similarly, one local government commenter stated the Bureau should ensure that debt collectors clearly and conspicuously convey to consumers that they have the option to not only opt out of electronic communications, but that they can choose not to receive any telephone calls or telephone calls to a particular number. The Bureau determines that consumers, without additional disclosures, currently make such requests of debt collectors and will likely continue to do so. In addition, the procedures in § 1006.6(e) require a debt collector to disclose to a consumer the ability to opt out of electronic communications to a particular email address, telephone number, or other electronic-medium address. Accordingly, the Bureau declines to include an additional disclosure requirement related to § 1006.14(h). For the reasons discussed above, the Bureau is finalizing § 1006.14(h)(1) to provide that, in connection with the collection of any debt, a debt collector must not communicate or attempt to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person. The Bureau also proposed commentary to § 1006.14(h)(1). Proposed comment 14(h)(1)–1 referred to comment 2(d)–1 for examples of communication media. The Bureau received no comments on proposed comment 14(h)(1)–1 and is finalizing it largely as proposed, with certain revisions to include, similar to comment 6(b)(1)–1, that a debt collector may ask follow-up questions regarding preferred communication media to clarify statements by the person. Proposed comment 14(h)(1)–2 clarified that, within a medium of communication, a consumer may request that a debt collector not use a specific address or telephone number and provided an example. The Bureau received no comments on proposed comment 14(h)(1)–2 and is finalizing it largely as proposed, with certain revisions consistent with § 1006.14(h)(1). Commenters requested clarification with respect to how a person may invoke the protections that would be afforded under proposed § 1006.14(h)(1). A number of consumer advocates requested that the Bureau clarify that a request pursuant to PO 00000 Frm 00094 Fmt 4701 Sfmt 4700 § 1006.14(h)(1) may be made using any reasonable method, for example orally, whereas two industry commenters asked the Bureau to require that the request must be made in writing. The Bureau declines to adopt a writing requirement. While FDCPA section 805(c), as implemented by § 1006.6(c), requires a consumer to notify a debt collector in writing, that provision applies only if a consumer wishes a debt collector to cease all communication; the Bureau concludes that a similar writing requirement is not necessary or warranted in the context of § 1006.14(h)(1), which provides a person with the opportunity to make a narrower request regarding communication media. As discussed in the section-by-section analysis of § 1006.6(c)(1), the Bureau declines to extend § 1006.6(c)(1) to oral requests but does clarify that, depending on the facts and circumstances, a consumer’s oral request to, for example, ‘‘stop calling’’ would constitute a request that the debt collector not use that medium of communication (e.g., telephone calls) to communicate with the consumer, and consistent with § 1006.14(h)(1), the debt collector would thereafter be prohibited from placing telephone calls to the consumer.476 The Bureau is adopting new comment 14(h)(1)–3.i to provide an example illustrating this aspect of the rule. Additionally, the Bureau is adopting new comment 14(h)(1)–3.ii to provide an example illustrating a consumer’s request to opt out in response to receipt of either the opt-out procedures described in final § 1006.6(d)(4)(ii) or the opt-out notice in final § 1006.6(e). Assuming that, in response to receipt of either the opt-out notice described in § 1006.6(d)(4)(ii) or the opt-out instructions in § 1006.6(e), a consumer requests to opt out of receiving electronic communications from a debt collector at a particular email address or telephone number, comment 14(h)(1)– 3.ii clarifies that the consumer has requested that the debt collector not use that email address or telephone number to electronically communicate with the consumer for any debt. Thereafter, § 1006.14(h)(1) prohibits the debt collector from electronically communicating or attempting to communicate with the consumer through that email address or telephone number. 14(h)(2) Exceptions The Bureau proposed § 1006.14(h)(2) to provide two exceptions to the general 476 See the section-by-section analysis of § 1006.6(c)(1). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations prohibition in proposed § 1006.14(h)(1). Specifically, proposed § 1006.14(h)(2)(i) provided that, notwithstanding the prohibition in § 1006.14(h)(1), if a consumer opts out in writing of receiving electronic communications from a debt collector, a debt collector may reply once to confirm the consumer’s request to opt out, provided that the reply contains no information other than a statement confirming the consumer’s request. And proposed § 1006.14(h)(2)(ii) provided that, if a consumer initiates contact with a debt collector using an address or a telephone number that the consumer previously requested the debt collector not use, the debt collector may respond once to that consumer-initiated communication. The Bureau proposed § 1006.14(h)(2) because a single communication from a debt collector of the types described likely would not have the natural consequence of harassing, oppressing, or abusing the consumer within the meaning of FDCPA section 806.477 One industry commenter supported the two proposed exceptions as helpful to both consumers and debt collectors and described them as designed to facilitate communications that are reasonable under the circumstances. For the reasons discussed below, the Bureau is finalizing § 1006.14(h)(2)(i) and (ii) as proposed, with certain clarifications, and, in response to comments, is adopting an additional exception under § 1006.14(h)(2)(iii) for legally required communication media. TKELLEY on DSKBCP9HB2PROD with RULES3 14(h)(2)(i) Proposed § 1006.14(h)(2)(i) provided that, notwithstanding the prohibition in § 1006.14(h)(1), if a consumer opts out in writing of receiving electronic communications from a debt collector, a debt collector may reply once to confirm the consumer’s request to opt out, provided that the reply contains no information other than a statement confirming the consumer’s request. One industry commenter explained that it is fairly common for businesses to send a consumer who opts out of email communication a confirmation message to indicate that the consumer’s request has been honored; the commenter stated that debt collectors should be able to continue this practice. Other industry commenters requested that the Bureau clarify the reference to a consumer’s written opt-out request in proposed § 1006.14(h)(1)(i), given that proposed 477 Proposed § 1006.14(h)(2) also is consistent with the regulations implementing the CAN–SPAM Act, which permit senders to send a reply electronic message. See 16 CFR 316.5. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 § 1006.14(h)(1) does not contain a writing requirement. A group of consumer advocates requested that, in order to protect consumers who have opted out of a workplace communication medium, the Bureau clarify that the exception under proposed § 1006.14(h)(2)(i) does not apply if a debt collector knows or should know that the written opt-out request came from a workplaceprovided communication channel, such as an employer-provided email address.478 In response to these comments, the Bureau is finalizing § 1006.14(h)(2)(i) as proposed, with certain clarifications and revisions consistent with final § 1006.14(h)(1). The Bureau is striking the reference to ‘‘in writing’’ to clarify that a person’s request to opt out of receiving electronic communications from a debt collector need not be in writing.479 Relatedly, consistent with the permission for a debt collector to reply once, a debt collector may send an electronic confirmation of the person’s request to opt out. The Bureau believes that a single electronic communication from a debt collector to confirm a person’s request to opt out of receiving electronic communications from a debt collector likely would not have the natural consequence of harassing, oppressing, or abusing the person within the meaning of FDCPA section 806. As finalized, § 1006.14(h)(2)(i) also provides that the electronic confirmation may state that the debt collector will honor the person’s request. Accordingly, final § 1006.14(h)(2)(i) provides that, notwithstanding the prohibition in § 1006.14(h)(1), if a person opts out of receiving electronic communications from a debt collector, a debt collector may send an electronic confirmation of the person’s request to opt out, provided that the electronic confirmation contains no information other than a statement confirming the person’s request and that the debt collector will honor it. 14(h)(2)(ii) Proposed § 1006.14(h)(2)(ii) provided that, if a consumer initiates contact with 478 For special rules regarding employer-provided email addresses, see § 1006.22(f)(3) and its associated commentary. 479 As discussed in the section-by-section analysis of § 1006.6(e), the final rule requires a debt collector to provide, in each electronic communication, a clear and conspicuous statement describing a reasonable and simple method by which the consumer can opt out of further electronic communications or attempts to communicate by the debt collector to that address or telephone number. Nothing in § 1006.6(e) prohibits a debt collector from accepting an opt-out request made orally. PO 00000 Frm 00095 Fmt 4701 Sfmt 4700 76827 a debt collector using an address or a telephone number that the consumer previously requested the debt collector not use, the debt collector may respond once to that consumer-initiated communication. One industry commenter supported this proposed exclusion, explaining that it makes sense to allow a business to respond to a consumer-initiated communication using the same medium used by the consumer, even in circumstances where the consumer had previously chosen to opt out from that communication medium. Two trade group commenters suggested that, if a consumer contacts a debt collector using a medium that the consumer requested the debt collector not use, the consumer should be deemed to have waived the protections under proposed § 1006.14(h)(1). One consumer commenter stated that the proposed exclusion for consumerinitiated communications should be modified to exclude employer-provided communication media, and a group of consumer advocates urged the Bureau to exclude addresses and telephone numbers that a debt collector knows or should know are employer-provided, unless the debt collector confirms with the consumer that it is permissible to use them again. The Bureau is finalizing § 1006.14(h)(2)(ii) largely as proposed, with certain clarifications in response to comments and revisions consistent with final § 1006.14(h)(1). As suggested by the commenter above, and consistent with new comment 6(b)(1)–2, the Bureau is revising § 1006.14(h)(2)(ii) to permit a debt collector to respond once through the same medium of communication used by the person. The Bureau determines that a single communication from a debt collector in response to a communication initiated by a person using that medium of communication likely would not have the natural consequence of harassing, oppressing, or abusing the person within the meaning of FDCPA section 806. The Bureau concludes this is the case even with respect to employerprovided email addresses because, as explained in the section-by-section analysis of § 1006.6(d)(4)(i), consumers are generally better positioned than debt collectors to determine if third parties have access to a particular email account used by a consumer, whether personal or employer provided.480 Accordingly, final § 1006.14(h)(2)(ii) provides that, notwithstanding the prohibition in § 1006.14(h)(1), if a person initiates contact with a debt 480 See the section-by-section analysis of § 1006.6(d)(4)(i). E:\FR\FM\30NOR3.SGM 30NOR3 76828 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 collector using a medium of communication that the person previously requested the debt collector not use, the debt collector may respond once through the same medium of communication used by the person. 14(h)(2)(iii) Proposed § 1006.14(h)(2) did not include an exception for legally required communications; however, the Bureau requested comment on whether there are specific laws that require communication with a consumer through a specific medium, and if so, whether additional clarification is needed regarding the delivery of legally required communications through a specific medium of communication required by applicable law if the consumer has requested that the debt collector not use that medium to communicate with the consumer. Two industry commenters explained that court orders as well as certain Federal and State laws, including State laws relating to service of process and contracts, can require communication through a specific medium that could contradict a consumer’s request that a debt collector not use that communication medium, including, for example, various notices under State laws that are required to be mailed and in some cases specifically by first-class or certified mail. These commenters requested the Bureau clarify that compliance with a conflicting law and or court order serve as a safe harbor or defense to a claim under the FDCPA. Another industry commenter specifically requested that the Bureau clarify how a debt collector who is also a mortgage servicer could comply with the periodic statement requirement for residential mortgage loans under Regulation Z. In light of these comments, the Bureau is adopting new § 1006.14(h)(2)(iii), which provides that, notwithstanding the prohibition in § 1006.14(h)(1), 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. The Bureau is also adopting new comment 14(h)(2)–1 to provide an example illustrating the exception adopted under § 1006.14(h)(2)(iii). New comment 14(h)(2)–1 provides that, under § 1006.14(h)(2)(iii), if otherwise required by applicable law, a debt collector may communicate or attempt to communicate with a person in VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 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. For example, assume that a debt collector who is also a mortgage servicer subject to the periodic statement requirement for residential mortgage loans under Regulation Z, 12 CFR 1026.41, is engaging in debt collection communications with a person about the person’s residential mortgage loan. The person tells the debt collector to stop mailing letters to the person, and the person has not consented to receive statements electronically in accordance with 12 CFR 1026.41(c). Although the person has requested that the debt collector not use mail to communicate with the person, § 1006.14(h)(2)(iii) permits the debt collector to mail the person periodic statements, because the periodic statements are required by applicable law. Section 1006.18 False, Deceptive, or Misleading Representations or Means FDCPA section 807 generally prohibits a debt collector from using any false, deceptive, or misleading representations or means in connection with the collection of any debt and lists 16 non-exhaustive examples of such prohibited conduct.481 The Bureau proposed § 1006.18 to implement FDCPA section 807.482 Proposed § 1006.18 generally restated the statute with only minor wording changes for clarity, except for certain organizational changes and interpretations in proposed § 1006.18(e) through (g). The Bureau proposed to organize § 1006.18 by grouping the 16 nonexhaustive examples of prohibited false or misleading representations in FDCPA section 807 into categories of related conduct. Specifically, the Bureau proposed § 1006.18(a) to implement the general prohibition in FDCPA section 807 against debt collectors using any false, deceptive, or misleading representation or means in connection with the collection of any debt. Proposed § 1006.18(b) restated FDCPA section 807’s examples of false, deceptive, or misleading representations.483 Proposed U.S.C. 1692e. 84 FR 23274, 23322–24 (May 21, 2019). 483 Proposed § 1006.18(b)(1)(i) through (viii) would have implemented, respectively, paragraphs (1), (16), (3), (7), (6), (12), (13), and (15) of FDCPA section 807, and proposed § 1006.18(b)(2) would have implemented FDCPA section 807(2). The Bureau explained that restating the statutory language was not intended to suggest any particular interpretation of that language. For example, the omission of the words ‘‘or imply’’ from the introductory language to proposed § 1006.18(b)(2) § 1006.18(c) restated FDCPA section 807’s examples of false, deceptive, or misleading collection means.484 Proposed § 1006.18(d) restated the catch-all prohibition against false representations or deceptive means as described in FDCPA section 807(10). Proposed § 1006.18(e) addressed the disclosures required under FDCPA section 807(11). Finally, proposed § 1006.18(f) addressed the use of assumed names by debt collectors’ employees, and proposed § 1006.18(g) addressed misrepresentations of meaningful attorney involvement in debt collection litigation. A number of individual consumer commenters asked the Bureau to prohibit specific examples of false statements that debt collectors had made to the commenters, such as claims that the consumer would be deported or arrested for failing to pay a debt. While the final rule does not enumerate additional specific false statements, the Bureau notes that § 1006.18’s general prohibition on any false, deceptive, or misleading representation or means in connection with the collection of any debt prohibits the false statements described by commenters. The Bureau also received two overarching comments regarding proposed § 1006.18. One industry commenter asked the Bureau to clarify that a debt collector who makes immaterial false statements orally does not violate § 1006.18.485 This commenter suggested that the Bureau could develop a warning letter template that consumers could send to a debt collector to clarify any potential misstatements before suing the debt collector for violating the FDCPA’s prohibition on false representations. This commenter further suggested that the Bureau provide a list of specific statements that debt collectors could use to inform consumers of the credit reporting status of their debts or of the effect of paying their debts without violating the FDCPA’s prohibition on false representations. The Bureau declines to adopt these suggestions. The FDCPA does not qualify the prohibition on false, deceptive, or misleading representations, and the Bureau did not propose to categorically interpret certain 481 15 482 See PO 00000 Frm 00096 Fmt 4701 Sfmt 4700 consistent with the statutory language in FDCPA section 807(2) was not intended to suggest that the Bureau would not regard implied false representations as violations of FDCPA section 807 or 807(2) or proposed § 1006.18(b)(2). 484 Proposed § 1006.18(c)(1) through (4) would have implemented, respectively, paragraphs (5), (8), (9), and (14) of FDCPA section 807. 485 Other commenters addressed specific provisions within proposed § 1006.18, and these comments are discussed below. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 18(d) False Representations or Deceptive Means FDCPA section 807(10) prohibits debt collectors from using any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer. As noted above, proposed § 1006.18(d) restated this catch-all prohibition. The Bureau is finalizing § 1006.18(d) as proposed but, as discussed below, is adding new comment 18(d)–1 to address feedback received regarding the possibility of debt collectors employing deceptive means to collect debts using social media. The Bureau received a number of comments from government commenters and others expressing concern about the possibility of deception when debt collectors use social media to collect debts. The commenters explained that if, when debt collectors communicate or attempt to communicate with consumers using social media, debt collectors do not clearly indicate their identity and the fact that they are collecting a debt, consumers will not understand that they are communicating with a debt collector and will be vulnerable to deceptive conduct. For example, commenters highlighted concerns with debt collectors submitting a Facebook ‘‘friend request’’ or a LinkedIn ‘‘connection’’ while omitting information about the debt collector’s true purpose, in order to engage in collection communications or to obtain information about consumers. A group of State Attorneys General stated that all debt collection communications sent using social media should be accompanied by a notice that the purpose of the communication is to collect a debt.487 Similarly, Federal government agency staff indicated in its comment that the agency has initiated enforcement actions against debt collectors for using false pretenses to engage consumers in conversation through social media. The Bureau recognizes that there are unique consumer concerns presented by social media interactions with debt collectors, whether through direct messaging or connections generally. To clarify the application of the final rule to the type of conduct described by commenters, the Bureau is adding comment 18(d)–1. Comment 18(d)–1 restates the general rule of § 1006.18(d) and provides two examples. First, given the purpose of social media platforms marketed for social or professional networking purposes, such as Facebook or LinkedIn, a consumer who receives a ‘‘friend’’ or ‘‘connection’’ request on such a platform would take away from the request that the requester is interested in a social or professional networking relationship. This consumer takeaway would be false if the request is from a debt collector in connection with the collection of a debt, and this false claim may cause the consumer to accept a request that the consumer otherwise would not have accepted. Such deceptive means of engaging with the consumer violate § 1006.18(d). To address this, comment 18(d)–1.i provides an example of a debt collector who sends a private message to a consumer, in connection with the collection of a debt, requesting to be added as one of the consumer’s contacts on a social media platform marketed for social or professional networking purposes. The comment explains that a debt collector makes a false representation or implication if the debt collector does not disclose his or her identity as a debt collector when making a friend or connection request on social media. Second, the Bureau is including an example to clarify that a debt collector using a social media account for the purpose of engaging with third parties to obtain location information about a consumer must use a profile that accurately identifies the debt collector’s individual name. Specifically, comment 18(d)–1.ii provides an example of a debt collector who sends a private communication to a friend or coworker of the consumer on a social media platform for the purpose of obtaining location information. The comment states that, pursuant to § 1006.10(b)(1), the debt collector must identify himself or herself individually by name, and that, pursuant to § 1006.18(d), the debt collector must communicate using a profile that accurately identifies the debt collector’s individual name. To clarify that this comment is not intended to prohibit the use of an otherwise permissible assumed name, the comment includes a cross-reference to § 1006.18(f). The comment also states that the debt collector must comply with the other applicable requirements of §§ 1006.6(d)(1), 1006.10, and 1006.22(f)(4) when communicating with third parties. Because the use of social media by debt collectors is a relatively new practice, the Bureau intends to monitor closely developments in this space. The Bureau also emphasizes that the general prohibition on false, deceptive, or misleading conduct with any person may prohibit social media activities that are not specifically discussed in comment 18(d)–1. 486 See Bureau of Consumer Fin. Prot., CFPB Bulletin 2013–08, Fair Debt Collection Practices Act and the Dodd-Frank Act (July 10, 2013), https:// files.consumerfinance.gov/f/201307_cfpb_bulletin_ collections-consumer-credit.pdf. 487 Some commenters requested that the Bureau restrict debt collectors from sending private direct messages to consumers on social media platforms. Those comments are discussed in the section-bysection analysis of § 1006.22(f)(4). 488 15 U.S.C. 1692e(11). Proposed § 1006.18(e)(1) addressed initial communications, proposed § 1006.18(e)(2) addressed subsequent communications, and proposed § 1006.18(e)(3) provided an exception for legal pleadings. types or methods of statements as compliant with § 1006.18. A consumer’s understanding of a statement generally depends both on the statement itself and on the facts and circumstances surrounding the statement. Similarly, although the Bureau encourages communication between consumers and debt collectors, the Bureau did not propose and does not support conditioning a consumer’s access to the judicial system on the consumer sending a warning letter to a debt collector. Finally, the Bureau is not creating safe harbor statements regarding credit reporting. The Bureau concludes that safe harbors for general statements about credit reporting are unnecessary for simple statements about a debt collector’s actions, and safe harbors may not be accurate or effective for complicated statements about the effects of paying a debt on a consumer’s credit report, credit score, creditworthiness, or likelihood of receiving credit because these effects depend on the facts and circumstances of a particular case.486 For these reasons, and pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors and to implement and interpret FDCPA section 807, the Bureau is finalizing § 1006.18 largely as proposed, except with respect to the provisions proposed in § 1006.18(d) through (g) as discussed below. TKELLEY on DSKBCP9HB2PROD with RULES3 76829 VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00097 Fmt 4701 Sfmt 4700 18(e) Disclosures Required The Bureau proposed § 1006.18(e) to implement FDCPA section 807(11), which requires debt collectors to disclose in their initial communications with consumers that they are attempting to collect a debt and that any information obtained will be used for that purpose, and to disclose in their subsequent communications with consumers that the communication is from a debt collector, except in a formal pleading made in connection with a legal action (the ‘‘mini-Miranda disclosure’’).488 E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76830 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations Proposed comment 18(e)(1)–1 described the circumstances in which debt collectors would be required to provide disclosures in initial communications under proposed § 1008.18(e)(1). Proposed comment 18(e)(1)–1 specified that a debt collector must provide the disclosures in the debt collector’s initial communication with the consumer, regardless of whether that initial communication is written or oral, and regardless of whether the debt collector or the consumer initiated the communication. Proposed comment 18(e)(1)–1 also provided an example of the rule regarding required disclosures during initial communications. Proposed comment 18(e)–1 provided general commentary to explain how the disclosure requirements in proposed § 1006.18(e) would interact with the proposal’s limited-content message, a message that was not a communication under proposed § 1006.2(d). For the reasons discussed below, the Bureau is finalizing § 1006.18(e) largely as proposed, with minor changes for clarity, and is adopting new § 1006.18(e)(4) regarding translated disclosures. The Bureau received a few comments on the proposed implementation of the mini-Miranda disclosure requirement. A trade group commenter asked the Bureau to allow debt collectors to modify the mini-Miranda disclosure in the bankruptcy context to remove the reference to the collection of a debt and to the use of any information for debt collection purposes. This commenter stated that such language could be construed as an attempt to collect the debt in violation of the automatic stay provisions of the bankruptcy code. The Bureau declines to adopt a specialized bankruptcy version of the mini-Miranda disclosure. Removing a reference to the collection of a debt and to the use of any information for debt collection purposes would functionally eliminate the miniMiranda that Congress required debt collectors to provide in FDCPA section 807(11). One industry commenter asked the Bureau to clarify that caller ID that reveals a debt collector’s business name does not constitute the initial communication with a consumer under § 1006.18(e)(1). The Bureau believes that disclosure of a debt collector’s business name does not automatically convey information regarding a debt such that a communication, as defined in final § 1006.2(d), has occurred. As discussed in the section-by-section analysis of final § 1006.2(j), the final rule defines a message, the limited-content message, that includes a business name for the debt collector that does not indicate that VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 the debt collector is in the debt collection business, but is not a communication. The Bureau does not determine, however, that caller ID can never constitute a communication because caller ID systems might convey information regarding a debt. This commenter also asked the Bureau to clarify which communications in a series of email or text messages are the ‘‘subsequent communications’’ for purposes of § 1006.18(e)(2), such that a debt collector must again disclose that the communication is from a debt collector. The Bureau currently lacks information showing that the meaning of subsequent communication in FDCPA section 807(11) is a source of serious harm to consumers or burden to debt collectors. Moreover, the Bureau believes that a highly prescriptive approach that attempts to define when the ‘‘initial’’ communication ends and a ‘‘subsequent’’ communication begins for all communication media would be too rigid to accommodate the various forms that communications between debt collectors and consumers might take. On one hand, communications that occur in different media, such as an email message followed by a text message, or communications that have no inherent connection between them, such as two letters, seem to be exactly the kind of ‘‘subsequent communications’’ where a new disclosure would further the purposes of the FDCPA section 807(11) and final § 1006.18(e)(2). On the other hand, some communications, such as a webchat session, may be closer to individual telephone calls where new disclosures throughout the conversation would likely be unnecessary.489 Other communications exist between these examples and might allow for several reasonable interpretations of when a subsequent communication occurs. Given the diversity of communications and the Bureau’s lack of information, the Bureau is finalizing § 1006.18(e)(2) as proposed. Consumer advocates urged the Bureau to require the mini-Miranda disclosure for any voicemail message that deviates from the content required or permitted in a limited-content message, as defined in § 1006.2(j). The Bureau declines to adopt such a requirement. As explained 489 Comment 6(b)(1)–2 states that, if a consumer initiates a communication with a debt collector at a time or from a place that the consumer previously designated as inconvenient, the debt collector may respond once at that time or place through the same medium of communication used by the consumer. Depending on the circumstances, such a reply by a debt collector may not constitute a subsequent communication and therefore new disclosures would be unnecessary. PO 00000 Frm 00098 Fmt 4701 Sfmt 4700 in the section-by-section analysis of final § 1006.2(j), the limited-content message identifies a voicemail message that debt collectors can 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 would not convey information about a debt. Requiring the mini-Miranda disclosure in every voicemail other than a limited-content message would conflict with the FDCPA’s definition of communication by treating all such messages as communications even if they do not convey information regarding a debt to any person. Several commenters addressed language access requirements. Most of these comments addressed non-English language translations of the validation notice in proposed § 1006.34. These comments included recommendations that the Bureau include a non-English language mini-Miranda disclosure on the validation notice. As discussed in the section-by-section analysis of § 1006.34, the Bureau intends to finalize certain provisions of the proposal in a disclosure-focused final rule addressing the validation notice and will respond to commenters’ suggestions regarding accessibility of the mini-Miranda disclosures on the validation notice as part of that rulemaking. However, the Bureau is adopting a requirement that debt collectors make the disclosures required by § 1006.18(e)(1) and (2) in the same language or languages used for the rest of the communication in which the disclosures are conveyed. Consumers who are unable to communicate in English would benefit from receiving translated versions of the mini-Miranda disclosure. At the same time, however, the Bureau determines that requiring debt collectors to identify such consumers and provide accurate translations in the myriad languages that consumers speak may impose a significant burden on debt collectors. If a debt collector chooses to communicate with a consumer in a non-English language, however, this burden is reduced. Such a debt collector will have already identified the consumer’s language preference and exhibited a willingness to communicate in that language. In those circumstances, requiring a debt collector who communicates in a non-English language to provide the disclosures in that language would decrease the risk of deception and help ensure that the disclosures are effective for more consumers. Accordingly, final § 1006.18(e)(4) provides that a debt E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations collector must make the disclosures required by § 1006.18(e)(1) and (2) in the same language or languages used for the rest of the communication in which the debt collector conveyed the disclosures. Finally, the Bureau requested comment on whether additional clarification regarding false or misleading representations would be helpful in the decedent debt context, or whether to require any affirmative disclosures when debt collectors communicate in connection with the collection of a debt owed by a deceased consumer. Although the Bureau did not propose specific rules regarding deception in the decedent debt context, the Bureau noted that the FTC expressed concern in its Policy Statement on Decedent Debt that, even absent explicit misrepresentations, a debt collector might violate FDCPA section 807 by communicating with such individuals in a manner that conveys the misleading impression that the individual is personally liable for the deceased consumer’s debts, or that the debt collector could seek assets outside of the deceased consumer’s estate to satisfy the consumer’s debt. The FTC’s Policy Statement suggested two possible disclosures that debt collectors generally could use to avoid deceiving individuals who are attempting to resolve the financial affairs of an estate about their liability for the decedent’s debts.490 Several commenters addressed these issues. Two consumer advocates urged the Bureau to require affirmative disclosures of non-liability. Several industry commenters noted that they affirmatively disclose non-liability and recommended that the Bureau adopt similar disclosures. One trade group commenter supported the creation of safe harbor language that debt collectors could use to avoid deceiving consumers. Another trade group commenter requested certain exceptions from any required disclosure, such as for communications with attorneys. The Bureau declines to adopt any additional clarifications or affirmative disclosures. The need for required disclosures is diminished by the lack of evidence of deception regarding decedent debt, as noted in the proposal, and by the widespread debt collector practice of disclosing non-liability, as 490 FTC Policy Statement on Decedent Debt, supra note 157, at 44922. The FTC’s suggested disclosures were: ‘‘(1) That the debt collector is seeking payment from the assets in the decedent’s estate; and (2) [that] the individual could not be required to use the individual’s assets or assets the individual owned jointly with the decedent to pay the decedent’s debt.’’ Id. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 noted by commenters. Moreover, as the FTC explained, the information debt collectors would need to disclose to avoid deception depends on the circumstances. Indeed, even in the abstract, commenters suggested slightly different disclosures, with two commenters supporting the FTC’s disclosures and several others offering their own alternative language. Accordingly, the Bureau declines to require in the final rule affirmative disclosures in the decedent debt context. For the reasons discussed above and pursuant to its authority to implement and interpret FDCPA section 807(11), the Bureau is finalizing § 1006.18(e) largely as proposed, with minor revisions for clarity, and is adopting new § 1006.18(e)(4) regarding translated disclosures. Final § 1006.18(e)(4) provides that a debt collector must make the disclosures required by § 1006.18(e) in the same language or languages used for the rest of the communication in which the disclosures are conveyed. Any translation of the disclosures must be complete and accurate. The Bureau is also adopting new comment 18(e)(4)–1, which provides an illustrative example. 18(f) Assumed Names Proposed § 1006.18(f) stated that nothing in § 1006.18 prohibits a debt collector’s employee from using an assumed name when communicating or attempting to communicate with a person, provided that the employee uses the assumed name consistently and that the employer can readily identify the employee even if the employee is using the assumed name. For the reasons discussed below, the Bureau is finalizing § 1006.18(f) as proposed, with additional clarifying commentary. As the Bureau explained in the proposal, debt collectors may instruct or permit their employees to use assumed names when interacting with consumers for a variety of reasons. For example, some employees may have privacy or safety concerns about revealing their true name and employer to a potentially large number of consumers or to particular consumers. As the Bureau explained, from a consumer’s perspective, it may not be relevant whether employees use true names or assumed names, provided that the name used does not mislead the consumer about the debt at issue and who is attempting to collect it. The Bureau also noted that the FTC previously issued guidance stating that a debt collector’s employee does not violate the FDCPA by using an assumed name if the employee uses the assumed name consistently and the debt collector can PO 00000 Frm 00099 Fmt 4701 Sfmt 4700 76831 readily ascertain the employee’s identity. The Bureau requested comment on the use of assumed names by debt collectors’ employees in general, as well as on whether and how employers can readily identify their employees who are using assumed names. One industry commenter supported the proposal because the use of assumed names would help ensure the safety of the commenter’s employees. A trade group commenter asked whether proposed § 1006.18(f) would require an assumed name to be linked to a specific individual, or if it could be used in other ways, such as by linking certain assumed names to certain letters mailed to consumers. Consumer advocates opposed the use of assumed names by debt collectors’ employees. These commenters argued that assumed names are inconsistent with FDCPA section 806(6)’s prohibition on the placement of telephone calls without meaningful disclosure of the caller’s identity. These commenters further argued that permitting assumed names would enable debt collectors to escape accountability for abusing consumers by concealing their identities. If the Bureau were to allow assumed names, these commenters stated that the Bureau must develop a Federal database of aliases, with one alias per employee and no duplicate aliases within the same company, among other requirements, so that consumers could look up the names of any debt collector’s employees. The Bureau is finalizing § 1006.18(f) as proposed with additional clarifying commentary. As explained in the proposal, debt collectors’ employees may use assumed names for many legitimate reasons, including for safety and efficiency, and the Bureau does not conclude that assumed names are inherently deceptive. The use of assumed names is consistent with accountability for debt collectors, as long as the debt collector can connect any assumed name to an employee’s real identity. The Bureau’s creation of a register of assumed names used by debt collectors’ employees is outside the scope of this rule, and the Bureau does not believe that such a requirement is necessary or warranted. In response to a trade group commenter’s question about whether an assumed name must be linked to a specific employee, the Bureau finds that any system of managing assumed names must ensure that the employee uses the assumed name consistently and that the employer can readily identify the employee even if the employee is using the assumed name. The Bureau is E:\FR\FM\30NOR3.SGM 30NOR3 76832 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations adding comment 18(f)–1 to clarify that one way of doing so is for an employer to require an employee to use the same assumed name when communicating or attempting to communicate with any person, and to prohibit any other employee from using the same assumed name. But the Bureau does not believe a one-to-one link is the only way for an employer to comply with the final rule. The Bureau anticipates, however, that a debt collector who permits many employees to use the same assumed name, e.g., for a specific letter campaign, would be unable to readily identify any employee communicating or attempting to communicate with any person. For the reasons discussed above, the Bureau is finalizing § 1006.18(f) largely as proposed. Final § 1006.18(f) provides that § 1006.18 does not prohibit a debt collector’s employee from using an assumed name when communicating or attempting to communicate with a person, provided that the employee uses the assumed name consistently and that the debt collector can readily identify any employee using an assumed name. New comment 18(f)–1 clarifies that a debt collector may use any method of managing assumed names that enables the debt collector to determine the true identity of any employee using an assumed name. For example, a debt collector may require an employee to use the same assumed name when communicating or attempting to communicate with any person and may prohibit any other employee from using the same assumed name. TKELLEY on DSKBCP9HB2PROD with RULES3 Proposed Provision Not Finalized FDCPA section 807 contains certain provisions designed to protect consumers from false, deceptive, or misleading representations made by, or means employed by, attorneys in debt collection litigation. FDCPA section 807(3) prohibits the false representation or implication that any individual is an attorney or that any communication is from an attorney. In addition, debt collection communications sent under an attorney’s name may violate FDCPA section 807(10) if the attorney was not meaningfully involved in the preparation of the communication.491 The meaningful attorney involvement case law also has been applied in the 491 See, e.g., Nielsen v. Dickerson, 307 F.3d 623, 635 (7th Cir. 2002); Clomon, 988 F.2d at 1320. Courts have found violations of other subsections of FDCPA section 807 for similar conduct. See, e.g., Lesher v. Law Offices of Mitchell N. Kay, PC, 650 F.3d 993, 1002 (3d Cir. 2011); Avila v. Rubin, 84 F.3d 222, 229 (7th Cir. 1996). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 specific context of debt collection litigation submissions.492 Proposed § 1006.18(g) would have provided a safe harbor for attorneys and law firms against claims asserting lack of meaningful attorney involvement in debt collection litigation materials signed by the attorney and submitted to the court, provided that the attorneys met the requirements in proposed § 1006.18(g). Proposed § 1006.18(g) provided that an attorney has been meaningfully involved in the preparation of debt collection litigation submissions if the attorney: (1) Drafts or reviews the pleading, written motion, or other paper; and (2) personally reviews information supporting the submission and determines, to the best of the attorney’s knowledge, information, and belief, that, as applicable: The claims, defenses, and other legal contentions are warranted by existing law; the factual contentions have evidentiary support; and the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or lack of information. The Bureau received a large number of comments on the proposed meaningful attorney involvement safe harbor from a variety of commenters, almost all of whom opposed the proposal. As discussed below, the Bureau has decided after considering the comments not to finalize the proposed provision regarding meaningful attorney involvement. While some debt collectors supported proposed § 1006.18(g), other industry commenters—particularly debt collection attorneys and associations thereof—opposed it. These commenters stated that the meaningful attorney involvement case law discussed above is misguided because FDCPA section 807(3) prohibits only the false representation that any communication is from an attorney and, therefore, any communication that is, in fact, from an attorney does not run afoul of that section. These commenters also stated that the FDCPA does not authorize the Bureau to adopt the meaningful attorney 492 See Bock v. Pressler & Pressler, 30 F. Supp. 3d 283, 303 (D.N.J. 2014) (‘‘The claimed misrepresentation here does not relate to the ultimate veracity of the numbered factual allegations of the complaint; it concerns the veracity of the implied representation that an attorney was meaningfully involved in the preparation of the complaint. If, in fact, the attorney who signed the complaint is not involved and familiar with the case against the debtor, then the debtor has been unfairly misled and deceived within the meaning of the FDCPA. . . .’’), reaff’d on remand, 254 F. Supp. 3d 724, 729 (D.N.J. 2017); Miller v. Upton, Cohen & Slamowitz, 687 F. Supp. 2d 86, 100 (E.D.N.Y. 2009) (applying meaningful involvement liability to, among other actions, filing of complaint in court). PO 00000 Frm 00100 Fmt 4701 Sfmt 4700 involvement standard through rulemaking, because the standard is not found in the FDCPA and is found only in case law.493 These commenters also stated that the proposed standard would improperly infringe on the practice of law, which, they said, has historically been regulated by the judicial branch and State governments and would undermine the attorney-client privilege and work-product doctrines. A member of Congress also opposed the proposed meaningful attorney involvement standard on these grounds. Finally, debt collection attorneys stated that the proposed standard would not provide clarity but would instead lead to litigation, which would necessarily result in sharing confidential attorney work product. A few of these commenters stated that they had considered alternatives to the Bureau’s proposal and found that none of them were workable. Consumer advocates stated that the proposed meaningful attorney involvement standard was too lenient and would sanction debt collection attorney practices that these commenters believe to be problematic. The commenters expressed the opinion that the proposed standard was more lenient than some meaningful attorney involvement standards set forth in the Bureau’s past enforcement work, State enforcement work, and State laws. Some United States Senators also opposed the proposed meaningful attorney involvement standard for these reasons. Consumer advocates additionally stated that the Bureau did not describe a safe harbor for meaningful attorney involvement in its SBREFA Outline and asserted that the proposed provision therefore harmed the integrity of the Bureau’s rulemaking process. These commenters recommended that the Bureau propose a meaningful attorney involvement rule, as opposed to safe harbor, incorporating requirements set forth in Bureau enforcement actions. Having considered all of the comments on the issue that it received, the Bureau declines to finalize the proposed meaningful attorney involvement safe harbor.494 493 A few of these commenters additionally argued that Dodd-Frank Act section 1027(e)(1) precludes the Bureau from regulating the practice of law by debt collection attorneys. 494 The Bureau disagrees with commenter assertions that the absence of a meaningful attorney involvement safe harbor from the Bureau’s SBREFA Outline represents a shortcoming in the Bureau’s rulemaking process. The Bureau thoroughly described the proposed safe harbor and the Bureau’s rationale for it in the proposal. The proposed safe harbor therefore raised no concerns from an APA perspective. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations As the Bureau noted in the proposal, under existing case law, a debt collection communication sent under an attorney’s name may violate FDCPA section 807(10) if the attorney was not meaningfully involved in the preparation of the communication.495 Further, the meaningful attorney involvement case law has been applied in the specific context of debt collection litigation submissions.496 The Bureau intended its proposed safe harbor to provide greater clarity for all stakeholders as to the standards law firms and attorneys submitting pleadings, written motions, or other papers to courts in debt collection litigation should meet in order to be in compliance with FDCPA section 807(10). As noted above, however, many industry commenters stated that the proposed safe harbor would not provide the intended clarity, and some of these commenters stated that they had considered various alternatives to the proposed safe harbor and found none to be workable in providing clarity either. And, many consumer advocates felt that the standards proposed were too permissive. Because neither the proposal nor alternatives discussed in comments would provide greater clarity as to the meaning of meaningful attorney involvement, the Bureau has decided not to include a safe harbor in the final rule. The Bureau anticipates that debt collection attorneys will continue to face lawsuits under this legal theory. As the Bureau described in the proposal, the legal theory underlying these lawsuits is that a debt collection attorney makes an implied false representation, in violation of the prohibition in FDCPA section 807 against misleading representations, when the attorney submits litigation materials without there having been meaningful attorney involvement in the preparation of the materials. As a general matter, the Bureau believes that this legal theory has a valid basis in the text of FDCPA section 807; 497 accordingly, the Bureau expects that the law regarding violations of FDCPA section 807 due to lack of meaningful attorney involvement will continue to evolve case-by-case. The Bureau will monitor these developments and continue to assess whether a future rulemaking in this area to provide clarity and decrease consumer harm 495 See supra note 491. supra note 492. 497 FDCPA section 807 states that ‘‘[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.’’ 496 See VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 would be desirable. In that regard, the Bureau disagrees with commenter assertions that the FDCPA does not authorize the Bureau to adopt a meaningful attorney involvement standard—whether consisting of requirements or a safe harbor or both— through rulemaking.498 The Bureau believes that the FDCPA provides it with ample authority to adopt a meaningful attorney involvement standard by rule. Section 1006.22 Unfair or Unconscionable Means FDCPA section 808 prohibits the use of unfair or unconscionable means in debt collection.499 The Bureau proposed § 1006.22 to implement FDCPA section 808.500 Specifically, the Bureau proposed § 1006.22(a) to implement FDCPA section 808’s general prohibition against unfairness and § 1006.22(b) through (f)(2) to implement section 808’s prohibited conduct examples.501 These provisions largely restated the statute. The Bureau proposed § 1006.22(f)(3) and (4) to prohibit certain conduct with respect to the use of employer-provided email addresses and social media for debt collection communications and § 1006.22(g) to provide a safe harbor for information contained in certain email messages. The Bureau did not receive feedback about proposed § 1006.22(a), (c)(2) and (3), (d), or (e). The Bureau therefore does not address them in the section-bysection analysis below and is finalizing them as proposed. After considering feedback, the Bureau is finalizing proposed § 1006.22(b), (c)(1), (f), and (g) as discussed below. Except as otherwise discussed, the Bureau is finalizing § 1006.22 to implement and interpret FDCPA section 808, pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors. 22(b) Collection of Unauthorized Amounts The Bureau proposed § 1006.22(b) to implement FDCPA section 808(1). The 498 The Bureau also disagrees with commenter assertions that Dodd-Frank Act section 1027(e)(1) constrains the Bureau’s ability to adopt rules regarding meaningful attorney involvement pursuant to its FDCPA authority. See supra notes 115 and 116. 499 15 U.S.C. 1692f. 500 84 FR 23274, 23324–27 (May 21, 2019). 501 Section 1006.22(b) proposed to implement FDCPA section 808(1), 15 U.S.C. 1692f(1); § 1006.22(c) proposed to implement FDCPA section 808(2) through (4), 15 U.S.C. 1692f(2) through (4); and § 1006.22(d) through (f)(2) proposed to implement FDCPA section 808(5) through (8), 15 U.S.C. 1692f(5) through (8). PO 00000 Frm 00101 Fmt 4701 Sfmt 4700 76833 proposed provision generally mirrored the statute, with minor wording and organizational changes for clarity. Specifically, proposed § 1006.22(b) provided that a debt collector ‘‘must not collect any amount unless such amount is expressly authorized by the agreement creating the debt or permitted by law,’’ where the term any amount includes ‘‘any interest, fee, charge, or expense incidental to the principal obligation.’’ 502 One industry commenter expressed concern about litigation risk under § 1006.22(b) in the context of medical collections in which debt collectors are sued due to inadvertent billing errors caused by healthcare providers, or due to failing to identify if a bankruptcy is involved. The commenter advocated for giving debt collectors fifteen days to investigate and resolve disputes before they are sued by consumers, protection from liability based on reliance on information provided by a creditor, and a mechanism by which debt collectors report corrections caused by medical providers to the Bureau. The Bureau declines to adopt this suggestion. As discussed elsewhere in this Notice, the Bureau appreciates that the complexity of medical collections may result in inadvertent errors. But FDCPA section 808(1) does not contain any pre-litigation dispute resolution or correction-reporting procedures, and the Bureau did not propose such procedures in § 1006.22(b). As such, they are outside the scope of this rulemaking. Accordingly, the Bureau is finalizing § 1006.22(b) as proposed. The Bureau notes that, as discussed elsewhere in this Notice, under FDCPA section 813(c), debt collectors may have a bona fide error defense to civil liability if they can show that a violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. Depending on the facts and circumstances of a particular case, this defense might apply in certain scenarios. 22(c) Postdated Payment Instruments 22(c)(1) The Bureau proposed § 1006.22(c)(1) to implement FDCPA section 808(2), which prohibits debt collectors from accepting from any person a check or other payment instrument postdated by more than five days, unless such person is notified in writing of the debt collector’s intent to deposit such check or instrument ‘‘not more than ten nor 502 84 E:\FR\FM\30NOR3.SGM FR 23274, 23324, 23403 (May 21, 2019). 30NOR3 76834 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations less than three business days prior to such deposit.’’ Proposed § 1006.22(c)(1) generally mirrored that statute, except that it included the phrase ‘‘days (excluding legal public holidays, Saturdays, and Sundays)’’ in lieu of the statutory phrase ‘‘business day.’’ 503 In response to proposed § 1006.22(c)(1), one commenter explained that the proposed language would require debt collectors to monitor State holidays, which can vary significantly. The commenter suggested that the language be revised to state ‘‘three days (excluding federally recognized legal public holidays, Saturdays and Sundays).’’ The Bureau is finalizing proposed § 1006.22(c)(1) substantially as proposed, with a minor modification in response to this comment. To address potential ambiguity, final § 1006.22(c)(1) contains the phrase ‘‘excluding legal public holidays identified in 5 U.S.C. 6103(a), Saturdays, and Sundays.’’ 22(f) Restrictions on Use of Certain Media TKELLEY on DSKBCP9HB2PROD with RULES3 22(f)(1) FDCPA section 808(7) prohibits a debt collector from communicating with a consumer regarding a debt by postcard. The Bureau proposed § 1006.22(f)(1) to implement FDCPA section 808(7). The proposed provision generally mirrored the statutory language.504 A consumer advocate suggested that the Bureau revise proposed § 1006.22(f)(1) to prohibit not only communications, as defined in § 1006.2(d), but also attempts to communicate, as defined in § 1006.2(b). The commenter observed that, if § 1006.22(f)(1) prohibited only communications, and if the Bureau finalized the definition of limitedcontent messages as proposed in § 1006.2(j) as only attempts to communicate, then § 1006.22(f)(1) would permit debt collectors to send limited-content messages by postcard. As discussed in the section-by-section analysis of § 1006.2(j), the definition of limited-content message in the final rule is limited to voicemail and cannot contain either the consumer’s name or the consumer’s address. Under this definition, limited-content messages cannot be sent by postcard. The Bureau accordingly is finalizing § 1006.22(f)(1) as proposed. 22(f)(2) The Bureau proposed § 1006.22(f)(2) to implement FDCPA section 808(8). The proposed provision generally 503 Id. 504 Id. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 mirrored the statute. Specifically, as proposed, § 1006.22(f)(2) would have prohibited debt collectors from using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by mail, but would have permitted a debt collector to use the debt collector’s business name on an envelope if the name did not indicate that the debt collector was in the debt collection business.505 In response to proposed § 1006.22(f)(2), a consumer advocate commenter stated that the Bureau should clarify that the provision prohibits email message ‘‘from’’ or ‘‘subject’’ lines that indicate that a communication either is about a debt or is from a debt collector. The Bureau declines to prohibit the inclusion of such information in email message ‘‘from’’ or ‘‘subject’’ lines. Although the Bureau’s proposal made a minor change for clarity from the wording of FDCPA section 808(8) by omitting the term ‘‘by telegram,’’ the Bureau did not propose to expand the application of FDCPA section 808(8) beyond mail. In addition, the commentary to final § 1006.42 provides that the inclusion of some such information in an email subject line is a factor in determining whether the debt collector has complied with § 1006.42(a)(1)’s requirement to send required disclosures in a manner that is reasonably expected to provide actual notice. The Bureau is, however, clarifying how § 1006.22(f)(2) applies in the context of mail. In the Seventh Circuit, the Bureau filed an amicus brief arguing that, while there is no benign language exception in FDCPA section 808(8) that would permit debt collectors to include phrases such as ‘‘time sensitive’’ on mailed envelopes, the FDCPA permits debt collectors to include language or symbols on an envelope that facilitate making use of mail. Specifically, because FDCPA section 808(8) expressly recognizes that a debt collector may ‘‘communicat[e] with a consumer by use of the mails,’’ the FDCPA permits language and symbols that facilitate mailing an envelope.506 The Seventh Circuit agreed with the Bureau’s analysis. In the final rule, the Bureau is adding comment 22(f)(2)–1, which, consistent with the Bureau’s amicus brief, clarifies that, for purposes of § 1006.22(f)(2), the phrase ‘‘language or symbol’’ does not include language or symbols that facilitate communications by mail, for example: Postage; language such as ‘‘forwarding and address correction requested;’’ and the United States Postal Service’s Intelligent Mail barcode. 22(f)(3) The Bureau proposed § 1006.22(f)(3) to provide that a debt collector violates FDCPA section 808’s general prohibition against unfairness, as proposed to be implemented in § 1006.22(a), by communicating or attempting to communicate with a consumer using an email address that the debt collector knows or should know is provided to the consumer by the consumer’s employer, unless the debt collector received the consumer’s prior direct consent to use that email address or the consumer had sent the debt collector an email from that address. The Bureau proposed § 1006.22(f)(3) on the basis that a debt collector who communicates or attempts to communicate by sending an email message to a consumer’s employerprovided email address generally would violate FDCPA section 808 because of the likelihood that the consumer’s employer could access and read the message and, in turn, that the consumer could suffer reputational or other harm.507 The Bureau received many comments regarding proposed § 1006.22(f)(3) from a wide variety of commenters. Many commenters, including several consumers, consumer advocates, a group of State Attorneys General, Federal government agency staff, a local government agency, a commenter from an academic institution, and a number of industry commenters generally supported proposed § 1006.22(f)(3). Some consumer advocates argued, however, that the Bureau should further restrict, or even prohibit, debt collectors’ use of employer-provided email addresses. By contrast, many industry commenters questioned the Bureau’s basis for proposed § 1006.22(f)(3), raising concerns that it was overly restrictive in light of the privacy features of email and citing the potential cost of compliance compared to lack of evidence of consumer harm. Some such commenters argued that the Bureau should not include the provision in the final rule. For example, some industry 505 Id. 506 See Brief for Consumer Financial Protection Bureau as Amicus Curiae, Preston v. Midland Credit Mgmt., Inc., 948 F.3d 772 (7th Cir. 2020) (No. 1:18– cv–01532), https://files.consumerfinance.gov/f/ documents/cfpb_amicus-brief_preston-vmidland.pdf. PO 00000 Frm 00102 Fmt 4701 Sfmt 4700 507 See 84 FR 23274, 23324–26 (May 21, 2019). The proposal used the terms ‘‘work’’ and ‘‘nonwork’’ email addresses. Consistent with other sections of the final rule, final § 1006.22(f)(3) replaces these terms with ‘‘employer-provided’’ and ‘‘personal,’’ respectively. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations commenters argued that employees are well aware that their employer has the right to view emails sent to email addresses within the employer-provided email domain and thus are aware of the risks of being contacted at such addresses. Several industry commenters believed that debt collectors should be permitted to contact consumers at employer-provided email addresses as long as consumers could opt out. Another argued that debt collectors should be permitted to communicate or attempt to communicate using an email address that is not obviously employer provided unless a consumer expressly states a desire not to be contacted at work.508 After considering this feedback, the Bureau is finalizing proposed § 1006.22(f)(3) with revisions, as discussed below, because the Bureau concludes that the provision provides important protections for consumers. As discussed in the proposal, employers often have the right to access, and may monitor, email accounts they provide to employees. And the risks of harm to consumers from debt collectors sending messages to an employer-provided email address are particularly high because of the risk of adverse employment consequences, which can cause economic harm and exacerbate a consumer’s financial distress, including by making it more difficult to satisfy outstanding financial obligations. The legislative history of the FDCPA indicates an emphasis on preventing such risks to a consumer’s employment from debt collection communications. Final § 1006.22(f)(3) provides protections specific to such harms consumers may face with the use of employer-provided email addresses. TKELLEY on DSKBCP9HB2PROD with RULES3 Knows-or-Should-Know Standard Section 1006.22(f)(3) proposed, in relevant part, to prohibit debt collectors from communicating or attempting to communicate with a consumer using an email address that the debt collector knows or should know is provided to the consumer by the consumer’s employer. Proposed comment 22(f)(3)–3 described the know or should know standard and set forth three scenarios in which a debt collector would have met it. Proposed comment 22(f)(3)–3 also stated that, absent contrary information, a debt collector would not know (and should not know) that an email address was employer provided if the domain name in the email address was one 508 As discussed further below, many industry commenters also expressed significant compliance concerns with the ‘‘should know’’ aspect of the proposed knowledge standard. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 commonly associated with a provider of personal email addresses (e.g., gmail.com).509 Notwithstanding the examples in proposed comment 22(f)(3)–3, a number of commenters, including many industry and some consumer advocate commenters, expressed concern about the ‘‘should know’’ standard, stating that, in many cases, debt collectors may be unable to easily or reliably distinguish between employer-provided and personal email addresses. A number of industry commenters, for example, stated that whether an ‘‘.edu’’ email address belongs to a student or employee of an educational institution can be ambiguous. Similarly, several consumer advocate commenters questioned whether debt collectors would be able to rely on domain name alone to distinguish personal from employer-provided email addresses because some consumers use free or low-cost email accounts in connection with their employment. Industry commenters explained that there currently are no systems to scrub email addresses to determine whether they are employer provided and that developing and maintaining such systems would cost the industry millions of dollars and entail privacy risks for consumers. Many industry commenters stated that the lack of clarity regarding ‘‘should know’’ would impose significant costs on debt collectors and increase litigation risk, and some stated that it would discourage debt collectors from using email altogether, even if email might potentially benefit some consumers. Industry commenters suggested a number of revisions to proposed § 1006.22(f)(3) to address their concerns regarding the knowledge standard. A variety of industry commenters suggested that the Bureau should include a presumption that email domain names commonly associated with personal accounts (e.g., gmail, hotmail, yahoo, msn, and other similar products) are personal email addresses, unless the debt collector knows or has reason to know that such email addresses are employer provided. Other industry commenters requested that the Bureau limit § 1006.22(f)(3) to situations in which the debt collector knows an email address is employer provided. Other industry commenters asked the Bureau to clarify that debt collectors are not required to impute knowledge that one consumer’s email address is employer provided to other consumers who are employees of the same employer. On the other hand, a consumer advocate commenter and a 509 See PO 00000 84 FR 23274, 23325 (May 21, 2019). Frm 00103 Fmt 4701 Sfmt 4700 76835 law firm commenter argued that finalizing § 1006.22(f)(3) to include an actual knowledge standard would make it too difficult for consumers to establish a violation. The Bureau appreciates that, under a ‘‘should know’’ standard, debt collectors may have difficulty determining, for example, whether certain email addresses are employer provided and that such uncertainty may cause some debt collectors to refrain from communicating through any email address, even if email might be beneficial and preferable for at least some consumers. As discussed elsewhere in part V, the final rule clarifies the FDCPA’s application to electronic communication media and such clarity is intended, in part, to permit those consumers and debt collectors who prefer to use such newer communication technologies to do so while also establishing important consumer protections. The Bureau also understands concerns raised by consumer advocate commenters about an actual knowledge standard. However, in light of the difficulties identified regarding a ‘‘should know’’ standard, and because the Bureau finds that consumers will benefit from a clear prohibition in the final rule against the use of employerprovided email addresses, the Bureau is finalizing § 1006.22(f)(3) to generally prohibit debt collectors from communicating or attempting to communicate with a consumer by sending an email to an email address that the debt collector knows is provided to the consumer by the consumer’s employer.510 The standard is consumer-specific; that is, a debt collector does not necessarily know that a consumer’s email address is employer provided merely because the domain name for that email address is the same as the domain name for an email address that a different consumer has told the debt collector is employer provided. Consent and Prior Use Exceptions Proposed § 1006.22(f)(3) provided that a debt collector could communicate or attempt to communicate with a consumer using an employer-provided email address if the debt collector had received directly from the consumer either prior consent to use that email address or an email from that email address. Proposed comments 22(f)(3)–1 and –2 clarified these exceptions. 510 The Bureau notes that debt collectors remain subject to the general prohibition on third-party disclosure in § 1006.6(d)(1) and that consumers may set communication limits according to their preferences under §§ 1006.6(b)(1) and 1006.14(h). E:\FR\FM\30NOR3.SGM 30NOR3 76836 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations Several industry commenters supported the consent provision as proposed, but many requested that debt collectors be able to rely on evidence of consent provided to the creditor, such as an employer-provided email address included in a loan application or an email recently used by a creditor.511 One industry commenter asked that debt collectors be able to rely on a documented specific request by a consumer to be contacted at an employer-provided email address. Other industry commenters asked the Bureau to clarify how the rule applies if a consumer withdraws consent for the debt collector to use an employerprovided email address after the debt collector has sent an email to that address. Two industry commenters recommended that consumers be required to provide debt collectors an alternative email address if they withdraw their consent to be contacted at their employer-provided address. Consumer advocate commenters generally argued that the Bureau should limit how a debt collector could obtain a consumer’s prior consent. A number of consumer advocate commenters requested that consent be provided in conformity with the requirements of the E–SIGN Act. One consumer advocate commenter requested that the Bureau prohibit debt collectors from soliciting employer-provided email addresses. Another consumer advocate commenter requested that the Bureau narrow the scope of the consent exception by only allowing, in some circumstances, the debt collector to respond by sending a single follow-up email to confirm the consumer’s consent. Regarding industry commenters’ suggestion that prior consent cover email addresses the consumer provided to a creditor, the Bureau finds that, as discussed in the section-by-section analysis of § 1006.6(d)(4), consumers might not appreciate the risks of sharing an email address with a creditor at the time of initiating an account relationship, when the prospect of defaulting on a financial obligation is remote. The Bureau also declines to require consumers who are withdrawing TKELLEY on DSKBCP9HB2PROD with RULES3 511 The proposal stated that a consumer may consent to receiving emails from a creditor on their work account based on the characteristics of that particular creditor; in contrast, consumers generally have no ability to choose which debt collector attempts to collect their debts. 84 FR 23274, 23326 (May 21, 2019). Some industry commenters disagreed. They stated that most contracts specify that the creditor may hire a third-party debt collector if the consumer fails to uphold the agreement and that, in the commenters’ view, the debt collector should therefore be able to use an email address provided by the consumer to the creditor. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 their prior consent for debt collectors to use an employer-provided email address to provide an alternative email address to debt collectors. Such a requirement does not have a basis in the FDPCA and is not necessary or warranted for debt collectors to avoid a third-party disclosure violation. As to the request for clarification about what to do if a consumer withdraws consent to communicate using an employerprovided address, the Bureau notes that § 1006.14(h) prohibits debt collectors from using that email address again.512 The Bureau finds that it is not necessary to limit the prior consent exception in the ways that consumer advocates suggested in light of other revisions to the final rule addressing consent for and prior use of particular email addresses. As discussed in the section-by-section analysis of § 1006.6(d)(4)(i) and (iii), the procedures described in those sections are tailored to minimize the risk of third-party disclosures, including disclosures to employers. Specifically, § 1006.6(d)(4)(i) outlines procedures based on whether the consumer used the email address to communicate with the debt collector or directly consented to the debt collector’s use of the address. These procedures permit the consumer to assess the risk of a third-party disclosure, including to an employer, before deciding whether to communicate by email. Section 1006.6(d)(4)(iii) outlines procedures based on communication by a prior debt collector and limits a debt collector to using email addresses that, among other things, were obtained by a prior debt collector under § 1006.6(d)(4)(i) or (ii).513 The Bureau also declines to adopt consumer advocates’ recommendation to prohibit debt collectors from soliciting employer-provided email addresses. While the Bureau appreciates the risk that a debt collector could engage in abusive, deceptive, or unfair conduct to obtain a consumer’s consent to use an employer-provided email address, a per se prohibition on soliciting a consumer’s permission would be overbroad because debt 512 The Bureau notes that one commenter asked that debt collectors be able to rely on a documented specific request by a consumer to be contacted at an employer-provided email address. A consumer who specifically requested to be contacted at an employer-provided email address would qualify as prior direct consent under the final rule. 513 An additional requirement of § 1006.6(d)(4)(iii) is that the consumer did not opt out of the immediately prior debt collector’s use of the particular email address. This requirement, when satisfied, suggests that the risk of third-party disclosure is low if the later debt collector uses the email address, even if that debt collector knows the email address is employer provided. PO 00000 Frm 00104 Fmt 4701 Sfmt 4700 collectors need not engage in such conduct to obtain consumer consent. And, to the extent a debt collector does so, the debt collector will have violated one or more of FDCPA sections 806 through 808 and §§ 1006.14(a), 1006.18(a), and 1006.22(a). For these reasons, the Bureau is finalizing § 1006.22(f)(3) to provide, as proposed, prior consent and consumer use exceptions to the general prohibition. For ease of compliance, however, the Bureau is finalizing the exceptions by replacing them with a cross-reference to § 1006.6(d)(4)(i) and (iii), which, as described above, are generally consistent with the proposed exceptions. For the reasons discussed above, the Bureau is finalizing § 1006.22(f)(3) to prohibit a debt collector from communicating or attempting to communicate with a consumer by sending an email to an email address that the debt collector knows is provided to the consumer by the consumer’s employer, unless the email address is one described in § 1006.6(d)(4)(i) or (iii).514 The Bureau is adopting new comment 22(f)(3)–1 to further clarify that a debt collector who sends an email to an email address described in § 1006.6(d)(4)(i) or (iii) does not violate the prohibition in § 1006.22(f)(3), even if the debt collector knows the email address is employer provided. New comment 22(f)(3)–1 also clarifies that a debt collector who sends an email to an email address described in § 1006.6(d)(4)(ii) complies with § 1006.22(f)(3) because a debt collector who follows § 1006.6(d)(4)(ii) does not, by definition, send an email to an email address that the debt collector knows is provided by a consumer’s employer. In effect, therefore, comment 22(f)(3)–1 clarifies that a debt collector who sends an email to an email address described in § 1006.6(d)(4) does not violate § 1006.22(f)(3). 22(f)(4) The FDCPA does not specifically address newer technologies, including social media. The Bureau proposed to provide that certain communications and communication attempts, when made using social media, represent unfair or unconscionable means to collect a debt in violation of FDCPA section 808, as proposed to be implemented in § 1006.22(a).515 Specifically, proposed § 1006.22(f)(4) provided that a debt collector must not 514 In light of the changes the Bureau is making to § 1006.22(f)(3), proposed comments 22(f)(3)–1 through –3 are no longer necessary, and the Bureau is not finalizing them. 515 See 84 FR 23274, 23326–27 (May 21, 2019). E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations communicate or attempt to communicate with a consumer in connection with the collection of a debt through a social media platform that is viewable by a person other than the persons described in § 1006.6(d)(1)(i) through (vi) (i.e., the consumer; the consumer’s attorney; a consumer reporting agency, if otherwise permitted by law; the creditor; the creditor’s attorney; or the debt collector’s attorney).516 Proposed comment 22(f)(4)–1 provided certain clarifications regarding the proposed prohibition. As discussed below, the Bureau is finalizing proposed § 1006.22(f)(4) with revisions in response to feedback and for clarity. Public-Facing Social Media Communications and Attempts to Communicate TKELLEY on DSKBCP9HB2PROD with RULES3 No commenters objected to the general concept of restricting publicly viewable social media communications as an unfair means of debt collection. Several industry commenters supported the proposed concept, as did a Federal government commenter, consumer advocate commenters, and individual consumer commenters. Some commenters were uncertain whether the proposal would have prohibited communications or attempts to communicate that might be viewable by social media platform providers, given that such providers were persons other than those specified in § 1006.6(d)(1)(i) through (vi). The Bureau clarifies in the final rule that the prohibition applies to communications or attempts to communicate that can be viewed by members of the general public or a person’s social media contacts,517 not to messages that could be accessible in some form by a social media platform provider but that are otherwise not viewable by the general public or a person’s social media contacts.518 Similarly, one industry commenter believed that the proposal’s use of the word ‘‘viewable’’ would create compliance risk for messages inadvertently viewed by a third party on 516 These individuals are those with whom a debt collector may communicate about a debt, even in the absence of an exception such as prior consent, without violating the FDCPA’s prohibition against third-party communications. See the section-bysection analysis of § 1006.6(d)(1). 517 In this way, § 1006.22(f)(4) is similar to other provisions of the FDCPA and Regulation F that focus on protecting consumers from public disclosure of information regarding their debts. See FDCPA sections 806(3) (§ 1006.14(e)) and 808(7) and (8) (§ 1006.22(f)(1) and (2)). 518 For further discussion of electronic communications and access by providers, see the section-by-section analysis of § 1006.6(d)(4)(ii)(E). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 a shared device. The Bureau confirms that the prohibition in § 1006.22(f)(4) applies to public-facing communications and attempts to communicate, not to private messages (i.e., social media messages that cannot be viewed by members of the general public or a person’s social media contacts) that might be inadvertently accessed by a third party.519 One consumer advocate commenter stated that, instead of prohibiting communications or attempts to communicate through a social media platform that is viewable by a person other than the persons described in § 1006.6(d)(1)(i) through (vi), the rule should prohibit social media communications or attempts to communicate that are viewable by anyone other than the consumer as defined in FDCPA section 803(3) (i.e., by anyone other than the person who owes or is alleged to owe the debt). The commenter explained that it was unaware of any social media platform that would allow for communications to be viewable only by the persons described in § 1006.6(d)(1)(i) through (vi) and nobody else. The Bureau agrees that a debt collector’s communications or attempts to communicate through a social media platform are unlikely to be limited in that way and is finalizing § 1006.22(f)(4) without that language. One consumer advocate commenter stated that the scope of proposed § 1006.22(f)(4) should be expanded to include not just public-facing social media communications and communication attempts, but any public-facing electronic communication or attempt to communicate, e.g., comments to a blog post, group text, or chatroom discussions. The Bureau declines to expand the scope of § 1006.22(f)(4) in this way. The Bureau notes that, even if not specifically prohibited by § 1006.22(f)(4), any public-facing communication (whether online or otherwise) may well violate one or more other prohibitions, such as the prohibition against third-party communications in FDCPA section 805(b) (as implemented by § 1006.6(d)(1)); the prohibition against harassing, oppressive, or abusive conduct in FDCPA section 806 (as implemented by § 1006.14(a)); and the prohibition against unfair or unconscionable collection means in 519 Other commenters argued that the Bureau should prohibit private social media messages because of the risks involved in sending such messages, including the risk that they might be inadvertently accessed by third parties. Those comments are discussed in the section-by-section analysis below regarding private social media communications and attempts to communicate. PO 00000 Frm 00105 Fmt 4701 Sfmt 4700 76837 FDCPA section 808 (as implemented by § 1006.22(a)). Private Social Media Communications and Attempts To Communicate Although proposed § 1006.22(f)(4) would not have prohibited private communications or attempts to communicate by social media, most commenters who addressed proposed § 1006.22(f)(4) addressed this topic. Some industry commenters noted that communicating privately through social media could benefit both consumers and debt collectors, but some also indicated that they do not currently use social media due to data security and privacy concerns.520 A few commenters noted that consumers do not provide their social media contact information to creditors and therefore do not expect to be contacted through that channel about financial matters, although one industry commenter noted that consumers might post about their collection experiences in a social media forum and companies might monitor social media for such mentions.521 One group of consumer advocates stated that some consumers might be advantaged by private social media communications. But this commenter, along with many consumer, consumer advocate, government, and other commenters, expressed concerns about such communications, as discussed further below. One member of Congress expressed particular concern regarding private social media debt collection communications about consumers’ medical debts, which, this commenter stated, could include consumers’ protected health-care information. In light of those concerns, some of these commenters argued that the Bureau should either expand § 1006.22(f)(4) to also ban private social media communications and attempts to communicate or to require debt collectors to obtain prior consent directly from consumers before communicating privately through social media.522 The Bureau declines to do so for the reasons discussed below. 520 A few industry commenters noted the possibility of inbound private social media messages from consumers. In response to a request for clarification, the Bureau notes that nothing in the FDCPA or the final rule requires a debt collector to communicate using a social media platform merely because a consumer sends the debt collector a message using that platform. 521 The Bureau notes that debt collectors can respond to such posts privately, as discussed below, and that the prohibition in § 1006.22(f)(4) applies only to communications and attempts to communicate in connection with the collection of a debt. 522 Many commenters in support of a prior consent requirement recommended that consent be E:\FR\FM\30NOR3.SGM Continued 30NOR3 76838 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 One common area of concern among commenters regarding private social media messages was the risk of thirdparty disclosures, which commenters observed could occur if, for example, debt collectors accidentally sent messages to the wrong person (e.g., to a person with a similar name as the consumer) or if social media platform providers accessed private communications for advertising or other purposes. As to sending messages to the wrong person, debt collectors remain subject to § 1006.6(d)(1) when communicating through social media and, accordingly, should exercise caution to avoid violating FDCPA section 805(b) and § 1006.6(d) by communicating with the wrong consumer.523 For example, a debt collector would violate FDCPA section 805(b) and § 1006.6(d) if, as suggested in one hypothetical, the debt collector communicated by private social media message with the wrong person because the debt collector merely identified a person with the same or similar name as the consumer.524 As to social media platform providers accessing private communications, the Bureau discusses this concern in § 1006.6(d)(4)(ii)(E). Accordingly, the Bureau declines to prohibit private social media communications and attempts to communicate. Other commenters expressed concern about consumers’ ability to communicate effectively about a debt over social media. Several consumer advocates explained that some consumers would inadvertently miss important information, such as the validation notice, if it were sent using social media, due to difficulty accessing information online or managing a high number of electronic communications. The Bureau notes that, as discussed in the section-by-section analysis of § 1006.42, it is finalizing standards that express and provided directly to the debt collector or conform with the E–SIGN Act’s consumer consent provisions. See 15 U.S.C. 7001(c)(1). 523 For the reasons discussed in the section-bysection analysis of § 1006.6(d)(3), although the Bureau is outlining procedures that, when followed, may provide a debt collector a safe harbor from civil liability for a third-party disclosure when sending emails and text messages, the Bureau is not outlining such procedures for sending private social media messages. 524 Commenters also expressed concern that third-party disclosures of private social media messages might occur as the result of identity theft or a data breach; inadvertently (e.g., if the consumer shares a device with another person); or if consumers give permission to a third party. The Bureau notes that these types of risks are present in any type of electronic debt collection communication and that debt collectors must take care not to violate the general prohibition against third-party disclosures in FDCPA section 805(b) (§ 1006.6(d)(1)). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 a debt collector must meet to send required disclosures electronically, including that the disclosure must be sent in a manner that is reasonably expected to provide actual notice to the consumer, and, with respect to the validation notice that is not the initial communication, that the disclosure be sent in accordance with section 101(c) of the E–SIGN Act. The Bureau notes that communications over social media may be less likely to reach consumers and therefore, under the final rule, debt collectors may be less likely to meet these standards by sending validation notices to consumers through private social media messages. Some commenters worried about the potential for deception from private social media messages. Consumer commenters expressed concern that consumers would have difficulty verifying the identity of a debt collector over social media. Relatedly, a group of State Attorneys General, a Federal government commenter, and a member of Congress identified risks from potentially deceptive acts or practices, such as ‘‘friending’’ someone in connection with the collection of the debt in a way that omits material information about the debt collector’s identity and motives. One member of Congress expressed particular concern regarding this conduct in connection with collection of medical debts. In response to commenters’ concerns, the Bureau notes that the specific conduct described above likely would violate FDCPA section 807 and final § 1006.18’s prohibition against false or deceptive representations, as discussed in the section-by-section analysis of § 1006.18(d). Some commenters observed that consumers might find private social media communications from debt collectors unwelcome or harassing, particularly because consumers do not provide social media contact information to creditors and generally are not accustomed to being contacted about financial matters in this way. While the Bureau recognizes this concern, the Bureau also notes that private messages are subject to all of the provisions of the FDCPA and the final rule, including all of the provisions designed to empower consumers to communicate with debt collectors in the manner that they prefer (i.e., the time and place restrictions in FDCPA section 805(a) and § 1006.6(b)(1),525 the opt-out 525 One industry commenter requested that the Bureau clarify whether private messages on social media platforms would be subject to time and place restrictions under the FDCPA; the Bureau clarifies that they would be. Section 1006.6, and specifically final comments 6(b)(1)–1 and –2 and 6(b)(1)(i)–1, PO 00000 Frm 00106 Fmt 4701 Sfmt 4700 instructions for electronic communications in § 1006.6(e), and the limitations on use of certain communications media in § 1006.14(h)). They also are subject to the FDCPA’s general prohibitions against unfair, deceptive, and abusive conduct in sections 806 through 808 (final §§ 1006.14, 1006.18, and 1006.22).526 Some consumer advocates recommended that consumers be able to opt out of private social media messages, among other types of electronic communications, such as by allowing consumers to reply simply with ‘‘stop.’’ Others suggested that consumers should be allowed to opt out of all social media platforms because opting out of individual platforms would be burdensome. The Bureau notes that, under the final rule, debt collectors will be required to include, in any private social media message, a reasonable and simple method by which the consumer can opt out of receiving further messages. Consumers also will have the option to opt out of all social media communications, or communications through a particular platform.527 Coverage As proposed, § 1006.22(f)(4) would have applied only to communications or attempts to communicate with a consumer, as defined in FDCPA section 803(3) and proposed § 1006.2(e) (i.e., the person obligated or allegedly obligated to pay the debt). A consumer advocate commenter stated that the Bureau should broaden § 1006.22(f)(4) to apply to consumers as defined in FDCPA section 805(d) and proposed § 1006.6(a) (i.e., to the person obligated or allegedly obligated to pay the debt and that person’s spouse, parent (if the person is a minor), or guardian, or the executor or administrator of the person’s estate), as well as to deceased consumers. The commenter explained that debt collectors should not be able to post provide guidance about how the time and place restrictions apply in the case of electronic communications, which include private social media messages. 526 Several groups of consumer advocate commenters argued that private social media messages should be subject to a frequency limit like the one the Bureau proposed in § 1006.14 with respect to telephone calls. For the reasons discussed in the section-by-section analysis of § 1006.14, electronic communications, including private social media messages, are not subject to the telephone call frequencies in final § 1006.14(b). However, as noted, they are subject to the general prohibition in FDCPA section 806 and final § 1006.14(a) against conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. See the section-bysection analysis of § 1006.14(a) and (b). 527 See the section-by-section analyses of §§ 1006.6(e) and 1006.14(h), respectively. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations publicly about a deceased consumer’s alleged debt on the person’s social media account because a debt collector’s only reason for doing so would be to pressure surviving relatives to pay the debt, either to protect the deceased consumer’s reputation or out of a sense of moral obligation. Other commenters raised concerns about debt collectors contacting persons other than consumers, such as family members, by social media and as discussed above, many commenters supported a broad ban on public-facing social media communications. The Bureau is finalizing § 1006.22(f)(4) with revisions to the scope of coverage. Specifically, final § 1006.22(f)(4) prohibits a debt collector from communicating or attempting to communicate with a person, in connection with the collection of a debt, through a social media platform if the communication or attempt to communicate is viewable by the general public or the person’s social media contacts. The definition of person includes a consumer. FDCPA section 803(3) defines a consumer as any natural person obligated or allegedly obligated to pay any debt. As noted in the section-by-section analysis of § 1006.2(e), the Bureau received a number of comments regarding its proposal to interpret the term consumer to include deceased natural persons. 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. For the reasons discussed above, the Bureau is finalizing § 1006.22(f)(4) to provide that a debt collector must not communicate or attempt to communicate with a person in connection with the collection of a debt through a social media platform if the communication or attempt to communicate is viewable by the general public or the person’s social media contacts.528 The Bureau is finalizing proposed comment 22(f)(4)–1 with revisions to conform to the text of the final rule.529 TKELLEY on DSKBCP9HB2PROD with RULES3 528 As proposed, § 1006.22(f)(4) provided, in relevant part, that a debt collector must not communicate or attempt to communicate ‘‘by a social media platform that is viewable’’ by the public. The Bureau is finalizing § 1006.22(f)(4) to provide, in relevant part, that a debt collector must not communicate or attempt to communicate ‘‘through a social media platform if the communication or attempt to communicate is viewable’’ by the general public, to clarify that the relevant question is whether the communication or attempt to communicate is viewable, not whether the platform itself is viewable. 529 Among other conforming changes, final comment 22(f)(4)–1 omits references to limited- VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 22(g) Safe Harbor Proposed § 1006.22(g) provided that a debt collector who communicates with a consumer using an email address, or telephone number for text messages, and follows the procedures described in § 1006.6(d)(3) does not violate § 1006.22(a) by revealing in the email or text message the debt collector’s name or other information indicating that the communication relates to the collection of a debt. The procedures in proposed § 1006.6(d)(3) were designed to ensure that a debt collector who uses a particular email address or telephone number to communicate with a consumer by email or text message does not have a reason to anticipate that an unauthorized third-party disclosure may occur. As the Bureau explained in the proposal, if the proposed procedures work as designed, there would not be a reason to anticipate that a third party would see the debt collector’s name or other debt-collection-related information included in a communication sent to such an email address or telephone number. Some consumer advocate commenters stated that the Bureau should not finalize the proposed safe harbor for emails and text messages in § 1006.22(g) because the commenter believed the procedures in proposed § 1006.6(d)(3) were inadequate.530 The Bureau is finalizing § 1006.22(g) substantially as proposed. For the reasons discussed in the section-bysection analysis of § 1006.6(d)(3) through (5), the Bureau believes the safe harbor procedures at § 1006.6(d)(3) will provide appropriate consumer protections and that debt collectors using those procedures would not have reason to anticipate a third-party disclosure would occur. If a debt collector is using those procedures, the Bureau concludes that a safe harbor for § 1006.22(a) is necessary and warranted. Accordingly, the Bureau is finalizing § 1006.22(g) substantially as proposed, with technical revisions for clarity. content messages. As discussed in the section-bysection analysis of § 1006.2(j), final § 1006.2(j) defines a limited-content message to mean a voicemail message for a consumer. Accordingly, under the final rule, it will not be possible for debt collectors to leave limited-content messages using social media. In light of this change, the Bureau does not further address comments received regarding the use of limited-content messages in publicly viewable social media messages. 530 A few industry commenters stated that the safe harbor in proposed § 1006.22(g) should be expanded to include voicemails. As to voicemails, final § 1006.2(j) defines a limited-content message that debt collectors can leave for consumers without communicating under the FDCPA. PO 00000 Frm 00107 Fmt 4701 Sfmt 4700 76839 Section 1006.26 Collection of TimeBarred Debts Proposed § 1006.26(a) and (b) would have defined the terms statute of limitations and time-barred debt and would have interpreted FDCPA section 807 to prohibit debt collectors from suing and threatening to sue consumers to collect time-barred debts.531 In addition, proposed § 1006.26(c), as set forth in the Bureau’s February 2020 proposal,532 would have required a debt collector collecting a debt that the debt collector knows or should know is time barred to disclose: (1) That the law limits how long the consumer can be sued for a debt and that, because of the age of the debt, the debt collector will not sue the consumer to collect it; and (2) if the debt collector’s right to bring a legal action against the consumer to collect the debt can be revived under applicable law, the fact that revival can occur and the circumstances in which it can occur. The February 2020 proposal also included model language and forms that debt collectors could use to comply with the proposed time-barred debt and revival disclosures. The Bureau is not finalizing proposed § 1006.26 at this time. As noted in part III, the comment period for the February 2020 proposal closed on August 4, 2020, and the Bureau is now completing its review and evaluation of all comments received regarding proposed § 1006.26. As discussed in the section-by-section analysis of § 1006.34, the Bureau intends to issue a disclosure-focused final rule to address the Bureau’s proposed validation notice, and the Bureau intends to address § 1006.26 at that time, as well. For this reason, the Bureau is reserving § 1006.26. Section 1006.30 Other Prohibited Practices The Bureau proposed in § 1006.30 several measures designed to protect consumers from certain harmful debt collection practices. Specifically, the Bureau proposed in § 1006.30(a) to regulate debt collectors’ furnishing practices under certain circumstances; in § 1006.30(b) to limit the transfer of certain debts; and in § 1006.30(c), (d), and (e) to generally restate statutory provisions regarding allocation of payments, venue, and the furnishing of certain deceptive forms, respectively. The Bureau received no comments specifically addressing proposed § 1006.30(e) regarding the furnishing of deceptive forms and is finalizing it as 531 84 FR 23274, 23327–29 (May 21, 2019). Bureau proposed the time-barred debt disclosures in the February 2020 proposal. 85 FR 12672 (Feb. 21, 2020). 532 The E:\FR\FM\30NOR3.SGM 30NOR3 76840 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations proposed.533 Accordingly, the Bureau does not address § 1006.30(e) further in the section-by-section analysis below. 30(a) Communication Prior To Furnishing Information Proposed § 1006.30(a) would have prohibited a debt collector from furnishing to a consumer reporting agency, as defined in section 603(f) of the Fair Credit Reporting Act (FCRA),534 information regarding a debt before communicating with the consumer about the debt.535 The Bureau is not finalizing proposed § 1006.30(a) at this time. As discussed in the section-bysection analysis of § 1006.34, the Bureau intends to issue a disclosure-focused final rule to address the Bureau’s proposed validation notice, and the Bureau intends to address proposed § 1006.30(a) at that time, as well. For this reason, the Bureau is reserving § 1006.30(a). 30(b) Prohibition on the Sale, Transfer for Consideration, or Placement for Collection of Certain Debts TKELLEY on DSKBCP9HB2PROD with RULES3 30(b)(1) In General The Bureau proposed in § 1006.30(b)(1) to prohibit a debt collector from selling, transferring, or placing for collection a debt if the debt collector knows or should know that the debt has been paid or settled, discharged in bankruptcy, or that an identity theft report has been filed with respect to the debt (‘‘transfer ban’’).536 The Bureau proposed § 1006.30(b)(1) pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors, and pursuant to its authority to interpret FDCPA section 808 regarding unfair or unconscionable debt collection practices. The Bureau proposed to prohibit the sale, transfer, or placement of such debts as unfair under FDCPA section 808 on the basis that, because consumers do not owe or cannot lawfully be subject to collections on alleged debts that have been paid or settled or discharged in bankruptcy, and likely do not owe alleged debts that are subject to identity theft reports, the sale, transfer, or placement of such debts is 533 The Bureau proposed § 1006.30(e) to implement FDCPA section 812, 15 U.S.C. 1692j. 84 FR 23274, 23333 (May 21, 2019). FDCPA section 812 addresses the furnishing of deceptive forms and applies to any person, not just to debt collectors. As noted in the proposal, § 1006.30(e), like the rest of the rule, applies only to FDCPA debt collectors. FDCPA section 812 continues to prohibit other persons from furnishing deceptive forms. Id. at 23286 n.137. 534 15 U.S.C. 1681 et seq. FCRA section 603(f) is codified at 15 U.S.C. 1681a. 535 See 84 FR 23274, 23329–30 (May 21, 2019). 536 See id. at 23330–32. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 unfair or unconscionable. The Bureau also proposed § 1006.30(b)(1) pursuant to its authority under section 1031(b) of the Dodd-Frank Act to prescribe rules to identify and prevent unfair acts or practices by Dodd-Frank Act covered persons. The Bureau received numerous substantive comments addressing the proposed transfer ban. Some industry commenters, including creditors and associations thereof, as well as the U.S. SBA Office of Advocacy, expressed concern about the Bureau’s proposed adoption of the transfer ban through reliance on its authority under section 1031(b) of the Dodd-Frank Act in addition to its FDCPA authority. These commenters stated that use of authority under section 1031(b) of the Dodd-Frank Act creates uncertainty and legal risk for creditors without increasing consumer protections because a ban might be imputed to creditors even if they are not FDCPA debt collectors. These commenters urged the Bureau to adopt the transfer ban using only its FDCPA authority. These commenters further commented that, if the Bureau retained the use of its authority under section 1031(b) of the Dodd-Frank Act, the Bureau should take other steps to provide clarity, such as explicitly excluding debt sales by creditors from the transfer ban, adding a safe harbor for sale or transfer of accounts by creditors subject to a repurchase agreement, or permitting creditors to invoke the bona fide error defense in FDCPA section 813(c) in the context of the transfer ban. Some industry commenters stated that the ‘‘should know’’ aspect of the proposed ‘‘knows or should know’’ standard is unclear and argued that the rule should reflect a ‘‘knows’’ standard, or, if ‘‘should know’’ is retained, include safe harbors for certain practices. For example, some of these commenters stated that the rule should provide a safe harbor for the bankruptcy prong of the ban to a debt collector who ‘‘scrubs’’ a debt against commercially available databases 30 days before the debt’s sale, transfer, or placement to ascertain whether the debt has been discharged in bankruptcy. Industry commenters also suggested changes to the proposed transfer ban’s application to a debt for which an identity theft report has been filed. These commenters asserted that the proposed transfer ban would increase consumers’ incentives to make false identity theft claims in order to avoid repaying their debts. These commenters requested that the rule permit a debt collector to investigate a consumer’s identity-theft claim—within a prescribed time period of, for example, PO 00000 Frm 00108 Fmt 4701 Sfmt 4700 30 days—and to sell, transfer, or place the debt if, pursuant to its investigation, the debt collector determines that the claim is not valid. Some of these commenters noted that the FCRA prohibits a person from selling, transferring for consideration, or placing for collection a debt after being notified that a consumer reporting agency identified that debt as having resulted from identity theft. They also noted that the FCRA includes provisions designed to ensure that consumer reporting agencies and furnishers are able to conduct reasonable investigations of consumers’ identity-theft claims and to prevent consumers and credit repair companies from abusing the FCRA’s identity-theft related consumer protections. Industry commenters also provided comments seeking other modifications and clarifications to the proposed transfer ban. One industry commenter stated that the ban should apply to disputed debts if the debt collector does not have access to original account-level documentation; other industry commenters said that the ban should not encompass any additional debt types beyond those set forth in the proposal. Finally, one industry commenter stated that the Bureau should clarify that the transfer ban does not prohibit the return of an assignment, a file of data being sent for analytics, or a file sent for ‘‘scrubbing.’’ Instead, commenters argued the transfer ban should apply only when the transferring entity intends the receiving entity to undertake collection activity for receiving payment from the debtor. Consumer advocates suggested that the Bureau expand the transfer ban’s coverage in proposed § 1006.30(b)(1) to encompass several additional types of debt beyond, as proposed, debts that have been paid or settled, discharged in bankruptcy, or that are subject to an identity theft report. They suggested that the ban also prohibit the sale, transfer, or placement of time-barred debt, disputed debt, debt lacking ownership documentation, debt subject to litigation, and debt that has been extinguished pursuant to State law. They also suggested that the Bureau clarify that the proposed ban of the sale, transfer, or placement of ‘‘debt that has been paid or settled’’ would apply if a consumer has entered into an uncompleted settlement agreement, as opposed to being limited to a completed repayment agreement. They also suggested that the rule explicitly prohibit the collection of these types of debt (in addition to banning their transfer, placement, or sale). Further, they suggested that, if an identity-theft E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations report has been filed regarding a debt, the rule should prohibit a debt collector from reporting the debt to a credit reporting agency (in addition to banning its transfer, placement, or sale). A comment letter from Federal government agency staff did not address expanding the proposed transfer ban to encompass the above-mentioned types of debt but did recommend that the Bureau prohibit the sale, transfer, or placement of debts that are counterfeit or fictitious. This letter also observed that the FCRA currently prohibits a person from selling, transferring, or placing for collection any debt after being notified that the debt resulted from identity theft. Consumer advocates suggested that the transfer ban in proposed § 1006.30(b)(1) be modified in several additional respects. Some suggested that the rule prohibit the sale, transfer, or placement of debt unless the prior debt collector represents in writing that the debt has not been paid, settled, or otherwise discharged; is not time barred; and whether the debt is subject to a dispute. Some suggested that the rule clarify that a debt collector may not require a consumer to file an identitytheft report with the police or to complete a specific identity-theft report form required by the debt collector for the prohibition to apply. Instead, they said, the rule should require a debt collector to accept from a consumer the FTC identity-theft report form, thereby furthering the FTC’s goal of reducing the need for police reports. They also suggested that the rule require debt collectors to perform a search of PACER or of another commercially available database to screen for bankruptcy discharges prior to a debt’s sale, transfer, or placement for collection. Taking into consideration all the comments regarding the proposed transfer ban in § 1006.30(b)(1), the Bureau is finalizing the ban and its commentary with substantial revisions, as follows. Subject to the exceptions in § 1006.30(b)(2), final § 1006.30(b)(1) prohibits a debt collector from selling, transferring for consideration, or placing for collection a debt if the debt collector knows or should know that the debt has been paid or settled or discharged in bankruptcy. The Bureau is finalizing § 1006.30(b)(1) pursuant solely to its FDCPA authority. The Bureau has determined that the sale, transfer for consideration, or placement for collection of a debt that a debt collector knows or should know has been paid or settled or discharged in bankruptcy constitutes an unfair or unconscionable means to collect or attempt to collect the VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 debt under FDCPA section 808 because consumers do not owe or cannot legally be subject to collections on alleged debts that have been paid or settled or discharged in bankruptcy, and yet the debt collector receives or expects to receive compensation for the sale, transfer, or placement of such debt.537 Because the Bureau is finalizing § 1006.30(b)(1) pursuant solely to its FDCPA authority, the Bureau determines it is clear, as the Bureau intended and stated in the proposal, that § 1006.30(b)(1) of the final rule does not apply to creditors, except to the extent the creditor is an FDCPA debt collector. Accordingly, the Bureau concludes it is not necessary or warranted for final § 1006.30(b)(1) to include a safe harbor or other requested clarifications for accounts that creditors sell or transfer as part of a portfolio subject to a repurchase agreement. As to concerns about the breadth of the ‘‘know or should know’’ language, the Bureau notes that the prohibition in § 1006.30(b)(1) is limited to specific account circumstances. These account circumstances will, in general, be within the debt collector’s ability to know or obtain the necessary knowledge. For example, whether a debt has been paid or settled is a fact that a debt collector knows or should know because it should be within the debt collector’s account management system. Although bankruptcy may not be within the debt collector’s own system in the same manner as paid or settled debts, a debt collector should be able to utilize a commercial database or publicly available records to reasonably assess whether a debt has been discharged in bankruptcy.538 Because of the limited nature of the transfer ban as finalized, the Bureau believes the ‘‘know or should know’’ standard is appropriate but will monitor this issue for any potential consumer harm or compliance concerns and revisit at a later time if needed. The Bureau declines to apply the prohibition in final § 1006.30(b)(1) to debts for which the consumer has reported identity theft. The Bureau believes that transfer of these debts is a consumer protection concern but recognizes that commenters identified several complexities with respect to the 537 The Bureau has not determined in connection with this final rule whether the sale, transfer for consideration, or placement for collection of such debts constitutes an unfair act or practice under section 1031 of the Dodd-Frank Act. 538 Depending on the circumstances, FDCPA section 813(c)’s defense against civil liability may also apply where a debt collector utilizes a commercial database to reasonably assess whether a debt has been discharged in bankruptcy. PO 00000 Frm 00109 Fmt 4701 Sfmt 4700 76841 Bureau’s incorporation of identity-theftrelated debt in proposed § 1006.30(b)(1). Moreover, because FCRA section 615(f) prohibits a person from selling, transferring for consideration, or placing for collection a debt after such person has been notified in accordance with the FCRA that the debt resulted from identity theft, the Bureau believes that these consumer protection concerns can be addressed by adding new comment 30(b)(1)–2, which states that nothing in § 1006.30(b)(1) alters a debt collector’s obligation to comply with the prohibition set forth in FCRA section 615(f)(1) (15 U.S.C. 1681m(f)(1)).539 The Bureau also declines to expand the prohibition in § 1006.30(b)(1) to encompass other types of debt beyond debt that has been paid or settled or discharged in bankruptcy. The Bureau concludes that the transfer of timebarred debt, disputed debt, debt lacking ownership documentation, debt subject to litigation, debt in which the consumer has an uncompleted settlement agreement, or other types of debt suggested by commenters do not present the same unfairness and unconscionability concerns of the same prevalence and magnitude as the debt types to which the prohibition in § 1006.30(b)(1) applies. The prohibition in § 1006.30(b)(1) applies to debts that are extinguished or uncollectible or that consumers do not owe. For the reasons discussed above, the sale, transfer for consideration, or placement for collection of the debts described in § 1006.30(b)(1) is unfair or unconscionable collection activity under FDCPA section 808 because the consumer does not owe or cannot legally be subject to collection of such debt. While the debt types listed above in this paragraph may present consumer protection concerns, and while their collection remains subject to the FDCPA’s general prohibitions on harassment or abuse, false or misleading statements, and unfair or unconscionable practices, the Bureau declines to expand the prohibition in § 1006.30(b)(1) to encompass them. The Bureau declines to finalize a prohibition regarding the sale, transfer for consideration, or placement for collection of debt that a debt collector 539 The Bureau considered the comments it received regarding prohibiting a debt collector from reporting an identity-theft debt to a credit reporting agency and from requiring a consumer to use a specific identity-theft report form. The FCRA provides a private right of action and places liability on ‘‘any person’’ for failure to comply with the FCRA. See FCRA sections 616 through 618, 15 U.S.C. 1681n–1681p. As a result, the Bureau concludes it is unnecessary for the prohibition in § 1006.30(b)(1) to address debt collector practices in the area of credit reporting. E:\FR\FM\30NOR3.SGM 30NOR3 76842 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 knows or should know has been extinguished pursuant to State law or is counterfeit or fictitious. It clearly is an unfair or unconscionable practice under FDCPA section 808 for a debt collector to sell, transfer for consideration, or place for collection a debt that the debt collector knows or should know has been extinguished pursuant to State law or is counterfeit or fictitious. As noted above, some commenters stated that the term ‘‘transfer’’ should be clarified. The Bureau agrees, and final § 1006.30(b)(1) therefore states that ‘‘a debt collector must not sell, transfer for consideration, or place for collection a debt if the debt collector knows or should know. . . .’’ (emphasis added). In addition, the Bureau is adopting new comment 30(b)(1)–1 to clarify that a debt collector transfers a debt for consideration if the debt collector receives or expects to receive compensation for the transfer. A debt collector does not transfer a debt for consideration if the debt collector sends information about the debt, as opposed to the debt account itself, to another party. For example, a debt collector does not transfer a debt for consideration if the debt collector sends a file with data about the debt to another person for analytics, ‘‘scrubbing,’’ or archiving. A debt collector also does not transfer a debt for consideration if the debt collector reports to a credit reporting agency information that a debt has been paid or settled or discharged in bankruptcy. 30(b)(2) Exceptions Proposed § 1006.30(b)(2) set forth four narrow exceptions to proposed § 1006.30(b)(1) to accommodate circumstances in which allowing the sale, transfer, or placement of the debts described in proposed § 1006.30(b)(1) for certain bona fide business purposes other than debt collection may not create a significant risk of unfair collections activity. The Bureau proposed in § 1006.30(b)(2)(i) to allow a debt collector to transfer a debt described in proposed § 1006.30(b)(1) to the debt’s owner. The Bureau proposed in § 1006.30(b)(2)(ii) through (iv) three additional exceptions that paralleled the FCRA’s exceptions to its prohibition on the sale, transfer for consideration, or placement for collection of debt caused by identity theft.540 Specifically, (1) the Bureau proposed in § 1006.30(b)(2)(ii) to allow a debt collector to transfer a debt described in proposed § 1006.30(b)(1) to a previous owner if the transfer is authorized under the terms of the original contract between the debt 540 See 15 U.S.C. 1681m(f)(3). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 collector and the previous owner; (2) proposed in § 1006.30(b)(2)(iii) to permit a debt collector to securitize such debt, or to pledge a portfolio of such debt as collateral in connection with a borrowing; and (3) proposed in § 1006.30(b)(2)(iv) to allow a debt collector to transfer such debt as a result of a merger, acquisition, purchase and assumption transaction, or a transfer of substantially all of the debt collector’s assets. With respect to the exceptions set forth in proposed § 1006.30(b)(2), industry commenters stated that the proposed ban of the sale, transfer, or placement of a debt that has been discharged in bankruptcy should treat secured debt differently. Specifically, these commenters said, if the discharged debt is a secured debt, including but not limited to a residential mortgage, the transfer ban should not impede a creditor’s ability to maintain and exercise its security interest in the collateral that secures the discharged debt. Industry commenters suggested several approaches through which the rule might accomplish this objective, such as by including an exemption from the transfer ban for secured claims for residential mortgage loans and other secured debts. Consumer advocates also suggested changes to the proposed exceptions set forth in § 1006.30(b)(2). Like industry commenters, consumer advocates suggested that the ban be modified with respect to mortgage debt. They observed that, after a bankruptcy discharge, the owner of the loan (or a debt collector acting on the owner’s behalf) may nevertheless conduct a foreclosure sale if the borrower defaults on payments due under the loan obligation. Citing 11 U.S.C. 524(j), consumer advocates also observed that the bankruptcy code includes an exception to the discharge order that allows post-discharge debt collection limited to seeking or obtaining periodic payments due under a mortgage when the creditor seeks the payments as an alternative to exercise of its right to foreclose. Consumer advocates suggested including an additional exception under § 1006.30(b)(2) to address these concerns and requested that the additional exception include a requirement that the transferring debt collector identify the debt as one for which the personal liability of the debtor has been discharged in bankruptcy. In addition, consumer advocates suggested other changes to the proposed exceptions to the transfer ban set forth in § 1006.30(b)(2). These commenters stated that the exception in proposed PO 00000 Frm 00110 Fmt 4701 Sfmt 4700 § 1006.30(b)(2)(iii), for securitizations or pledges as collateral of portfolios of debts, should be eliminated because the debt types in proposed § 1006.30(b)(1) cannot legally be collected and therefore should not be securitized or pledged as collateral. These commenters also stated that the other proposed exceptions (in § 1006.30(b)(2)(i), (ii), and (iv)) should be limited to transfers of debt, because those exceptions do not involve sales or placements for collection. Finally, these commenters stated that, if a debt collector transfers an account to the owner or to a prior owner, per the exceptions in proposed § 1006.30(b)(2)(i) and (ii), the rule should require the transferring collector to clearly disclose the applicable category of debt being transferred (e.g., discharged, paid, or settled debt). In light of both industry and consumer advocates’ comments, the final rule includes a new exception in § 1006.30(b)(2)(ii) for secured debts. The exception states that a debt collector may sell, transfer for consideration, or place for collection a debt that has been discharged in bankruptcy if the debt is secured by an enforceable lien and the debt collector provides notice to the transferee that the consumer’s personal liability for the debt was discharged in bankruptcy. The Bureau determines that the notice requirement will help ensure that the transfer of the discharged, secured debt is not an unfair or unconscionable practice because the compensation that the transferring debt collector receives (or expects to receive) for the transfer will not be related to the consumer’s personal liability on the debt. In addition, the notice requirement will help ensure that the transferee debt collector does not engage in a deceptive debt collection practice by trying to collect on the debt as a personal liability of the consumer. With respect to consumer advocates’ other suggested changes to the exceptions set forth in proposed § 1006.30(b)(2), the Bureau notes as follows. Proposed § 1006.30(b)(2)(i), (ii), and (iv) were limited to ‘‘transfers’’ and did not encompass sale or placement for collection; final § 1006.30(b)(2)(i) includes a revision to clarify this point. The Bureau declines to eliminate the exception in § 1006.30(b)(2)(iii) for securitizations and pledges of debt because the Bureau concludes, as noted in the proposal,541 that a debt collector who securitizes or pledges a portfolio of debt may be unable to exclude the debts described in § 1006.30(b)(1) from the portfolio. Finally, the Bureau declines to require a debt collector who transfers for 541 84 E:\FR\FM\30NOR3.SGM FR 23274, 23332 (May 21, 2019). 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations consideration a debt to the owner or a previous owner (pursuant to the exceptions in § 1006.30(b)(2)(i)(A) and (B)) to disclose the applicable category of debt being transferred (i.e., paid, settled, or discharged debt). The Bureau concludes that such disclosure is not necessary or warranted to avoid an unfair or unconscionable practice. The Bureau adopts the prohibition set forth in § 1006.30(b)(1) and the exceptions set forth in § 1006.30(b)(2) pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors. As stated above, the Bureau has determined that the sale, transfer for consideration, or placement for collection of a debt that a debt collector knows or should know has been paid or settled or discharged in bankruptcy constitutes an unfair or unconscionable means to collect or attempt to collect the debt under FDCPA section 808. Therefore, pursuant to FDCPA section 814(d), the Bureau prescribes the rules in § 1006.30(b) with respect to that unfair or unconscionable means of collection of debts by debt collectors. TKELLEY on DSKBCP9HB2PROD with RULES3 30(c) Multiple Debts The Bureau proposed § 1006.30(c) to implement FDCPA section 810 542 regarding multiple debts.543 The proposed provision generally restated the statutory text, with only minor revisions for clarity. Two industry commenters addressed proposed § 1006.30(c) and asked the Bureau to provide an exception to the prohibition that would permit debt collectors to apply, at the consumer’s request, a single payment made with respect to multiple debts to a debt that the consumer had disputed. The Bureau is not aware of confusion or concerns regarding this issue and the minor revisions for clarity are not intended to change the meaning of the statute. The Bureau therefore declines to adopt such an exception. 30(d) Legal Actions by Debt Collectors The Bureau proposed § 1006.30(d) to implement FDCPA section 810 544 regarding legal actions by debt collectors.545 The proposed provision generally restated the statutory text, with only minor revisions for clarity. The Bureau received a few comments asking the Bureau to clarify whether specific practices related to the filing of legal actions either are unfair or unconscionable or do not violate the 542 15 U.S.C. 1692h. FR 23274, 23333 (May 21, 2019). 544 15 U.S.C. 1692i. 545 84 FR 23274, 23333 (May 21, 2019). 543 84 VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 prohibition. The Bureau concludes that it is not advisable to finalize such clarifications, which the Bureau did not propose, without the benefit of public notice and comment on the specific clarifications requested. Accordingly, the Bureau is finalizing § 1006.30(d) as proposed. Section 1006.34 of Debts Notice for Validation FDCPA section 809(a) generally requires a debt collector to provide certain information to a consumer either at the time that, or shortly after, the debt collector first communicates with the consumer in connection with the collection of a debt. The required information—i.e., the validation information—includes details about the debt and about consumer protections, such as the consumer’s rights to dispute the debt and to request information about the original creditor.546 The Bureau proposed § 1006.34 to require debt collectors to provide certain validation information to consumers and to specify when and how the information must be provided. In addition, the Bureau proposed Model Form B–3 in appendix B as a model validation notice form that debt collectors could use to comply with certain disclosure requirements in proposed § 1006.34.547 The Bureau is not finalizing proposed § 1006.34 at this time. The Bureau is completing its review and evaluation of comments regarding proposed § 1006.34, including the form and content of validation information. The Bureau also is conducting additional, qualitative disclosure testing that may be used to further validate proposed Model Form B–3 and to inform statements about the quality of the validation notice in the final rulemaking.548 For instance, the Bureau seeks insight through the consumer testing into how consumers would interact with the proposed model form, if finalized. The Bureau plans to address comments received regarding proposed § 1006.34 and proposed appendix B as part of the Bureau’s disclosure-focused final rule. The Bureau intends to issue a report about the ongoing qualitative testing in connection with that final 546 See 15 U.S.C. 1692g(a). 84 FR 23274, 23333–52 (May 21, 2019). 548 Dodd-Frank Act section 1032(b)(1) provides that ‘‘any final rule prescribed by the Bureau under this section requiring disclosures may include a model form that may be used at the option of the covered person for provision of the required disclosures.’’ 12 U.S.C. 5532(b)(1). Dodd-Frank Act section 1032(b)(3) provides that any such model form ‘‘shall be validated through consumer testing.’’ 12 U.S.C. 5532(b)(3). 547 See PO 00000 Frm 00111 Fmt 4701 Sfmt 4700 76843 rule. For these reasons, the Bureau is reserving § 1006.34 and appendix B. Section 1006.38 Disputes and Requests for Original-Creditor Information FDCPA section 809(b) requires debt collectors to take certain actions and to refrain from taking certain actions if a consumer either disputes the debt in writing or requests the name and address of the original creditor in writing during the 30-day period after the consumer receives the written notice described in FDCPA section 809(a). In turn, FDCPA section 809(c) states that a consumer’s failure to dispute a debt under FDCPA section 809(b) may not be construed by any court as an admission of liability.549 The Bureau proposed § 1006.38 to implement and interpret FDCPA section 809(b) and (c), pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors.550 Pursuant to this same authority, the Bureau is finalizing § 1006.38 as discussed below. Proposed comment 38–1 would have clarified the applicability of § 1006.38 in the decedent debt context. As described in the section-by-section analysis of § 1006.2(e), the Bureau proposed to interpret the term consumer in FDCPA section 803(3) to include deceased consumers. 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, as well as whether and how to finalize proposed comment 38–1, as part of the Bureau’s disclosurefocused final rule.551 The Bureau proposed comment 38–2 to interpret the applicability of the E–SIGN Act as it relates to FDCPA section 809(b)’s writing requirement for consumers’ submission of disputes or requests for original-creditor information. Section 101(a)(1) of the E– SIGN Act generally provides that a record relating to a transaction in or affecting interstate or foreign commerce may not be denied legal effect, validity, or enforceability solely because it is in electronic form. However, section 101(b)(2) of the E–SIGN Act (15 U.S.C. 7001(b)(2)) does not require any person to agree to use or accept electronic records or electronic signatures (other than a governmental agency with respect to a record other than a contract 549 15 U.S.C. 1692g(b)–(c). FR 23274, 23352–55 (May 21, 2019). 551 See the section-by-section analysis of § 1006.34. 550 84 E:\FR\FM\30NOR3.SGM 30NOR3 76844 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations to which it is a party). The Bureau proposed in comment 38–2 that FDCPA section 809(b)’s writing requirement is satisfied when a consumer submits a dispute or request for original-creditor information using a medium of electronic communication through which a debt collector accepts electronic communications from consumers, such as email or a website portal. Thus, under the proposal, a debt collector was required to give legal effect to an electronic consumer dispute or request for original-creditor information only if the debt collector agreed to accept electronic communications from consumers. The Bureau proposed to codify this E–SIGN Act interpretation in proposed comment 38–3. The comments the Bureau received on comments 38–2 and –3 expressed support. The Bureau finalizes this commentary as proposed, renumbered as comments 38–1 and –2, respectively. E–SIGN Act section 104(b)(1)(A) (15 U.S.C. 7004(b)(1)(A)) authorizes a Federal agency with rulemaking authority under a statute (here, the FDCPA) to interpret by regulation E–SIGN Act section 101 with respect to such statute. Pursuant to E–SIGN Act section 104(b)(1)(A), the Bureau has determined that the final rule as reflected in final comments 38–1 and –2 does not contravene E–SIGN Act section 101(b)(2) (15 U.S.C. 7001(b)(2)) because the comments do not require a debt collector to agree to use or accept consumers’ electronic notices of disputes or requests for original-creditor information if the debt collector does not otherwise accept electronic communications from consumers. Further, if a debt collector agrees to accept these notices or requests electronically from consumers, the comments do not prohibit the debt collector from requesting consumers to send these electronic communications through online portals or to email addresses designated by the debt collector.552 TKELLEY on DSKBCP9HB2PROD with RULES3 38(a) Definitions 38(a)(1) Duplicative Dispute The Bureau is finalizing the definition of duplicative dispute as proposed. The Bureau’s reasoning is discussed below under § 1006.38(d)(2)(ii) in this sectionby-section analysis. 552 The final rule’s prohibitions on harassing, deceptive, and unfair practices in §§ 1006.14, 1006.18, and 1006.22 continue to apply such that a debt collector should not ignore a consumer’s dispute or request for original-creditor information received through an online portal or to an email address not designated by the debt collector for receiving such disputes or requests. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 38(a)(2) Validation Period The Bureau’s proposed definition of validation period in § 1006.38(a)(2) cross-referenced the definition of that term in proposed § 1006.34(b)(5). The Bureau expects to address comments received on proposed § 1006.34(b)(5) as part of its disclosure-focused final rule. Therefore, at the present time, the Bureau is finalizing the definition in § 1006.38(a)(2) with revised wording to refer to the 30-day period described in FDCPA section 809 (rather than the definition in proposed § 1006.34(b)(5)) as defined by Bureau regulation. The Bureau will consider revising the definition of validation period in § 1006.38(a)(2) to cross-reference any such definition of that term that the Bureau adopts in the disclosure-focused final rule. 38(b) Overshadowing of Rights To Dispute or Request Original-Creditor Information FDCPA section 809(b) provides that, for 30 days after the consumer receives the validation notice information described in FDCPA section 809(a), a debt collector must not engage in collection activities or communications that overshadow or are inconsistent with the disclosure of the consumer’s right to dispute the debt or request information about the original creditor.553 The Bureau proposed in § 1006.38(b) to implement this prohibition and generally restate the statute, with only minor changes for style and clarity. The Bureau received a few substantive comments addressing proposed § 1006.38(b).554 Two industry commenters requested that the final rule define the term ‘‘overshadowing.’’ These commenters observed that debt collectors’ communications of validation notice information almost always expressly advise the consumer of the right to dispute the debt and to 553 This language was added to the FDCPA by the Financial Services Regulatory Relief Act of 2006, Public Law 109–351, sec. 802(c), 120 stat. 1966, 2006 (2006), after an FTC advisory opinion on the same subject. See Fed. Trade Comm’n, Advisory Opinion to American Collector’s Ass’n (Mar. 31, 2000) (opining that the 30-day period set forth in FDCPA section 809(a) ‘‘is a dispute period within which the consumer may insist that the debt collector verify the debt, and not a grace period within which collection efforts are prohibited’’ but that ‘‘[t]he collection agency must ensure, however, that its collection activity does not overshadow and is not inconsistent with the disclosure of the consumer’s right to dispute the debt specified by [s]ection 809(a).’’). 554 In addition, one industry representative stated that it generally agrees with proposed § 1006.38, and a group of consumer advocates that addressed proposed § 1006.38(b) did not object to the proposal. PO 00000 Frm 00112 Fmt 4701 Sfmt 4700 request the name and address of the original creditor. These commenters asserted that overshadowing claims are nonetheless some of the most common allegations in FDCPA lawsuits. These commenters also requested clarity as to whether the safe harbor in proposed § 1006.34(d)(2) for debt collectors who use proposed Model Form B–3 in proposed appendix B also precludes suits for violations of the overshadowing prohibition in proposed § 1006.38(b). One industry commenter requested that the final rule clarify that credit reporting during the validation period does not constitute overshadowing. At this time, the Bureau is finalizing proposed § 1006.38(b) as § 1006.38(b)(1) and is reserving § 1006.38(b)(2). As noted above, proposed § 1006.38(b) generally restated the statute, with only minor changes for style and clarity, and final § 1006.38(b)(1) does the same. The Bureau expects to address the comments it received requesting further clarity about the extent of the safe harbor that would be provided by proposed § 1006.34(d)(2) as part of its disclosurefocused final rule. The Bureau is reserving § 1006.38(b)(2) for the purpose of providing any such safe harbor. 38(c) Requests for Original-Creditor Information FDCPA section 809(b) provides that, if a consumer requests the name and address of the original creditor in writing within 30 days of receiving the validation notice information described in FDCPA section 809(a), the debt collector must cease collection of the debt until the debt collector obtains and mails that information to the consumer. The Bureau proposed in § 1006.38(c) to implement and interpret this requirement. In general, proposed § 1006.38(c) mirrored the statute, with minor changes for style and clarity. To accommodate electronic media through which a debt collector could send original-creditor information under proposed § 1006.42, proposed § 1006.38(c) interpreted FDCPA section 809(b) to require debt collectors to ‘‘provide,’’ rather than to ‘‘mail,’’ original-creditor information to consumers in a manner consistent with the delivery provisions in proposed § 1006.42. The Bureau received a number of comments addressing proposed § 1006.38(c).555 Three industry 555 A few of these comments asked the Bureau to define the term original creditor. These commenters’ requests are largely related to clarifications for purposes of the notice required by FDCPA section 809(a), so the Bureau will address E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 commenters requested that the final rule provide that, if a debt collector’s communication of the validation notice information to a consumer identifies the original creditor, the debt collector need not give the consumer the option of requesting original-creditor information from the debt collector. These commenters stated that, if the original creditor has already been identified to a consumer, it would be confusing to the consumer to provide the option to request the name and address of the original creditor. Further, they stated, consumers could use unnecessary requests for original-creditor information as a tactic to delay or avoid collection. One industry commenter requested that the final rule clarify that a debt collector is not required to include original-creditor information in its communication of validation notice information to a consumer. This commenter stated that lawsuits are often filed alleging that the FDCPA is violated if the communication does not identify the original creditor. A group of consumer advocates who addressed proposed § 1006.38(c) generally noted the importance of original-creditor information to consumers in helping them recognize the debt in question. One commenter stated that the rule should require debt collectors to identify the original creditor in the validation notice information.556 The Bureau is finalizing § 1006.38(c) generally as proposed.557 In the final rule, the Bureau has changed the word ‘‘provides’’ to ‘‘sends.’’ The reason for this change is discussed in the sectionby-section analysis of § 1006.42(a)(1). The Bureau declines to provide that a debt collector’s communication of the validation notice information may omit the option to request original-creditor information if the debt collector has already identified the original creditor to the consumer. The FDCPA expressly provides a consumer the right to request original-creditor information from a debt collector. FDCPA section 809(a)(5) states that the validation notice information must include ‘‘a statement that, upon the consumer’s written request within the 30-day period, the these comments as part of its disclosure-focused final rule. 556 Consumer advocates also addressed the proposal’s provisions regarding electronic delivery of original-creditor information (and other information) in proposed § 1006.42. These comments regarding electronic delivery are addressed in the section-by-section analysis of § 1006.42. 557 The Bureau is renumbering § 1006.38(c) as § 1006.38(c)(1) and is reserving § 1006.38(c)(2) for any alternative procedures that the Bureau finalizes in its disclosure-focused final rule. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.’’ 558 Further, FDCPA section 809(b) states that ‘‘[a]ny collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.’’ 559 However, the Bureau also believes that FDCPA section 809(a)(5) contemplates that a debt collector may respond differently to the consumer’s request for original-creditor information when the original creditor is not ‘‘different from the current creditor.’’ Because the question of how a debt collector may respond to a request for original-creditor information when the original creditor is the same as the current creditor implicates the proposed § 1006.34 provisions regarding disclosure of validation notice information, which are not being finalized at this time, the Bureau is not at the present time providing in § 1006.38(c) an alternative response mechanism for this situation. The Bureau expects to address further the comments received on this topic as part of its disclosure-focused final rule and may provide by regulation for alternative procedures when the original creditor is the same as the current creditor. For the same reason—that the Bureau is not presently finalizing the proposed § 1006.34 provisions for how validation notice information must be disclosed— the Bureau is not at the present time addressing (in response to comments from both industry commenters and consumer advocates, as noted above) whether a debt collector must include original-creditor information in its communication of validation notice information to a consumer. The Bureau expects to address these comments in its disclosure-focused final rule and may provide by regulation for alternative procedures when the original creditor is the same as the current creditor. 38(d) Disputes 38(d)(1) Failure To Dispute The Bureau proposed § 1006.38(d)(1) to implement FDCPA section 809(c), which states that the failure of a consumer to dispute the validity of a debt may not be construed by any court as an admission of liability by the consumer. Proposed § 1006.38(d)(1) generally restated the statute, with nonsubstantive changes for style. The 558 15 559 15 PO 00000 U.S.C. 1692g(a)(5). U.S.C. 1692g(b) (emphasis added). Frm 00113 Fmt 4701 Sfmt 4700 76845 Bureau received one comment generally supporting proposed § 1006.38(d)(1) and one comment arguing that § 1006.38(d)(1) is inconsistent with FDCPA section 809(a)(3), which requires a debt collector to disclose that, unless a consumer disputes the validity of the debt within thirty days of receiving the validation notice, the debt collector will assume the debt is valid.560 The Bureau disagrees that there is an inconsistency. FDCPA section 809(a)(3) addresses a debt collector’s assumption regarding the validity of the debt; § 1006.38(d)(1) addresses whether a consumer’s failure to dispute is a legal admission of liability. Accordingly, the Bureau is finalizing § 1006.38(d)(1) as proposed. 38(d)(2) Response to Disputes FDCPA section 809(b) provides that, if a consumer disputes a debt in writing within 30 days of receiving the information or notice described in FDCPA section 809(a), the debt collector must cease collection of the debt, or any disputed portion of the debt, until the debt collector obtains verification of the debt or a copy of a judgment and mails it to the consumer. Section 1006.38(d)(2) implements and interprets this requirement. 38(d)(2)(i) The Bureau proposed in § 1006.38(d)(2)(i) to implement FDCPA section 809(b)’s general requirements regarding disputes and verification. Proposed § 1006.38(d)(2)(i) generally mirrored the statute, with minor changes for style and clarity. To accommodate various electronic media through which a debt collector could send a copy of verification or a judgment under proposed § 1006.42, proposed § 1006.38(d)(2)(i) interpreted FDCPA section 809(b) to require debt collectors to provide, rather than to mail, such information to consumers in a manner consistent with the delivery provisions in proposed § 1006.42. The Bureau received no comments objecting to proposed § 1006.38(d)(2)(i) and is finalizing it generally as proposed.561 In the final rule, the Bureau has changed the word ‘‘provides’’ to ‘‘sends.’’ The reason for this change is discussed in the sectionby-section analysis of § 1006.42(a)(1). 560 15 U.S.C. 1692g(3). Bureau received numerous comments regarding the proposed electronic delivery requirements in proposed § 1006.42. Those comments are addressed in the section-by-section analysis of § 1006.42. 561 The E:\FR\FM\30NOR3.SGM 30NOR3 76846 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 38(d)(2)(ii) The Bureau proposed in § 1006.38(d)(2)(ii) to establish an alternative way for debt collectors to respond to disputes that they reasonably conclude are duplicative disputes as that term is defined in § 1006.38(a)(1). The Bureau proposed in § 1006.38(a)(1) to define the term ‘‘duplicative dispute’’ to mean a dispute submitted by the consumer in writing within the validation period that satisfies two criteria. The first criterion was that the dispute is substantially the same as a dispute previously submitted by the consumer in writing within the validation period to which the debt collector has already responded in accordance with the requirements of § 1006.38(d)(2)(i). The second criterion was that the dispute does not include new and material supporting information. Proposed § 1006.38(d)(2)(ii) provided that, upon receipt of a duplicative dispute, a debt collector must cease collection of the debt, or any disputed portion of the debt, until the debt collector either: Notifies the consumer in writing or electronically in a manner permitted by § 1006.42 that the dispute is duplicative, provides a brief statement of the reasons for the determination, and refers the consumer to the debt collector’s response to the earlier dispute; or satisfies § 1006.38(d)(2)(i).562 The Bureau received numerous substantive comments on the Bureau’s proposal regarding duplicative disputes, including the proposed definition of duplicative dispute. With respect to the definition of duplicative dispute in § 1006.38(a)(1), industry commenters stated that the Bureau should provide more clarity about the meaning of ‘‘substantially the same.’’ These commenters stated that the lack of clarity might result in the threat of additional disputes and litigation, which might make it not worthwhile for debt collectors to use the proposed alternative response mechanism for duplicative disputes. Consumer advocates observed that it is unlikely that a consumer would submit a dispute that meets the proposed duplicative dispute definition, because it is rare that a consumer submits a dispute, a debt collector 562 The Bureau did not propose to address duplicative requests for original-creditor information. As the Bureau noted in its proposal, some members of the debt collection industry have described being overwhelmed by the number of repeat disputes they receive. Industry members have not described any similar concerns about duplicative requests for original-creditor information. 84 FR 23274, 23354 (May 21, 2019). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 responds to the dispute, and the consumer resubmits the dispute, all within the 30-day validation period. They also stated that the proposed definition would give too much discretion to debt collectors to determine if a dispute is duplicative. They stated that the Bureau should either limit collector discretion by including additional criteria in the ‘‘duplicative dispute’’ definition or eliminate the alternative response to duplicative disputes set forth in § 1006.38(d)(2)(ii). Finally, some consumer advocates stated that the definition of duplicative dispute should include an additional criterion under which a consumer’s dispute is duplicative only if the consumer submits the second dispute to the same debt collector who provided a copy of the debt verification or judgment to the consumer in response to the consumer’s first dispute. With respect to the proposed alternative response to duplicative disputes in § 1006.38(d)(2)(ii), industry commenters generally suggested substantial changes to make it easier for debt collectors to address disputes that they determine to be duplicative. Some industry commenters stated that the duplicative dispute provision should permit debt collectors to disregard all disputes submitted by debt-relief companies. Others stated that the provision should permit debt collectors to disregard all disputes that meet the definition of duplicative dispute in § 1006.38(a)(1). Others stated that the provision should permit debt collectors to disregard all disputes (whether or not duplicative) submitted by consumers outside of the 30-day validation period. Finally, others stated that, by defining what it means for a debt collector to ‘‘verify’’ a debt—and by also requiring consumers to include specific information when they dispute a debt— the Bureau could reduce burden by making it easier for debt collectors to identify and dispose of disputes that are duplicative. Some industry commenters suggested more minor changes with respect to how the rule should permit debt collectors to address disputes that they determine to be duplicative. Specifically, some of these commenters suggested that, if a debt collector receives a consumer’s dispute electronically, then the rule should permit the debt collector to respond to the dispute electronically, irrespective of whether the debt collector has the consumer’s E–SIGN consent. Others suggested that the rule permit debt collectors to respond to duplicative disputes through PO 00000 Frm 00114 Fmt 4701 Sfmt 4700 a telephone call. Finally, in their comments on proposed § 1006.42(b) (discussed below), some industry commenters stated that debt collector responses to consumer disputes as required by § 1006.38(d)(2) are not written ‘‘disclosures’’ (but are instead, in these commenters’ view, documents substantiating the debt) and, therefore, the rule should not require debt collectors to obtain consumers’ E–SIGN consent before providing dispute responses electronically. Consumer advocates, as noted above, expressed concern that the definition of duplicative dispute in § 1006.38(a)(1) gives too much discretion to debt collectors to determine if a dispute is duplicative. But, they said, taking that definition as given, the alternative response mechanism for a duplicative dispute set forth in proposed § 1006.38(d)(2)(ii) should be eliminated from the final rule, because the proposed treatment of disputes would not reduce the number of duplicative disputes because it would not mandate that debt collectors review and provide copies of original, account-level documentation in response to consumer disputes and would not prohibit debt collectors from responding to disputes by providing summary data found in the debt collector’s database. The Bureau is finalizing as proposed the definition of duplicative dispute in § 1006.38(a)(1). The Bureau also is finalizing largely as proposed the optional alternative response mechanism for a duplicative dispute in § 1006.38(d)(2)(ii), but with one change intended to reduce burden for debt collectors who choose to use the alternative response mechanism. This change will thus also benefit consumers by allowing debt collectors to devote more resources to non-duplicative consumer disputes, as follows. Regarding the duplicative dispute definition, the Bureau believes that the meaning of ‘‘substantially the same’’ is sufficiently clear and is a concept that is already present in other regulations. For example, Regulation V, 12 CFR 1022, § 1022.43(f)(1)(ii) addresses direct disputes to a furnisher that are ‘‘substantially the same as a dispute previously submitted by or on behalf of the consumer.’’ And, Regulation X, 12 CFR 1024, § 1024.35(g)(1)(i) addresses consumer-asserted errors to a mortgage servicer that are ‘‘substantially the same as an error previously asserted by the borrower for which the servicer has previously complied with its obligation to respond.’’ Similarly, Regulation X § 1024.36(f)(1)(i) addresses a request for information to a mortgage servicer that ‘‘is substantially the same as E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations information previously requested by the borrower for which the servicer has previously complied with its obligation to respond.’’ The Bureau therefore declines to provide examples in the commentary about the meaning of ‘‘substantially the same’’ because doing so is unnecessary and unwarranted. The Bureau acknowledges that it is possible that consumers might infrequently submit disputes that meet the duplicative dispute definition, because it might be unusual for a consumer to submit a dispute, a debt collector to respond, and the consumer to resubmit the dispute all within the 30-day validation period. With respect to both the meaning of ‘‘substantially the same’’ and the frequency with which consumers submit duplicative disputes as defined, the Bureau expects to monitor consumers’ and debt collectors’ responses to and implementations of the duplicative dispute aspect of the Bureau’s rule to ensure that the definition is not resulting in consumer harm and to ascertain the extent to which the duplicate dispute provisions allow debt collectors to devote more resources to non-duplicative disputes. Regarding the alternative response mechanism for a duplicative dispute in § 1006.38(d)(2)(ii), the Bureau declines to adopt the substantial changes to the proposal that industry commenters suggested and declines to eliminate the mechanism from the final rule as consumer advocates suggested. With respect to industry commenters’ suggestion that the duplicative dispute provision permit debt collectors to disregard all disputes submitted by debt-relief companies, the Bureau declines to adopt a categorical approach because the Bureau cannot say that every such dispute is duplicative. As to the suggestion that the rule permit debt collectors to disregard all disputes that meet the definition of duplicative dispute, the Bureau determines that a debt collector’s notice to a consumer that the debt collector has determined that a dispute is a duplicative dispute, and the reasons for that determination, may nevertheless be informative to the consumer and is consistent with the statutory requirement to provide a response to disputes. Finally, the Bureau’s proposal did not define what it means to verify a debt, and the Bureau declines to do so in this final rule. The Bureau concludes that it is not necessary or warranted to provide such a definition because the Bureau generally expects that debt collectors will respond to non-duplicative disputes by providing verifications of VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 debts (or copies of judgments) as they do today. The Bureau has determined that debt collectors’ responses to consumer disputes are disclosures of information relating to a transaction or transactions, as E-SIGN Act section 101(c)(1) uses that phrase.563 And the Bureau interprets the requirement in FDCPA section 809(b) that ‘‘a copy’’ of a verification of the debt or a judgment, or the name and address of the original creditor be ‘‘mailed’’ requires a writing. Nonetheless, the FDCPA does not explicitly address debt collectors’ responses to duplicative disputes and, as a result, does not specify that responses to such disputes must involve mailing another copy of the verification or judgment. Rather, the statute says that only ‘‘a’’ copy of the verification or judgment must be ‘‘mailed.’’ Accordingly, the Bureau finds that the statute is ambiguous as to whether responses to duplicative disputes must be mailed if a copy of the verification or judgment previously has been mailed. The Bureau therefore has discretion to determine whether the E-SIGN Act’s consumer-consent provisions apply if a debt collector responds electronically to a duplicative dispute. For the policy reasons set forth below, the Bureau has determined to permit debt collectors to respond electronically to disputes that they determine to be duplicative without obtaining the relevant consumers’ E-SIGN consent. In the final rule, the Bureau has effected this change in § 1006.42(b)(1), which, as revised from the proposal, now provides that consumers’ E-SIGN consent is necessary only for debt collectors to respond electronically to consumers’ initial, non-duplicative disputes (pursuant to § 1006.38(d)(2)(i)). As proposed, § 1006.42(a)(1) applies to debt collectors’ responses to all disputes, including to duplicative disputes. Thus, debt collectors’ responses to duplicative disputes (and to initial disputes) must be provided in a manner that is reasonably expected to provide actual notice and in a form the consumer may keep and access later, 563 See 15 U.S.C. 7001(c)(1) (stating that ‘‘if a statute, regulation, or other rule of law requires that information relating to a transaction or transactions in or affecting interstate or foreign commerce be provided or made available to a consumer in writing, the use of an electronic record to provide or make available (whichever is required) such information satisfies the requirement that such information be in writing if (A) the consumer has affirmatively consented to such use and has not withdrawn such consent. . . .’’) (emphasis added). See also E-Sign Act sections 106(7) and (13) (15 U.S.C. 7006(7) and (13)), which, respectively, define ‘‘information’’ and ‘‘transaction’’ quite broadly. PO 00000 Frm 00115 Fmt 4701 Sfmt 4700 76847 while debt collectors’ electronic responses to initial disputes must also comply with § 1006.42(b). The Bureau believes there may be scenarios in which debt collectors respond to consumers’ initial disputes in paper form because the debt collectors do not have consumers’ ESIGN consent, but in which the debt collectors nonetheless can respond to consumers’ duplicative disputes electronically, because the debt collectors have consumers’ email addresses or mobile telephone numbers for text messages. By adopting the duplicative dispute provision largely as proposed, but modified as described above, the Bureau intends to provide a method of delivery that allows debt collectors the option to respond to duplicative disputes in a less burdensome way, which may permit collectors to apply more resources to responding to non-duplicative disputes, while also appropriately balancing consumer protections, because those electronic communications remain subject to § 1006.42(a)(1). The Bureau will monitor industry implementation of the final rule’s duplicative-disputes provision to assess its impact on all stakeholders. The Bureau declines to permit collectors to respond to duplicative disputes orally. The Bureau concludes that FDCPA section 809(b) requires responses to consumers’ disputes in a form that consumers may keep and access later for the reasons discussed in the section-by-section discussion of § 1006.42.564 The Bureau is finalizing the alternative procedure in § 1006.38(d)(2)(ii) for responding to duplicative disputes as an interpretation of FDCPA section 809(b) and pursuant to its rulemaking authority provided by FDCPA section 814(d). In particular, § 1006.38(d)(2)(ii) interprets what it means for a debt collector to ‘‘obtain[ ] verification of the debt or any copy of a judgment’’ and to provide ‘‘a copy of such verification or judgment’’ to the consumer when the debt collector reasonably determines that a dispute is a duplicative dispute. In some cases a consumer might submit a timely written dispute that is duplicative of an earlier dispute for which the debt collector already obtained and mailed to the consumer a copy of verification of the 564 FDCPA section 809(b) states that, when a debt collector receives a consumer’s dispute, ‘‘the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment . . . and a copy of such verification or judgment . . . is mailed to the consumer by the debt collector.’’ E:\FR\FM\30NOR3.SGM 30NOR3 76848 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 debt or a judgment. In those cases, the Bureau interprets FDCPA section 809(b)’s requirement to provide ‘‘a copy of such verification or judgment’’ to the consumer to mean that a debt collector must provide the consumer either with another copy of the materials the debt collector provided in response to the earlier dispute, or with a notice explaining the reasons for the debt collector’s determination that the dispute is duplicative and referring the consumer to the materials the debt collector provided in response to the earlier dispute. The Bureau also is finalizing the notice requirement of § 1006.38(d)(2)(ii) pursuant to the Bureau’s authority under Dodd-Frank Act section 1032(a). As discussed above, 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. The Bureau is finalizing the notice requirement in § 1006.38(d)(2)(ii) on the basis that a debt collector’s decision to treat a dispute as a duplicative dispute under § 1006.38(d)(2)(ii) is a feature of debt collection. A debt collector’s notice to a consumer that the debt collector has determined that a dispute is a duplicative dispute, and the reasons for that determination, may help the consumer understand the costs, benefits, and risks associated with filing additional disputes and deciding whether to pay a debt. Section 1006.42 Sending Required Disclosures Section 1006.42 sets forth requirements for sending the disclosures required by the FDCPA and Regulation F. Proposed § 1006.42(a)(1) set forth a general standard for providing the required disclosures in writing or electronically. Proposed § 1006.42(b) provided that, to meet that standard when delivering the required disclosures electronically, a debt collector needed to either obtain a consumer’s E-SIGN consent directly from the consumer or comply with alternative procedures in proposed § 1006.42(c), and needed to take certain additional steps regarding the format and delivery of the communication.565 For the reasons discussed below, final § 1006.42 focuses on the general 565 See 84 FR 23274, 23355–67 (May 21, 2019). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 standard and on clarifying that a debt collector who sends the required written disclosures electronically must do so in accordance with the E-SIGN Act. At this time, the Bureau declines to interpret whether, and if so when, the E-SIGN Act requires a debt collector to obtain E-SIGN consent directly from the consumer and declines to finalize the alternative procedures in proposed § 1006.42(c). The Bureau is finalizing § 1006.42 to implement and interpret FDCPA section 809(a) and (b) and pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors. In addition, the Bureau is finalizing the general standard in § 1006.42(a)(1) as an interpretation of FDCPA section 808’s prohibition on using unfair or unconscionable means to collect a debt.566 42(a) Sending Required Disclosures 42(a)(1) In General The Bureau proposed § 1006.42(a)(1) to require a debt collector who provides disclosures required by Regulation F in writing or electronically to do so: (1) In a manner that is reasonably expected to provide actual notice to the consumer; and (2) in a form that the consumer may keep and access later. Commenters generally supported this standard, and the Bureau is finalizing it largely as proposed, with minor edits for clarity. Specifically, final § 1006.42(a)(1) uses the term sends, rather than the proposed term provides, to clarify that a debt collector’s obligation under the rule— and as the Bureau intended under the proposal—is to send required disclosures in a manner reasonably expected to provide actual notice.567 Final § 1006.42(a)(1) also clarifies that the general standard applies when debt collectors send disclosures required either by the FDCPA or Regulation F.568 With these revisions, final § 1006.42(a)(1) provides that a debt collector who sends disclosures required by the FDCPA and Regulation F in writing or electronically must do so 566 The proposal explained the Bureau’s basis for citing to FDCPA section 808. See id. at 23356. The Bureau addresses feedback about this basis at the end of the section-by-section analysis of § 1006.42. 567 For simplicity, the Bureau uses ‘‘send’’ throughout this section-by-section analysis, including when describing what proposed provisions would have required. 568 Proposed § 1006.42 referred in certain places to the disclosures required by proposed § 1006.34. Final § 1006.42 instead refers in those places to the disclosures required by the FDCPA, as implemented by Bureau regulation, because the Bureau is not finalizing § 1006.34 at this time. The Bureau expects that, in the Bureau’s disclosure-focused final rule, these references will be updated to refer to § 1006.34. PO 00000 Frm 00116 Fmt 4701 Sfmt 4700 in a manner that is reasonably expected to provide actual notice, and in a form that the consumer may keep and access later. In response to feedback, the Bureau is revising the proposed commentary for § 1006.42(a)(1) in several ways, including by renumbering proposed comment 42(a)(1)–1 as new comment 42(a)(1)–2 and by adding three new comments (final comments 42(a)(1)–1, –3, and –4) to incorporate text from proposed § 1006.42(b)(2) and (3), (e)(1), and comment 42(c)(1)–1. The Bureau is not otherwise finalizing proposed § 1006.42(b)(2) or (3), (e)(1), or comment 42(c)(1)–1 and, therefore, addresses comments received in response to those provisions in this section-by-section analysis. Final Comment 42(a)(1)–1 Proposed § 1006.42(b)(2) would have required the debt collector to identify the purpose of an electronic communication transmitting a required disclosure by including in the email subject line or the first line of a text message the name of the creditor to whom the debt is owed and one additional piece of information identifying the debt, other than the amount.569 Consumer advocates expressed concern that proposed § 1006.42(b)(2) would be unlikely to lead many consumers to open or read emails or text messages from debt collectors and could lead some consumers or their email providers to mark the messages as spam. Consumer advocates suggested that the Bureau eliminate proposed § 1006.42(b)(2) and replace it with more robust monitoring to ensure consumers’ actual receipt of electronic communications containing required disclosures. Proposed § 1006.42(b)(3) would have required a debt collector sending required disclosures electronically to permit receipt of notifications of undeliverability from communications providers, monitor for any such notifications, and treat any such notifications as precluding a reasonable expectation of actual notice for that delivery attempt. Some industry commenters stated that the general standard in § 1006.42(a)(1) should be deemed to be satisfied if a debt collector emails required disclosures to the consumer email address that the creditor provided to the debt collector and the debt collector does not receive a notice that the email was returned as undeliverable. Consumer advocates 569 Proposed comment 42(b)(2)–1 provided examples of the types of information that a debt collector might include. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations stated that proposed § 1006.42(b)(3) would be inadequate to provide debt collectors with a reasonable expectation of actual notice. These commenters stated that the rule should provide that a debt collector does not have a reasonable expectation of actual notice if the debt collector’s records do not indicate that the electronic message was opened by the consumer. The Bureau determines that the actions described in proposed § 1006.42(b)(2) and (3) are relevant to the analysis regarding whether a debt collector has a reasonable expectation of actual notice but that these factors may be viewed in light of any other relevant facts and circumstances. The Bureau therefore finalizes the text of proposed § 1006.42(b)(2) and (3) as new comments 42(a)(1)–1.i and .ii, respectively, to instead set forth relevant factors in determining whether a debt collector has complied with the § 1006.42(a)(1) general standard. The Bureau also is finalizing new comment 42(a)(1)–1.iii to provide an additional factor. Specifically, final comment 42(a)(1)– 1.i incorporates the text of proposed § 1006.42(b)(2) and comment 42(b)(2)–1 to provide that a relevant factor in determining whether the debt collector has met the general standard in § 1006.42(a)(1) is whether the debt collector identified the purpose of an electronic communication transmitting a required disclosure by including in the subject line the name of the creditor and one additional piece of information identifying the debt, such as a truncated account number; the name of the original creditor; the name of any store brand—that is, the merchant— associated with the debt; the date of sale of a product or service giving rise to the debt; the physical address of service; and the billing or mailing address on the account. Final comment 42(a)(1)–1.ii incorporates the text of proposed § 1006.42(b)(3) to provide that a relevant factor in determining whether the debt collector has met the general standard in § 1006.42(a)(1) is whether the debt collector permitted receipt of and monitored for notifications of undeliverability from communications providers and treated any such notifications as precluding a reasonable expectation of actual notice for that delivery attempt. Final comment 42(a)(1)–1.iii provides that a relevant factor is whether the debt collector identified itself as the sender of the communication by including a business name that the consumer would be likely to recognize, such as the name included in the notice described in VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 § 1006.6(d)(4)(ii)(C) or in a prior limitedcontent message left for the consumer or in an email message sent to the consumer. The Bureau adds this comment because the consumer’s ability to recognize the sender as a legitimate business is a factor in whether the debt collector has a reasonable expectation of actual notice. Particularly if the consumer has been alerted that a specific debt collector may be sending a communication to the consumer, as in the case of the notice described in § 1006.6(d)(4)(ii)(C), then the debt collector is unlikely to satisfy § 1006.42(a)(1) unless the debt collector uses the same name that was included in the notice. Final Comment 42(a)(1)–2 The Bureau is finalizing proposed comment 42(a)(1)–1 as new comment 42(a)(1)–2 and, apart from renumbering it, is finalizing it largely as proposed with minor wording changes for consistency with the text of final § 1006.42(a)(1). Final comment 42(a)(1)– 2 thus states that a debt collector who sends a required disclosure in writing or electronically and who receives a notice that the disclosure was not delivered has not sent the disclosure in a manner that is reasonably expected to provide actual notice under § 1006.42(a)(1). One industry commenter stated that, when a debt collector attempts to deliver a required disclosure electronically and the attempt is returned as undeliverable, the debt collector should be able to rely on the previously sent delivery attempt. The Bureau believes this commenter was primarily concerned with whether a debt collector violates the five-day validation notice timing requirement set forth in FDCPA section 809(a) and proposed § 1006.34(a)(1)(i)(B)—i.e., that the notice be sent within five days of the initial communication—if the debt collector’s first attempt to deliver the notice is returned as undeliverable. The Bureau expects to address this issue as part of its disclosure-focused final rule. The Bureau also expects that rulemaking to address how a debt collector should redeliver the validation notice if it is returned as undeliverable. See proposed comment 34(b)(5)–1. Final Comment 42(a)(1)–3 Proposed § 1006.42(e)(1) described a safe harbor for required disclosures sent by mail. Specifically, proposed § 1006.42(e)(1) provided that a debt collector satisfied the general standard in § 1006.42(a)(1) if the debt collector mailed a printed copy of a required disclosure to the consumer’s residential address, unless the debt collector received notification from the entity or PO 00000 Frm 00117 Fmt 4701 Sfmt 4700 76849 person responsible for delivery that the disclosure was not delivered.570 Proposed comment 42(e)(1)–2 specified that a debt collector did not mail a disclosure to a consumer’s residential address if the debt collector knew or should have known at the time of mailing that the consumer did not reside at that location. The Bureau is finalizing proposed § 1006.42(e)(1) and its accompanying commentary as new comment 42(a)(1)–3, for the reasons and with the revisions discussed below. Some industry commenters stated the safe harbor for mail set forth in proposed § 1006.42(e)(1) should be revised to encompass mail to a post office box or a consumer’s ‘‘last known address.’’ These commenters observed that a consumer might move without advising the creditor or debt collector of the consumer’s new address. They also observed that some consumers use post office boxes or commercial addresses to receive mail (e.g., if a consumer is a small business owner). Some consumer advocates recommended that the Bureau withdraw the safe harbor for mail delivery set forth in proposed § 1006.42(e)(1). These commenters stated that a debt collector may have multiple mail addresses for a consumer and stated that the Bureau’s proposed safe harbor did not provide sufficient guidance on how the debt collector should determine the consumer’s residential address. They further stated that the proposed safe harbor was arbitrary and that a debt collector could use it to claim compliance with § 1006.42(a)(1) without doing any due diligence to ensure that a consumer was likely to receive the disclosure at the residential address to which the debt collector mailed it. After considering these comments, and because the safe harbor illustrates how a debt collector may comply with § 1006.42(a)(1), the Bureau is finalizing the proposed safe harbor with revisions in new comment 42(a)(1)–3. Regarding industry’s concerns about the proposed requirement that mail be sent to a consumer’s residential address, the Bureau does not believe that consumer harm will result from including post office boxes in the safe harbor because post office boxes are generally secure and private. Further, some consumers may benefit from 570 Proposed § 1006.42(e) set forth two safe harbors, the first, § 1006.42(e)(1), covering provision of disclosures by mail and the second, § 1006.42(e)(2), covering provision of the validation notice within the body of an email that is a debt collector’s initial communication with the consumer. The Bureau addresses proposed § 1006.42(e)(2) in the section-by-section analysis regarding proposed provisions not finalized, below. E:\FR\FM\30NOR3.SGM 30NOR3 76850 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 providing post office box addresses to creditors and debt collectors because a consumer can maintain a post office box address for receiving mail even as the consumer moves and thereby changes his or her residential address. The final safe harbor set forth in comment 42(a)(1)–3 therefore encompasses a consumer address that is a post office box, unless the debt collector knows or should know that the consumer does not currently receive mail at that post office box. However, the safe harbor does not encompass an address that is a commercial address (e.g., if a consumer is a small business owner) because the Bureau is concerned that including such addresses in the safe harbor could result in consumers inappropriately receiving debt collection mail at their places of employment. Nonetheless, while a commercial address is not covered by the final safe harbor, mail sent to such an address could satisfy the requirements of § 1006.42(a)(1) and be otherwise compliant with the FDCPA and Regulation F, depending on the facts and circumstances. The Bureau determines that it is unnecessary for the final safe harbor to clarify how debt collectors should ascertain the address at which a consumer actually receives mail. Debt collectors already should have methods to ascertain correct addresses for consumers since mailing disclosures is not free and debt collectors generally may want consumers to receive such disclosures. In addition, the safe harbor only applies to a debt collector who mails a disclosure to the consumer’s last known address, and it does not cover a debt collector who knows or should know that the consumer does not currently reside at, or receive mail at, that location at the time of mailing. For these reasons, final comment 42(a)(1)–3 states that, subject to comment 42(a)(1)–2 regarding receipt of a notice of undeliverability, a debt collector satisfies § 1006.42(a)(1) if the debt collector mails a printed copy of a disclosure to the consumer’s last known address, unless the debt collector, at the time of mailing, knows or should know that the consumer does not currently reside at, or receive mail at, that location. Final Comment 42(a)(1)–4 The Bureau is finalizing proposed comment 42(c)(1)–1 as new comment 42(a)(1)–4. Proposed comment 42(c)(1)–1 clarified that a debt collector could not deliver a required disclosure to an email address or telephone number if a consumer had opted out of receiving communications to that VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 address or telephone number. The Bureau received no comments objecting to proposed comment 42(c)(1)–1 571 and, apart from renumbering it, is finalizing it as proposed, with wording changes only to reconcile its text to the Bureau’s overall approach in final § 1006.42. Final comment 42(a)(1)–4 thus states that, if a consumer has opted out of debt collection communications to a particular email address or telephone number by, for example, following the instructions provided pursuant to § 1006.6(e), then a debt collector cannot use that email address or telephone number to send required disclosures. 42(a)(2) Exceptions Proposed § 1006.42(a)(2) excepted the disclosures that would have been required by proposed §§ 1006.6(e) and 1006.18(e) from the requirements of proposed § 1006.42(a)(1), unless the disclosure was included on a notice required by FDCPA section 809(a) or § 1006.38(c) or (d)(2). The Bureau proposed to except these disclosures because they do not arise under FDCPA section 809 and generally do not implicate FDCPA section 808’s prohibition on using unfair or unconscionable means to collect or attempt to collect any debt. The Bureau received no comments objecting to § 1006.42(a)(2) and is finalizing it as proposed, with revisions only to conform its text to the Bureau’s overall approach in final § 1006.42. One industry commenter who addressed proposed § 1006.42(a)(2) requested that the final rule provide that the intent-to-deposit letter described in proposed § 1006.22(c)(1) (implementing FDCPA section 808(2)) is not subject to the E-SIGN Act’s consumer-consent requirements. Under the proposal, the Bureau did not take a position on E-SIGN coverage of the intent-to-deposit letter and, accordingly, the Bureau does not take a position on E-SIGN’s applicability to the letter in this final rule. The Bureau is not aware that these notices are currently being delivered electronically or, if they are, that there are concerns or questions about compliance with the E-SIGN Act when sending them. The Bureau notes, however, that the intent-to-deposit letter is subject to the notice and form requirements of § 1006.42(a)(1). 571 Consumer advocates objected to proposed § 1006.42(c) overall and stated that the consumer’s opt-out right referred to in proposed comment 42(c)(1)–1 was insufficient to resolve their objections. PO 00000 Frm 00118 Fmt 4701 Sfmt 4700 42(b) Requirements for Certain Disclosures Sent Electronically In its proposal, the Bureau preliminarily determined that the E-SIGN Act’s consumer-consent requirements apply to certain FDCPArequired disclosures. The proposal would have provided debt collectors with a choice between two general delivery options for providing required disclosures electronically. The first option, set forth in proposed § 1006.42(b)(1), was to, among other requirements, comply with the E-SIGN Act after the consumer provided affirmative consent directly to the debt collector. The second option was to, among other requirements, comply with the alternative procedures described in proposed § 1006.42(c)(1). The Bureau responds to comments regarding the proposed alternative procedures in the section-by-section analysis regarding proposed provisions that the agency is not finalizing, below. In this section-bysection analysis, the Bureau addresses comments regarding whether and how the E-SIGN Act’s consumer-consent requirements apply to certain FDCPArequired disclosures. Some industry commenters argued that the E-SIGN Act’s consumer-consent requirements do not apply to the disclosures that the FDCPA and Regulation F require. Some of these commenters based this argument on an assertion that debt collection disclosures are not disclosures regarding a ‘‘transaction’’ as the E-SIGN Act defines that term. Others based it on an assertion that the FDCPA does not require the validation notice to be provided in writing, because the FDCPA permits the notice to be provided orally when it is contained in the initial communication. Consumer advocates stated that the rule should require a debt collector to obtain a consumer’s E-SIGN consent before using any method of communication with the consumer other than mail or a telephone call. These commenters observed that many consumers whose debts enter collection are lower-income or elderly consumers who may not be familiar with internetbased financial transactions. Further, these commenters said, even if these consumers have and can use an email address or smartphone, they may not have reliable, high-bandwidth home internet service, such that they might prefer to receive important financial information through the mail. These commenters stated that the E-SIGN Act’s consumer-consent requirements were purposefully designed to ensure that consumers, including lower-income and E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations elderly consumers, have access to a computer and the internet such that they can access written disclosures electronically. Within the E-SIGN Act’s consumerconsent requirements, E-SIGN Act section 101(c)(1) states that, if a statute, regulation, or other rule of law requires that information relating to a transaction or transactions in or affecting interstate or foreign commerce be provided or made available to a consumer in writing, the use of an electronic record to provide or make available (whichever is required) such information satisfies the requirement that such information be in writing if (A) the consumer has affirmatively consented to such use and has not withdrawn such consent . . . .572 In turn, E-SIGN Act section 106(13) defines the term ‘‘transaction’’ quite broadly.573 The Bureau concludes that transaction—as E-SIGN Act section 101(c)(1) uses that term and as E-SIGN Act section 106(13) defines it—includes the collection of debts by debt collectors. Further, FDCPA section 809(a) states that ‘‘a debt collector shall . . . send the consumer a written [validation] notice’’ unless it is contained in the initial communication. Under the above terms of E-SIGN Act section 101(c)(1), the E-SIGN Act consumer-consent requirements apply when a law requires a written disclosure to a consumer. And the Bureau has determined that FDCPA section 809(a) sets forth a requirement that a debt collector provide a written disclosure of information to a consumer; i.e., the Bureau has determined that the validation notice required by FDCPA section 809(a) is a disclosure of information to a consumer and that FDCPA section 809(a) requires the validation notice to be in writing when it is not contained in the initial communication. Accordingly, when a debt collector provides the required, written validation notice electronically and does so other than within the initial communication, the E-SIGN Act’s consumer-consent requirements apply to the debt collector’s electronic provision of the notice. The same conclusion applies to the disclosures that FDCPA section 809(b) requires to be mailed, which are debt collectors’ responses to consumers’ requests for original-creditor information (see the section-by-section analysis of § 1006.38(c)) and debt collectors’ responses to consumers’ disputes (see the section-by-section analysis of § 1006.38(d)(2)(i)). The Bureau thus is finalizing proposed § 1006.42(b)(1) as § 1006.42(b) to provide that a debt collector who sends the required, written validation notice, or the disclosures required by § 1006.38(c) or (d)(2)(i),574 electronically, must do so in accordance with the consumer-consent requirements in E-SIGN Act section 101(c).575 As noted above, proposed § 1006.42(b)(1) would have required a debt collector to obtain E-SIGN consent directly from consumers when the debt collector provided electronically the validation notice or the disclosures required by § 1006.38(c) and (d)(2). Some industry commenters recommended that the Bureau take a different approach and interpret E-SIGN Act section 101(c) to permit a consumer’s E-SIGN consent obtained by a creditor to pass from the creditor (or a prior debt collector) to the debt collector. Consumer advocates, by contrast, supported the Bureau’s proposed approach. In these commenters’ view, a consumer’s E-SIGN consent applies only ‘‘during the course of the parties’ relationship’’ per E-SIGN Act section 101(c)(1)(B)(ii). Further, these commenters stated, collection activity by third-party debt collectors to which the FDCPA applies is not within the relationship between the consumer and the original creditor. The Bureau is not finalizing in § 1006.42(b) the proposed E-SIGN Act interpretation that a debt collector who provides electronically the written disclosures required by the FDCPA and Regulation F must obtain a consumer’s affirmative consent directly from the consumer. That is to say, the Bureau is not taking a position in this rulemaking on whether a consumer’s E-SIGN 572 As discussed elsewhere in part V, E-SIGN Act section 104(b)(1) grants Federal agencies authority to interpret E-SIGN Act section 101, including section 101(c). 573 E-SIGN Act section 106(13) defines transaction as ‘‘an action or set of actions relating to the conduct of business, consumer, or commercial affairs between two or more persons, including any of the following types of conduct—(A) the sale, lease, exchange, licensing, or other disposition of (i) personal property, including goods and intangibles, (ii) services, and (iii) any combination thereof; and (B) the sale, lease, exchange, or other disposition of any interest in real property, or any combination thereof.’’ See 15 U.S.C. 7006(13). 574 As discussed in the section-by-section analysis of § 1006.38(d)(2), the Bureau has determined not to apply the E-SIGN Act’s consumer-consent requirements when a debt collector responds electronically to a dispute that the debt collector has determined is duplicative. Thus, final § 1006.42(b) refers to the disclosures required by ‘‘§ 1006.38(c) or (d)(2)(i)’’ rather than ‘‘§ 1006.38(c) or (d)(2)’’ as proposed. 575 As discussed elsewhere in the section-bysection analysis of § 1006.42, the Bureau is moving proposed § 1006.42(b)(2) and (3) into commentary to final § 1006.42(a)(1) and is not finalizing proposed § 1006.42(b)(4). The Bureau therefore is finalizing proposed § 1006.42(b)(1) as § 1006.42(b). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00119 Fmt 4701 Sfmt 4700 76851 consent provided to a creditor (or to a prior debt collector) transfers to a debt collector, and, as a result, is not addressing feedback received regarding the Bureau’s proposed interpretation. The Bureau intends to monitor debt collectors’ practices for sending required debt collection disclosures in accordance with the consumer-consent requirements in E-SIGN Act section 101(c), including debt collectors’ practices for obtaining that consent. Proposed Provisions Not Finalized Proposed § 1006.42(b)(4) and (c) through (e) would have set forth additional requirements, alternative procedures, notice-and-opt-out processes, and a safe harbor for a debt collector providing a validation notice electronically. Collectively, these provisions, along with proposed § 1006.42(b) in general, prescribed various methods for a debt collector to deliver a validation notice either in the body of an email or through a hyperlink, in the initial communication with the consumer or within five days of the initial communication. The Bureau received thousands of comments concerning both the overall approach and details of these provisions. While many industry commenters supported the Bureau’s attempt to provide clarity, such commenters were also concerned about what they considered to be the prescriptive and burdensome nature of the proposal. These commenters suggested that, if finalized, the proposed procedures would not lead to the clarity or increased use of electronic delivery that the Bureau expected. Consumer and consumer advocate commenters objected to the Bureau’s proposal, arguing that, even with prescriptive procedures, the Bureau’s proposal failed to adequately safeguard consumers from threats present in electronic communications and to ensure that consumers would have a reasonable likelihood of receiving such communications. For the reasons discussed below, the Bureau is not finalizing the following specific procedures and safe harbors. The Bureau emphasizes, however, that it concludes that consumers may benefit from electronic communications in debt collection, including the delivery of required notices, as consumers may be able to exert greater control over such communications than over nonelectronic communications and those communications may be more easily retained and referenced by consumers. The Bureau also concludes that debt collectors may find electronic delivery of required notices to be a more effective E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76852 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations and efficient means of communicating with consumers. Nevertheless, because debt collectors do not presently engage in widespread use of electronic communications, as discussed in the section-by-section analysis of § 1006.6(d)(3) through (5), and in light of commenters’ concerns, the Bureau concludes that it does not, at this time, have sufficient information to properly weigh the risks to consumers and benefits to debt collectors to finalize specific procedures for electronic delivery of required disclosures. The Bureau determines that finalizing other communications provisions will encourage both debt collectors and consumers to communicate electronically when they prefer to do so. The Bureau intends to actively monitor the market and gather information on these electronic communications in general so that it may, in the future, revisit specific procedures for electronic delivery of required disclosures. Responsive format for validation notices sent electronically. Proposed § 1006.42(b)(4) would have required a debt collector who provides a validation notice electronically to do so in a responsive format that is reasonably expected to be accessible on a screen of any commercially available size and via commercially available screen readers. Those industry commenters who addressed the proposed responsive format requirement in proposed § 1006.42(b)(4) generally stated that it would be too burdensome and prescriptive. A few industry commenters supported the proposed requirement. Consumer advocates generally supported proposed § 1006.42(b)(4). They stated that responsive formats for required disclosures serve an important goal of readability on mobile devices. These commenters encouraged the Bureau to follow through on its proposal to release source code that collectors could use to provide electronically sent validation notices in a responsive format. While a group of State Attorneys General supported the responsiveformat requirement, they stated that, if a responsive disclosure is magnified on a small screen, a consumer can read only one small section of the disclosure at a time, which can result in information being overlooked or taken out of context notwithstanding that the disclosure includes the requisite information. As discussed above, the Bureau is not finalizing many of the proposed requirements or safe harbors related to electronic delivery of required disclosures because the Bureau VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 currently lacks sufficient information to properly balance the risks and benefits of rules for electronic delivery of required disclosures. Accordingly, the Bureau is declining at this time to finalize the proposal to require that the validation notice be provided in a responsive format. Alternative procedures to the E-SIGN Act for providing certain disclosures electronically. As noted in the section by-section analysis of § 1006.42(b), proposed § 1006.42(c) provided alternative procedures that debt collectors sending certain required disclosures electronically could have used in lieu of sending the disclosures in accordance with E-SIGN Act section 101 and obtaining affirmative consent directly from the consumer, as proposed § 1006.42(b)(1) otherwise would have required. In the context of those alternative procedures, proposed § 1006.42(c)(2) provided two methods from which debt collectors could choose for placing a required disclosure in an electronic communication. The first method, as described in proposed § 1006.42(c)(2)(i), was to place the disclosure in the body of an email. The second method, described in proposed § 1006.42(c)(2)(ii), was to place the disclosure on a secure website that is accessible by clicking on a hyperlink included within an electronic communication, provided certain other conditions were met. Among those conditions was that the consumer receive notice and an opportunity to opt out of hyperlinked delivery as set forth in proposed § 1006.42(d). Proposed § 1006.42(d) described two processes for providing consumers with notice and an opportunity to opt out of hyperlinked delivery of required disclosures. Proposed § 1006.42(d)(1) required a debt collector to inform the consumer, in a communication with the consumer before providing the required disclosure, of certain information which included requiring the debt collector to inform the consumer of the consumer’s ability to opt out of hyperlinked delivery of disclosures and to provide instructions for doing so within a reasonable period of time.576 Under 576 Proposed comment 42(d)(1)–3 would have clarified how the proposed requirement to communicate with the consumer before providing a hyperlinked disclosure worked together with the proposed requirement to provide the consumer a reasonable period within which to opt out. The proposed comment explained that, in an oral communication with the consumer, such as a telephone or in-person conversation, the debt collector may require the consumer to make an optout decision during that same communication. However, in a written or electronic communication, a debt collector would have had to allow a consumer more than five days to make an opt-out PO 00000 Frm 00120 Fmt 4701 Sfmt 4700 proposed § 1006.42(d)(2), the noticeand-opt-out process would have relied on a communication between the creditor and the consumer.577 As noted above, some industry commenters argued that the E-SIGN Act’s consumer-consent requirements should not apply to the written disclosures required under the FDCPA and Regulation F. Some industry commenters suggested that, if the Bureau were to determine that the E-SIGN Act’s consumer-consent requirements do apply, then the Bureau should use its exemption authority, provided by E-SIGN Act section 104(d)(1), to exempt from the E-SIGN Act’s consumer-consent requirements the disclosures that the FDCPA requires to be in writing. E-SIGN Act section 104(d)(1) states that a Federal agency may exempt required written disclosures from the E-SIGN Act’s consumer-consent requirements if the agency determines that ‘‘such exemption is necessary to eliminate a substantial burden on electronic commerce and will not increase the material risk of harm to consumers.’’ Industry commenters stated that the E-SIGN Act’s consumer-consent requirements impose a substantial burden on electronic commerce in the debt collection industry because it is infeasible for a debt collector to obtain a consumer’s E-SIGN consent prior to electronically delivering the validation notice to the consumer. Industry commenters generally based this position on the same rationale that underpinned the Bureau’s proposal to exempt from the E-SIGN Act’s consumer-consent requirements required disclosures sent pursuant to the alternative procedures in proposed § 1006.42(c). Specifically, these commenters stated, it is not practicable to obtain a consumer’s E-SIGN consent decision in order to grant sufficient time for the consumer to see and respond to the opt-out notice. And because, under FDCPA section 809(a), no more than five days may elapse between an initial debt collection communication and when the debt collector sends the validation notice, under proposed comment 42(d)(1)–3, a debt collector who wished to obtain consumer consent in an initial communication to hyperlinked delivery of the validation notice would have been required to obtain the consumer’s consent to such delivery orally. 577 Under proposed § 1006.42(d)(2), a debt collector would have been required, no more than 30 days before the debt collector’s electronic communication containing the hyperlink to the disclosure, to confirm that the creditor: (1) Communicated with the consumer using the email address or, in the case of a text message, the telephone number to which the debt collector intends to send the electronic communication, and (2) informed the consumer of the information set forth in proposed § 1006.42(d)(2). E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations through the mail or during a telephone call, which are the primary methods by which debt collectors make initial communications to consumers. Further, these commenters stated, it is difficult or impossible to obtain consumers’ E-SIGN consent in the five days between when the debt collector makes an initial communication in a telephone call and when FDCPA section 809(a) provides that the debt collector must provide the validation notice (unless the validation notice is contained in the initial communication). Finally, these commenters stated, debt collectors generally do not have ongoing customer relationships with the consumers from whom the debt collectors seek debt repayment, such that it is difficult or impossible for debt collectors to use the practices for obtaining E-SIGN consent that creditors typically use. While some industry commenters argued that the Bureau should use its exemption authority, some also expressed concern with the specifics of the Bureau’s proposed exemption, arguing that the proposal in § 1006.42(c) to permit debt collectors to use email addresses or telephone numbers that the creditor could have used in accordance with section 101(c) of the E-SIGN Act was not sufficient. These commenters stated that, in many cases, a creditor would not have a consumer’s E-SIGN consent but would have the consumer’s email address or telephone number (for text messages). For example, these commenters said, the creditor might use the email address or telephone number to provide non-required messages and notifications to consumers, for which the consumers’ E-SIGN consent is not required. To enable debt collectors to interact efficiently with consumers in these situations, these commenters said, the Bureau should provide an E-SIGN Act exemption and revise the alternative procedures in proposed § 1006.42(c) to permit a debt collector to send required disclosures electronically to the consumer’s email address or telephone number (for text messages) that the creditor provided to the debt collector, irrespective of whether the creditor or the debt collector obtained the consumer’s E-SIGN consent. Industry commenters also stated that the requirements in proposed § 1006.42(c)(2)(ii) and (d) regarding provision of required disclosures through hyperlinks in emails or text messages were far too prescriptive and burdensome and would not be used. They generally did not, however, suggest alternatives to those procedures because, as noted above, their main argument was that the E-SIGN Act’s consumer-consent requirements do not VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 apply or that the Bureau should establish a blanket exemption from those requirements. Consumer advocates objected to the ESIGN Act exemption in proposed § 1006.42(c). These commenters stated that the proposal failed to satisfy the two conditions that E-SIGN Act section 104(d)(1) requires an agency to meet when establishing an exemption from the E-SIGN Act’s consumer-consent provisions. Specifically, consumer advocates stated that the proposal failed to show that (i) electronic commerce is substantially burdened by requiring debt collectors to obtain E-SIGN consent and that (ii) the proposed exemption would not materially increase the risk of harm to consumers. Regarding hyperlinks, consumer advocates observed that Federal agencies have advised consumers against clicking on hyperlinks in electronic communications from unrecognized senders. They stated that the proposed procedures for hyperlinked delivery of required disclosures failed to provide reasonable assurance that an electronic debt collection communication with a hyperlink would not be sent to spam or that the consumer would recognize the communication and be comfortable clicking on a hyperlink within it. They stated that the Bureau’s rule should not permit required debt collection disclosures to be sent through hyperlinks in emails or text messages. For all of these reasons, consumer advocates recommended that the Bureau withdraw proposed § 1006.42(c). After considering feedback, the Bureau believes that it currently lacks sufficient information to properly assess the risks and benefits of the alternative procedures in proposed § 1006.42(c) visa`-vis the exemption criteria in E-SIGN Act section 104(d)(1), which, as noted above, are that ‘‘such exemption is necessary to eliminate a substantial burden on electronic commerce and will not increase the material risk of harm to consumers.’’ For the reasons the Bureau set forth in its proposal,578 the Bureau concludes that the E-SIGN Act’s consumer-consent requirements do pose a substantial burden on electronic commerce in the debt collection context. The Bureau also concludes, however, that it does not have sufficient evidence to establish that the proposed exemption and alternative procedures would not increase the material risk of harm to consumers.579 The Bureau also 578 84 FR 23274, 23361 (May 21, 2019). quantitative testing completed by the Bureau after publication of the proposal shows consumer preference for receiving validation 579 Moreover, PO 00000 Frm 00121 Fmt 4701 Sfmt 4700 76853 lacks evidence to assess and finalize other possible alternative procedures. Accordingly, the Bureau is not finalizing proposed § 1006.42(c) or otherwise establishing an exemption from the E-SIGN Act’s consumerconsent requirements at the present time. As discussed above, the final rule—as reflected in § 1006.42(b)—thus requires a debt collector who provides electronically the written disclosures required by the FDCPA and Regulation F to do so in accordance with the ESIGN Act’s consumer-consent requirements. The Bureau also declines to finalize at the present time the requirements for hyperlinked delivery of required disclosures that were proposed as part of the alternative procedures. The Bureau believes that the consumer risks from clicking on hyperlinks in electronic communications from senders that consumers might not recognize warrant additional consideration by the Bureau 580 and the Bureau intends to continue to monitor and gather information on electronic communications use in debt collection and, if applicable, use of hyperlinks in debt collection communications. In the absence of the proposed requirements, the final rule does not prohibit a debt collector from sending required disclosures electronically through hyperlinks (or with accompanying hyperlinks), provided that the debt collector complies with the requirements of the FDCPA and Regulation F and other applicable law. However, the final rule also does not provide a safe harbor for a debt collector to use hyperlinks to provide required disclosures electronically.581 As noted above, § 1006.42(a)(1) provides, in part, that a debt collector who sends disclosures required by the FDCPA or notices through the mail and less consumer willingness to receive validation notices by email or text message. See CFPB Quantitative Testing Report, supra note 33, at 32–33. 580 As the Bureau noted in the proposal, the FTC advises consumers not to clink on links or attachments in unsolicited electronic communications from senders they do not recognize, in order to prevent phishing and malware. See 84 FR 23274, 23363 (May 21, 2019); Fed. Trade Comm’n, How to Recognize and Avoid Phishing Scams (July 2017), https:// www.consumer.ftc.gov/articles/how-recognize-andavoid-phishing-scams; Fed. Trade Comm’n, Malware (Nov. 2015), https:// www.consumer.ftc.gov/articles/0011-malware. The FDIC offers consumers similar guidance. See Fed. Deposit Ins. Corp., Beware of Malware: Think Before You Click, https://www.fdic.gov/consumers/ consumer/news/cnwin16/malware.html (last updated Mar. 8, 2016). 581 In this regard, see the discussion of Lavallee v. Med-1 Solutions in the section-by-section analysis below addressing the Bureau’s decision not to finalize a safe harbor for validation notices sent in the body of an electronic initial communication. E:\FR\FM\30NOR3.SGM 30NOR3 76854 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 Regulation F in writing or electronically must, among other things, do so in a manner that is reasonably expected to provide actual notice. Final comment 42(a)(1)–1 provides relevant factors for determining whether a debt collector has met this requirement. Safe harbor for validation notices sent in the body of an electronic initialcommunication. Proposed § 1006.42(e)(2) provided that a debt collector satisfied the notice and retainability requirements of § 1006.42(a) if the debt collector delivered a validation notice in the body of an email that was the debt collector’s initial communication with the consumer and satisfied certain other conditions. The debt collector could either (i) satisfy the requirements of proposed § 1006.42(b) for delivering validation notices electronically, which included obtaining the consumer’s ESIGN consent; or (ii) satisfy the requirements of the proposed alternative procedures in § 1006.42(c) discussed above (except that proposed § 1006.42(e)(2) would have permitted debt collectors to send the validation notice to a potentially broader set of email addresses than proposed § 1006.42(c) would have permitted). Some industry commenters suggested that the safe harbor set forth in proposed § 1006.42(e)(2) be expanded in certain ways, while others criticized it as being overly complicated and burdensome.582 Industry commenters generally stated that the safe harbor should be expanded through changes to the procedures for selecting an email address in proposed § 1006.6(d)(3). For example, these commenters stated that the safe harbor should include any email address or telephone number that the consumer has provided to, or confirmed with, the creditor, debt collector, or other person for purposes of receiving communication about the account, including a consumer’s employerprovided email address if that is the email address that the consumer provided to the creditor.583 582 Some industry commenters did object to the safe harbor, but these commenters misunderstood the proposal as requiring a debt collector to obtain a consumer’s E-SIGN consent when the debt collector delivers the validation notice in the body of an email that was the debt collector’s initial communication with the consumer. Instead, as noted above, the proposed safe harbor included delivery without E-SIGN consent (per the alternative procedures set forth in proposed § 1006.42(c)) of an email to an email address that the debt collector selected through the procedures described in proposed § 1006.6(d)(3)). 583 As also discussed in the section-by-section analysis of § 1006.22(f)(3), these commenters stated that, while it may be true that a consumer’s employer can access emails sent to the consumer’s employer-provided email addresses, consumers VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 With respect to the form of the communication, some industry commenters stated that the safe harbor should include delivery of the validation notice in the initial communication through a text message. Others stated that the safe harbor should include initial communication emails that have the validation notice as a portable document format (PDF) attachment. And others stated that the safe harbor should expressly permit the body of initial communication emails to include both the validation notice and hyperlinks to debt collector websites. Consumer advocates recommended that the Bureau withdraw the email safe harbor set forth in proposed § 1006.42(e)(2). These commenters stated that the proposed procedures for obtaining consumers’ email addresses set forth in proposed § 1006.6(d)(3) would not reliably result in the validation notice information, contained within the emailed initial communication, actually reaching the consumer and could result in disclosure of sensitive information to third parties. These commenters stated that the proposal failed to provide a rational explanation of whether consumers would reliably receive the emailed initial communication. Having considered the comments, the Bureau declines to finalize the safe harbor for email delivery of the validation notice information within the initial communication. The Bureau has determined that the FDCPA does not require the validation notice information to be provided in writing when it is contained in the initial communication.584 The Bureau has therefore also determined that the ESIGN Act’s consumer-consent requirements do not apply to a debt collector’s electronic delivery of the validation notice information within the debt collector’s initial communication to a consumer.585 Accordingly, a debt understand that they do not have an expectation of privacy from their employers for their employerprovided email account when they provide employer-provided email addresses to creditors. 584 FDCPA section 809(a) permits the validation notice information to be contained in the initial communication. In turn, FDCPA section 807(11) indicates that the initial communication with the consumer may be oral. Accordingly, the Bureau interprets the FDCPA as not requiring that the validation notice information be provided in writing when it is contained in the initial communication. 585 The E-SIGN Act’s consumer-consent requirements apply only when a ‘‘statute, regulation, or other rule of law’’ requires that a disclosure be provided in writing. See E-SIGN Act section 101(c)(1) (15 U.S.C. 7001(c)(1)). Because the Bureau has determined that the FDCPA does not require that the validation notice information be provided in writing when it is contained in the initial communication (see previous footnote) and PO 00000 Frm 00122 Fmt 4701 Sfmt 4700 collector may electronically deliver the validation notice information within the debt collector’s initial communication to a consumer without obtaining the consumer’s E-SIGN consent.586 The Bureau also has determined that the validation notice information (whether or not contained in the initial communication) is a disclosure required by the FDCPA. Accordingly, the general standard in final § 1006.42(a)(1)—that a required disclosure be sent in a manner that is reasonably expected to provide actual notice and in a form that the consumer may keep and access later— applies when a debt collector sends the validation notice information electronically within the initial communication. The commentary discussed in the section-by-section analysis of § 1006.42(a)(1) clarifies the general standard. However, because email communications in general are not widely used in debt collection currently, the Bureau lacks evidence to show that a debt collector sending an email pursuant to the proposed safe harbor would have a reasonable expectation of actual notice to the consumer. The Bureau is thus declining to finalize the proposed safe harbor. The absence of the proposed safe harbor from the final rule does not preclude debt collectors from using email to deliver the validation notice information electronically within the initial communication if the debt collector is able to satisfy the requirements of the FDCPA and Regulation F, in particular the requirement that the communication be the Bureau is not imposing such a requirement through Regulation F, the Bureau has also determined that the E-SIGN Act’s consumer-consent requirements do not apply to electronic delivery of the validation notice information when it is contained in the initial communication. 586 In Lavallee v. Med-1 Solutions, the United States Court of Appeals for the Seventh Circuit held that the emails sent by Med-1 Solutions to Lavallee did not meet the FDCPA’s requirements for electronic delivery of the validation notice information within an initial communication because the emails did not ‘‘contain’’ the validation notice information. Lavallee v. Med-1 Solutions, LLC, 932 F.3d 1049 at 1055 (7th Cir. 2019). The court observed that, to access the validation notice information, the consumers receiving the emails had to complete multiple, discrete tasks and ‘‘[a]t best, the emails provided a digital pathway to access the information.’’ Id. at 1055–56. Under the specific facts of that case, the Bureau agrees with the Seventh Circuit that the electronic delivery procedures used by Med-1 Solutions did not satisfy the requirement in FDCPA section 809(a) that the initial communication ‘‘contain’’ the validation notice information. Nonetheless, the Bureau believes that a debt collector may properly provide the validation notice information to a consumer within the debt collector’s electronic initial communication with the consumer, provided that the communication ‘‘contains’’ the validation notice information. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations sent in a manner that is reasonably expected to provide actual notice and in a form that the consumer may keep and access later. The Bureau will monitor whether debt collectors who electronically provide validation notice information within initial communications do so in a manner that does not violate these requirements. As noted above, the Bureau is finalizing § 1006.42, including § 1006.42(a)(1), to implement and interpret FDCPA section 809(a) and (b) and pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors. The Bureau is also finalizing § 1006.42(a)(1) to implement and interpret FDCPA section 808’s prohibition on using unfair or unconscionable means to collect a debt. A few industry commenters objected to the proposal’s initial conclusion that it may be unfair or unconscionable under FDCPA section 808 for a debt collector to deliver a disclosure using a method that is not reasonably expected to provide actual notice to the consumer or that does not allow the consumer to retain the disclosure and access it later.587 These commenters argued that it is not unfair or unconscionable to send an electronic notice to a consumer that the debt collector has no reason to believe is addressed incorrectly or will be returned. The Bureau concludes that the proposal’s analysis under FDCPA section 808 is consistent with these commenters’ position. Whether a debt collector has a reasonable expectation of actual notice depends upon the specific facts and circumstances, which may include the debt collector’s knowledge concerning the accuracy of the electronic address used or knowledge regarding the likelihood that the electronic communication will be returned. As proposed, therefore, the Bureau is finalizing § 1006.42(a)(1) as, among other things, an interpretation of FDCPA section 808’s prohibition on using unfair or unconscionable means to collect a debt. Subpart C—Reserved TKELLEY on DSKBCP9HB2PROD with RULES3 Subpart D—Miscellaneous Section 1006.100 Record Retention For the purpose of promoting the effective and efficient enforcement and supervision of Regulation F, the Bureau proposed in § 1006.100 to require a debt collector to retain evidence of compliance with Regulation F. Specifically, the Bureau proposed in 587 See 84 FR 23274, 23356 (May 21, 2019). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 § 1006.100(a) to require a debt collector to retain evidence of compliance with Regulation F starting on the date that the debt collector begins collection activity on a debt and ending three years after: (1) The debt collector’s last communication or attempted communication in connection with the collection of the debt; or (2) the debt is settled, discharged, or transferred to the debt owner or to another debt collector. The proposed commentary would have clarified certain details, including that nothing in the proposed record retention provision required a debt collector to record telephone calls, but that, if a debt collector recorded telephone calls, the debt collector needed to retain the recordings if the recordings were evidence of compliance with Regulation F.588 To address feedback received, the Bureau is finalizing § 1006.100(a) with revisions and is adding new § 1006.100(b) to create a special rule regarding retention of telephone call recordings. 100(a) Industry commenters expressed concern regarding the potential burden of a retention requirement, especially for smaller debt collectors. Both industry and consumer advocate commenters offered suggestions on how the proposed requirement should be modified, as follows. Trigger To Begin Retaining Records As proposed, the final rule’s record retention provision would have required a debt collector to begin retaining records ‘‘on the date that the debt collector begins collection activity on a debt.’’ Most commenters who addressed the issue stated that that requirement provides sufficient clarity. Some consumer advocate commenters suggested that the retention period begin as soon as a debt collector obtains a debt from a creditor (or prior debt collector)—as opposed to, as proposed, when collection activity begins—so that the debt collector retains evidence relevant to disparate impacts in who the debt collector targets for collection or for particular types of collection. The Bureau declines to start the record retention requirement at the time the debt collector obtains the debt.589 The Bureau therefore is finalizing § 1006.100(a) to provide, as proposed, that a debt collector must begin to retain records on the date that collection activity begins on a debt. 588 See 84 FR 23274, 23367–68 (May 21, 2019). B, 12 CFR 1002, which implements the Equal Credit Opportunity Act, imposes its own record retention requirements. 589 Regulation PO 00000 Frm 00123 Fmt 4701 Sfmt 4700 76855 Running of Retention Period Industry commenters suggested a number of alternatives to, or requested clarity regarding, the Bureau’s proposal to tie the running of the retention period to (at the debt collector’s option) either the date of the debt collector’s last communication or attempted communication regarding the debt or the date that the account was settled, transferred, discharged or otherwise closed.590 First, some industry commenters suggested that the proposed retention period should run from the debt collector’s last communication or attempted communication with the consumer rather than, as proposed, with anyone. These commenters asserted that the purpose of the FDCPA is to protect consumers from unfair, deceptive, and abusive debt collection practices by debt collectors and that a record retention requirement based on a debt collector’s last communication or attempted communication with a consumer would be more consistent with this statutory purpose than the proposed approach of the last communication with anyone. Other industry commenters stated that the definitions of ‘‘communication’’ and ‘‘attempted communication’’ should be clarified for purposes of the rule’s record retention requirement. Second, industry commenters stated that, with respect to many accounts, a debt collector will undertake initial collection activity soon after receiving the account, but the account might then sit dormant for months or years before being settled, transferred, discharged, or otherwise closed on the debt collector’s books.591 These commenters stated that, as proposed, there would be uncertainty and burden associated with maintaining records for dormant accounts for time periods potentially well beyond three years from the last collection activity on the accounts because the accounts have not been closed. To alleviate this problem, some industry commenters suggested that the final rule’s record retention requirement should require debt collectors to retain records for three years from the earlier of the date of the last communication or the date on which the account is closed. Third, some industry commenters, as well as the U.S. SBA Office of 590 In addition to the comments discussed in this section-by-section analysis, commenters raised concerns about the unique record retention burdens associated with telephone call recordings. The Bureau discusses those comments in the section-bysection analysis of § 1006.100(b) below, and addresses retention of all other types of records here. 591 Some commenters suggested that the record retention provision in the regulation refer to the date on which an account is ‘‘closed’’ rather than ‘‘transferred.’’ E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76856 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations Advocacy, requested more clarity as to when the three-year retention clock would start to run. Some of these commenters noted that, for discharged debts, it was not clear from the proposal whether the retention requirement would run from the date of the discharge or of some later terminal event. Others stated that the proposal was unclear whether, if there is a judgment, the three-year period runs from the final court order, the date that the judgment is paid, or the date the account is closed. Separately, some industry commenters stated that the date of initiating collection activity sufficiently set forth the expectation for when debt collectors should start retaining records with respect to an account. Some consumer advocates likewise requested that the date on which the three-year retention clock starts to run be more definitive. These commenters suggested that the three-year period run from the time at which a debt collector sends a notice to the consumer stating that the debt has been fully paid or settled, or extinguished, or that the debt collector has ceased all collection activities related to the debt. These commenters stated their belief that most debt collectors do not currently provide such final notices today and suggested that the Bureau require such notices to provide clarity to consumers and to trigger the start of the three-year record retention clock. The Bureau agrees that, as proposed, the record retention requirement could have imposed an unintended burden as a result of the variability of the length of the life cycles of various debt collection accounts and the long dormancy of many accounts after the first communication (and related initial activity). The Bureau, however, declines to address these concerns by taking the suggested approach of making the threeyear retention period run from the earlier of the last communication or the closure of the debt file. If debt file closure occurred prior to the last communication, such an approach could result in the debt collector not being required to retain the record of the last communication for a sufficient time to permit effective supervision and enforcement, because the three-year retention period would have begun to run upon closure of the debt file. The Bureau also declines to require, as suggested by some consumer advocate commenters, a debt collector to provide a notice to a consumer that the debt collector has ceased all collection activity with respect to a debt. The Bureau did not propose such a requirement and therefore did not VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 receive comments on the benefit or burden of such a requirement. For these reasons, the Bureau is finalizing § 1006.100(a) to provide that, except for telephone call recordings (as discussed in the section-by-section analysis of § 1006.100(b)), the retention period begins to run on the date of the last collection activity on the account. Final comment 100(a)–4 provides clarity regarding when the last collection activity on an account occurs and, thus, when the three-year record retention clock starts to run. The Bureau determines that having the retention period begin to run with the last collection activity on the account strikes the right balance between encompassing the activities and documents necessary to adequately supervise and enforce the requirements of the FDCPA and Regulation F, providing sufficient clarity for compliance, and not being overly burdensome. The Bureau declines to base the running of the retention period, as suggested by industry commenters, on the debt collector’s last communication with the consumer. Nothing in the statute’s statement of its purposes in FDCPA section 802(e) suggests that the statute’s protections are limited to debt collectors’ communications with consumers. Further, the FDCPA’s protections against harassment or abuse (FDCPA section 806), false or misleading representations (section 807), and unfair practices (section 808) are not limited to communications or activities directed to the consumer alleged to owe a debt. For example, FDCPA section 806 states that a debt collector may not harass, oppress, or abuse ‘‘any person’’ in connection with the collection of a debt. Finally, the FDCPA’s limitations on acquisition of location information (FDCPA section 804) and communication with third parties (section 805(b)) are specifically targeted at communications with persons other than the consumer. Length of Retention Period Industry commenters expressed differing views as to the proposed threeyear record retention period. Some commenters stated that the proposed period strikes the right balance between cost and burden on the one hand and the need to ensure adequate supervision and enforcement on the other. Some stated that the period should be one year, consistent with the FDCPA’s oneyear statute of limitations. Other industry commenters recommended that the retention period be two years, consistent with Regulation X, 12 CFR 1024, and Regulation Z, 12 CFR 1026. Others suggested that the proposed PO 00000 Frm 00124 Fmt 4701 Sfmt 4700 three-year period should be amended to be ‘‘at least’’ or ‘‘no less than’’ three years to clarify that maintaining records for more than three years would not be a violation. Many consumer advocates stated that the record retention period should be longer than three years. Some consumer advocates stated that the retention period should last at least as long as a debt collector might continue collection attempts. Others said that it should be seven years, paralleling the length of time that information generally may stay in consumer credit reports under the FCRA and the time periods for actions under certain State laws. Others recommended that the rule clarify that debt collectors who furnish information to consumer reporting agencies pursuant to the FCRA also must comply with the recordkeeping requirements of the FCRA. For the reasons discussed below, the Bureau has decided to finalize a threeyear record retention period, as proposed. First, as to comments about the FDCPA’s ‘‘one-year statute of limitations,’’ the Bureau notes that that timeframe refers to FDCPA section 813(d), which applies only to private actions brought under the FDCPA. FDCPA section 814(b) and (c) set forth the basis for Federal agencies, including the Bureau, to bring administrative enforcement actions for violations of the FDCPA. The Bureau also declines to make the Regulation F retention period match the period set forth in Regulations X and Z (two years), because those regulations implement statutes (respectively, RESPA and the Truth in Lending Act 592) that serve different purposes than the FDCPA. The Bureau also declines to adopt a record retention time period longer than three years because retention for such a time period is unnecessary for effective supervision and enforcement and is not typical under the consumer financial services laws. A three-year retention period will provide the Bureau and other Federal and State enforcement agencies with a sufficient but limited amount of time to examine and conduct enforcement investigations. In addition, it will facilitate effective supervisory examinations, which depend critically on having access to the information necessary to assess operations, activities, practices, and legal compliance. If the record retention period were reduced, it could be considerably more difficult to ensure that the necessary information and records would remain routinely 592 15 E:\FR\FM\30NOR3.SGM U.S.C. 1601 et seq. 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations available for proper supervisory oversight of debt collectors. The Bureau is in a position to evaluate such issues from its near-decade of experience exercising supervision and enforcement authority over the debt collection industry.593 That experience supports the conclusion that a three-year record retention period is necessary and warranted. The Bureau also concludes that a three-year retention period will not impose an undue cost or burden on debt collectors, particularly when viewed in light of the marginal difference in cost or burden between, for example, a twoyear period and a three-year period. Based on the comments received and its own experience in supervision and law enforcement, the Bureau concludes that many debt collectors have already incorporated record retention policies and procedures into their budgets and daily operations and already maintain records for a sufficient length of time to comply with the time period in the final rule. The Bureau also determines that a three-year retention period is unlikely to impose undue burden on debt collectors because it is increasingly common, even for smaller entities, to maintain records electronically either on their own computers or using ever cheaper cloud storage options. The Bureau agrees with consumer advocate commenters that debt collectors who are furnishers under the FCRA must also, in addition to complying with the Regulation F record retention requirement, comply with the recordkeeping requirements of the FCRA. In particular, Regulation V, 12 CFR part 1022, requires furnishers to incorporate its guideline to ‘‘maintain[ ] records for a reasonable period of time, not less than any applicable recordkeeping requirement, in order to substantiate the accuracy of any information about consumers it furnishes that is subject to a direct dispute.’’ 594 Records reasonably substantiating a debt collector’s claims that a consumer owes a debt are records that are evidence of the debt collector’s compliance or noncompliance with the FDCPA’s prohibition against unfair or deceptive debt collection practices, as discussed in more detail below. Accordingly, if a debt collector is also a furnisher under Regulation V, a threeyear Regulation F record retention requirement would be the minimum amount of time for purposes of the 593 To facilitate Bureau supervision of nonbank covered persons active in the consumer debt collection market, the Bureau published in 2012 a rule defining larger participants in that market. 77 FR 65775 (Oct. 31, 2012). 594 12 CFR 1022, app. E, para. III(c). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 Regulation V record retention guideline, since that guideline specifically incorporates ‘‘any applicable recordkeeping requirement.’’ Under the final rule, there are no consumer debts or record types associated with those debts for which the rule requires record retention for more than three years beyond the last collection activity. The final rule therefore does not preclude debt collectors from adopting policies and procedures under which records are deleted three years after the last collection activity on an account. However, if a debt collector deletes an account’s records (other than call recordings, which are discussed below) at that time, then a violation of the record retention provision would occur if the debt collector undertook any further collection activity with respect to that account.595 Moreover, the Bureau concludes it is clear that a debt collector must have (or have access to) records reasonably substantiating its claim that a consumer owes a debt in order to avoid engaging in deceptive or unfair collection practices in violation of the FDCPA when it attempts to collect the debt.596 Thus, records reasonably substantiating a debt collector’s claim that a consumer owes a debt are records that are evidence of compliance or noncompliance with the FDCPA and Regulation F. As a result, although the record retention requirement does not mandate retention of any records beyond three years after the debt collector’s last collection activity on the debt, restarting debt collection activity at any time would mean that the last collection activity on the debt had not yet occurred. Records To Be Retained Consumer advocates generally recommended that, rather than require that debt collectors retain ‘‘evidence of compliance,’’ the record retention provision should require debt collectors to retain more types of documents. Specifically, these commenters said, the provision should reflect the types of documents described in the record retention provision of the Bureau’s SBREFA Outline, which would have 595 This is because further collection activity on the account after deletion of some of the account’s records would necessarily mean that the debt collector had failed to retain records, per § 1006.100(a), ‘‘starting on the date that the debt collector begins collection activity on a debt until not less than three years after the debt collector’s last collection activity on the debt.’’ 596 FDCPA section 807 states that ‘‘[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.’’ Section 808 states that ‘‘[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.’’ PO 00000 Frm 00125 Fmt 4701 Sfmt 4700 76857 ‘‘encompass[ed] all records the debt collector relied upon for the information in the validation notice and to support claims of indebtedness, for example, the information the debt collector obtained before beginning to collect, the representations the debt collector received from the creditor before beginning to collect, and the records the debt collector relied upon in responding to a dispute.’’ 597 As the Bureau intended with its proposal to require a debt collector to retain ‘‘evidence of compliance,’’ the final rule clarifies that a debt collector must retain records that are evidence of compliance or noncompliance with the FDCPA and Regulation F, which includes records that evidence that the debt collector refrained from conduct prohibited by the FDCPA and Regulation F. See final comment 100(a)– 1. The Bureau declines, however, to go further and to apply the final rule’s record retention requirement to all of the types of records that were described in the Bureau’s 2016 SBREFA Outline. At that time, the Bureau was considering a broader set of possible regulatory provisions, pursuant to legal authorities including the Bureau’s Dodd-Frank Act section 1031 unfair, deceptive, or abusive or acts or practices (UDAAP) authority, which could have applied to parties including creditors, and which could have resulted in creditors being required to ensure that they pass complete and accurate information about consumer debts to debt collectors. In contrast, the Bureau is now adopting a final rule, pursuant primarily to its FDCPA authority,598 that is narrower in scope and that applies only to FDCPA debt collectors. Accordingly, the Bureau determines that the record retention requirement that was described in the Bureau’s SBREFA Outline is neither necessary nor warranted to accomplish the requirement’s purpose, which is to promote effective and efficient enforcement and supervision of the requirements of the FDCPA and Regulation F, thereby promoting compliance with the law which is beneficial to consumers. Burden for Smaller Debt Collectors Several industry commenters, as well as the U.S. SBA Office of Advocacy expressed concern about the potential burden of the proposed requirement on 597 Small Business Review Panel Outline, supra note 36, at 35. 598 Although the final rule uses certain authorities provided to the Bureau by the Dodd-Frank Act, the rule relies primarily on the Bureau’s FDCPA authority and does not rely at all on the Bureau’s Dodd-Frank Act UDAAP authority. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76858 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations small debt collectors. These commenters noted that the cost of retaining electronic debt collection records, including telephone call recordings and scanned images, can be significant. Some of these commenters observed that most debt collectors have incorporated record retention procedures and costs into their daily operations, but that any additional requirements to retain records beyond three years could impose significant expense. Others stated their belief that a recorded telephone call would almost always constitute ‘‘evidence of compliance’’ and that, to reduce burden, the Bureau should consider imposing a tiered recordkeeping requirement for call recordings that takes into account the costs of maintaining recorded calls for small debt collectors. As discussed above, the Bureau concludes that its revisions to § 1006.100(a) (and its addition of § 1006.100(b) for a special rule regarding telephone calls, as discussed below) address the concerns of commenters, including small businesses, regarding the burdens of a record retention requirement, including for small businesses. In addition, the Bureau in the final rule has added comment 100(a)–2 to make clear that a debt collector need not create and maintain, for the sole purpose of evidencing compliance, additional records that the debt collector would not have created in the ordinary course of its business in the absence of the record retention requirement in § 1006.100(a). For these reasons, the Bureau determines that most debt collectors of all sizes will be able to comply with the final rule’s record retention requirement without making significant changes to their existing record retention policies and procedures.599 Accordingly, the Bureau concludes that the final record retention requirement will not impose a significant burden on debt collectors. For all of the reasons discussed above, the Bureau is finalizing § 1006.100(a) to provide that, except as provided in § 1006.100(b), a debt collector must retain records that are evidence of compliance or noncompliance with the FDCPA and Regulation F starting on the date that the debt collector begins collection activity on a debt until three years after the debt collector’s last collection activity on the debt. Comment 100–1 states that nothing in 599 As in the proposal, the final recordkeeping requirement does not require a debt collector to record telephone calls. However, as discussed below, if a debt collector’s practice is to record telephone calls, then the such records are evidence of compliance or noncompliance and the debt collector must retain them. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 § 1006.100 prohibits a debt collector from retaining records that are evidence of compliance or noncompliance with the FDCPA and Regulation F for more than three years after the applicable date. Comment 100(a)–1 clarifies that, if a record is of a type that could evidence compliance or noncompliance depending on the conduct of the debt collector that is revealed within the record, then the record is one that is evidence of compliance or noncompliance and the debt collector must retain it. The comment also provides examples.600 As noted above, comment 100(a)–2 clarifies that a debt collector need not create and maintain, for the sole purpose of evidencing compliance, additional records that the debt collector would not have created in the ordinary course of its business in the absence of the record retention requirement in § 1006.100(a). Comment 100(a)–3 states, as was proposed, that § 1006.100(a) does not require retaining actual paper copies of documents and that records may be retained by any method that reproduces them accurately and ensures the debt collector can easily access them (including the debt collector having a contractual or other legal right to access records possessed by another entity). And final comment 100(a)–4 provides clarity regarding when the last collection activity on an account occurs and, thus, when the retention clock starts to run. 100(b) As noted in the section-by-section analysis of § 1006.100(a), the Bureau received a number of comments regarding the unique concerns associated with retaining telephone call recordings. Industry commenters stated that the lifespan of debt collection accounts can vary significantly, with some remaining open only for months and others remaining open for many years. These commenters further stated that many debt collectors’ systems store telephone call recordings in large batch files based on date (e.g., a debt collector creates and stores one batch file each day that contains all of the call recordings for that day) and that, under the Bureau’s proposal, a debt collector would need to retain a given date’s call recordings for at least three years beyond the lifespan of the longestlifespan account for which a call was recorded on that date. These 600 Final comment 100(a)–1 includes an example that refers, in part, to disclosures required by the FDCPA, as implemented by Bureau regulation. The Bureau expects that, in the Bureau’s disclosurefocused final rule, this reference will be updated to refer to disclosures required by § 1006.34. PO 00000 Frm 00126 Fmt 4701 Sfmt 4700 commenters expressed concern that, as a result, there could be significant burden associated with retaining many call recordings for well beyond three years. To alleviate this problem, some industry commenters suggested that the final rule take an approach to record retention under which debt collectors would be required to retain a record, including a call recording, for three years from the unique or discrete event—such as a telephone call or letter, report to a credit bureau, or a payment or credit—that generated the record. These commenters also noted that the suggested event-specific approach would help reduce burden in the area of healthcare debt collection, because healthcare debts are usually packaged by patient rather than by account or debt. The Bureau agrees that the potential unique burdens associated with retaining telephone call recordings (for debt collectors who record telephone calls) merits a special rule regarding their retention. The Bureau therefore is finalizing § 1006.100(b) to set forth a separate retention time period for telephone call recordings. Section 1006.100(b) states that, if a debt collector records telephone calls made in connection with the collection of a debt, the debt collector must retain the recording of each such telephone call for three years after the date of the call.601 Thus, in contrast to other record types, a debt collector could delete a call recording after three years and yet collection activity on the relevant account could continue after that time.602 The Bureau concludes that this approach to call recordings addresses industry commenters’ concerns regarding potentially having to retain some call recordings for much longer than three years, due to debt collectors’ batch file call recording systems. The Bureau declines to adopt this event-specific approach for retention of 601 Final comment 100(b)–1 clarifies that, while nothing in § 1006.100 requires a debt collector to make call recordings, if a debt collector records telephone calls, the recordings are evidence of compliance or noncompliance with the FDCPA and Regulation F and the debt collector must retain the recording of each such telephone call for three years after the date of the call. 602 For example, if a call recording occurred at month six in the life of an account, the call recording could be deleted three years later; and, collection activity on that account could continue past the account’s three-and-a-half-year mark, notwithstanding that the call recording had been deleted. Further, as noted above, comment 100–1 provides that nothing in § 1006.100 prohibits a debt collector from retaining records that are evidence of compliance or noncompliance with the FDCPA and Regulation F for more than three years after the applicable date. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations record types other than call recordings, as suggested by some commenters. This is because the Bureau determines, based on comments received and its own experience, that the burden of retaining call recordings can be significant, such that it is appropriate to give debt collectors a date certain on which call recordings may be deleted—three years after the date of the telephone call— notwithstanding that collection activity on the relevant account might continue after that time. As discussed above, however, the Bureau concludes that it is generally inappropriate for a debt collector to continue collection activity on an account after the debt collector has begun to delete its records related to that account. Further, the Bureau believes based on feedback received that the burden of retaining other record types for the record retention period is not as significant as that of retaining call recordings. The Bureau therefore believes that an event-specific approach to record retention is neither necessary nor warranted for records other than call recordings.603 For the reasons described above, the Bureau is finalizing § 1006.100 to facilitate supervision of, and to assess and detect risks to consumers posed by debt collectors, including debt collectors who are larger participants of the consumer debt collection market, as defined in 12 CFR part 1090, and to enable the Bureau to conduct enforcement investigations to identify and help prevent and deter abusive, unfair, and deceptive debt collection practices. The Bureau is finalizing § 1006.100 pursuant to its authority under title X of the Dodd-Frank Act. Specifically, the Bureau is finalizing § 1006.100 pursuant to Dodd-Frank Act section 1022(b)(1), which, among other things, 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. The Bureau also is finalizing § 1006.100 pursuant to Dodd-Frank Act section 1024(b)(7)(A), which authorizes the Bureau to prescribe rules to facilitate supervision of a person described in Dodd-Frank Act section 1024(a)(1) including a person identified as a larger participant of a market for a consumer financial product or service as defined by rule in accordance with section 1024(a)(1)(B) of 603 The Bureau has considered comments received regarding the different structure of medical debt accounts and records relative to other debt types. The Bureau declines to adopt a record retention provision specific to medical debt. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 the Dodd-Frank Act; 604 and Dodd-Frank Act section 1024(b)(7)(B), which 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 a person and assessing and detecting risks to consumers. Title X of the Dodd-Frank Act does not provide a private right of action. Accordingly, the Bureau has determined that § 1006.100 does not provide a private right of action if a debt collector were to fail to comply with the requirements of § 1006.100. Section 1006.104 Relation to State Laws FDCPA section 816 provides that the FDCPA does not annul, alter, or affect, or exempt any person subject to the provisions of the FDCPA from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of the FDCPA, and then only to the extent of the inconsistency. FDCPA section 816 also provides that, for purposes of that section, a State law is not inconsistent with the FDCPA if the protection such law affords any consumer is greater than the protection provided by the FDCPA.605 The Bureau proposed § 1006.104 to implement FDCPA section 816.606 Proposed § 1006.104 mirrored the statute, except that proposed § 1006.104 referred to both the provisions of the FDCPA and the corresponding provisions of Regulation F. Proposed comment 104–1 would have clarified that a disclosure required by applicable State law that describes additional protections under State law does not contradict the requirements of the FDCPA or the corresponding provisions of Regulation F. Several industry and consumer advocate commenters expressed overall support for proposed § 1006.104 and its related commentary and did not request changes. For instance, at least one commenter stated that the proposal appropriately recognized the ability of States to enact laws that offer greater protections than those the FDCPA provides. A State Attorney General commenter expressed concern about how the proposal would interact with State unfair or deceptive acts or practices laws that exempt from liability acts or transactions permitted or affirmatively authorized by Federal law. The 604 12 CFR 1090.105 defines larger participants of the consumer debt collection market. 605 15 U.S.C. 1692n. 606 See 84 FR 23274, 23368 (May 21, 2019). PO 00000 Frm 00127 Fmt 4701 Sfmt 4700 76859 commenter was particularly concerned that debt collectors might argue that compliance with the proposal’s safe harbor provisions constitutes a defense to liability under State consumer protection laws. To mitigate this possibility, the commenter asked the Bureau to clarify that it does not intend to exempt debt collectors from State law requirements that afford equal or greater protection to consumers. Further, the commenter asked the Bureau to clarify that an act or transaction that satisfies the proposal’s safe harbor provisions is not affirmatively authorized or permitted with regard to any other law, such that the act or transaction would be exempt from liability under State law pursuant to an exemption for federally permitted transactions. Some commenters asked the Bureau to clarify how proposed § 1006.104 and its related commentary would impact State law disclosure requirements. According to these commenters, proposed comment 104–1 did not track FDCPA section 816’s statutory language and therefore would be susceptible to competing interpretations. These commenters expressed concern that proposed comment 104–1 could be interpreted to mean that proposed § 1006.104 would preempt State law disclosure requirements that afford the same protections as the FDCPA and the corresponding provisions of Regulation F. These commenters opposed such an interpretation as being inconsistent with FDCPA section 816. The Bureau notes that the final rule implements the FDCPA, a Federal law. The final rule does not interpret State law. Regarding the effect of the final rule on State law, the Bureau will apply the standard Congress set forth in FDCPA section 816. Under FDCPA section 816, debt collectors are only relieved of an obligation to comply with State law if that law is inconsistent with the FDCPA or the corresponding provisions of Regulation F, and then only to the extent of that inconsistency (and, as noted above, a State law that affords consumers greater protection than the FDCPA and Regulation F would not be inconsistent). For example, a State law that affords greater protection to consumers by imposing a call frequency limit is not preempted by § 1006.14(b), which sets a presumption of compliance or violation as to call frequency only with respect to the FDCPA and Regulation F. Thus, this final rule does not affirmatively permit debt collectors to comply with the presumption regarding call frequency in § 1006.14 instead of an applicable Statelaw frequency limit that affords greater protection to consumers. Further, the E:\FR\FM\30NOR3.SGM 30NOR3 76860 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 Bureau emphasizes that any safe harbor provided by Regulation F is a safe harbor only for purposes of compliance with the FDCPA and Regulation F and is not a safe harbor with regard to State laws, unless States choose to incorporate those Federal standards into their State legal frameworks. Moreover, as discussed in their respective sectionby-section analyses, the Bureau is not finalizing the safe harbors that were set forth in proposed §§ 1006.18(g) and 1006.42(e)(2), which were specifically cited by commenters as being potentially problematic vis-a-vis State laws. As a result, the final rule contains fewer safe harbors that could interrelate with States’ laws prohibiting unfair, deceptive, or abusive acts and practices. After considering the comments, and pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors, the Bureau is finalizing § 1006.104 as proposed to implement FDCPA section 816. Because § 1006.104 largely restates the FDCPA, the provision appropriately accommodates State debt collection laws, including those laws that afford consumers greater protections than the FDCPA and the corresponding provisions of Regulation F. The Bureau is not finalizing proposed comment 104–1 at this time. Because proposed comment 104–1 specifically addressed how State law disclosure requirements might interact with the FDCPA and Regulation F, the Bureau expects to determine whether and how to finalize proposed comment 104–1 as part of its disclosure-focused final rule. Section 1006.108 Exemption for State Regulation and Appendix A Procedures for State Application for Exemption From the Provisions of the Act FDCPA section 817 provides that the Bureau shall by regulation exempt from the requirements of the FDCPA any class of debt collection practices within any State if the Bureau determines that, under the law of that State, that class of debt collection practices is subject to requirements substantially similar to those imposed by the FDCPA, and that there is adequate provision for enforcement.607 Sections 1006.1 through 1006.8 of existing Regulation F implement FDCPA section 817 and set forth procedures and criteria whereby States may apply to the Bureau for exemption of debt collection practices within the applying State from the provisions of the Act.608 The Bureau proposed to retain these procedures and 607 15 608 12 U.S.C. 1692o. CFR part 1006. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 criteria, reorganized as § 1006.108 and appendix A, and with minor changes for clarity.609 Consistent with existing § 1006.2, proposed § 1006.108(a) provided that any State may apply to the Bureau for a determination that, under the laws of that State, any class of debt collection practices within that State is subject to requirements that are substantially similar to, or provide greater protection for consumers than, those imposed under FDCPA sections 803 through 812 and the corresponding provisions of Regulation F, and that there is adequate provision for State enforcement of such requirements. Proposed § 1006.108(b) stated that the procedures and criteria whereby States may apply for such an exemption are set forth in appendix A. Proposed appendix A set forth the procedures and criteria whereby States may apply to the Bureau for the exemption described in proposed § 1006.108. Proposed appendix A largely mirrored existing §§ 1006.1 through 1006.8, with certain revisions, including clarifying in proposed paragraph IV(a)(1)(i) that the ‘‘substantially similar’’ standard in FDCPA section 817 applies to the Bureau’s consideration of all aspects of the State law for which the exemption is sought, including defined terms and rules of construction.610 Accordingly, proposed paragraph IV(a)(1)(iv) used the phrase ‘‘substantially similar’’ rather than ‘‘the same’’ as in existing Regulation F. Some commenters expressed general support for proposed § 1006.108 and proposed appendix A. However, some commenters raised various concerns about incorporating the existing language of § 1006.2 and urged the Bureau to change the proposed language. For instance, an individual commenter argued that the term substantially similar is ambiguous and should be removed from both § 1006.108 and appendix A. Under this approach, § 1006.108 would permit exemptions only for State laws that provide greater protection for consumers than those imposed under FDCPA sections 803 through 812 and the corresponding provisions of Regulation F. Conversely, at least one 609 See 84 FR 23274, 23368 (May 21, 2019). Bureau also proposed several additional changes to existing Regulation F. The Bureau proposed to define the terms ‘‘applicant State law’’ and ‘‘relevant Federal law’’ in proposed paragraph I(b). Proposed appendix A would have stricken existing § 1006.3(c) as redundant of proposed paragraph III(a) as revised. Proposed paragraph III(d) of appendix A would have repeated existing § 1006.3(e) with certain clarifications. Proposed paragraph VI(b) would have repeated existing § 1006.6(b) with certain clarifications. 610 The PO 00000 Frm 00128 Fmt 4701 Sfmt 4700 industry commenter stated that the proposal (and existing Regulation F) deviated from the statutory language of FDCPA section 817 by allowing States to receive an exemption for State laws that ‘‘provide greater protection for consumers’’ than the FDCPA and Regulation F. According to this commenter, this language could permit States to supplant the requirements of the FDCPA and Regulation F and expose debt collectors to a patchwork of inconsistent State laws. This commenter urged the Bureau to revise proposed § 1006.108 and proposed appendix A consistent with FDCPA section 817 to permit exemptions only for State laws whose requirements are substantially similar to the FDCPA and the corresponding provisions of Regulation F. The Bureau declines to adopt the recommendation to remove the phrase ‘‘substantially similar’’ from § 1006.108 and appendix A. FDCPA section 817 uses ‘‘substantially similar,’’ so removing that phrase from proposed § 1006.108 and proposed appendix A would deviate from the FDCPA. Further, the Bureau disagrees that the phrase is ambiguous. As discussed in the sectionby-section analysis of § 1006.38(d)(2)(ii), the concept of ‘‘substantially the same,’’ which is analogous to ‘‘substantially similar,’’ is sufficiently clear and is a concept that is present in other regulations. However, the Bureau agrees with commenters that proposed § 1006.108 and proposed appendix A should be modified to refer only to State laws with substantially similar requirements as the FDCPA and the corresponding provisions of Regulation F. The Bureau recognizes the prerogative of States to establish debt collection laws within their jurisdictions. The Bureau notes that FDCPA section 816, which is implemented by § 1006.104, accommodates State laws that afford greater protections to consumers than the FDCPA as long as they are not inconsistent with the Act. The Bureau is also skeptical that the proposed language, which is consistent with existing § 1006.2, would have resulted in an irreconcilable patchwork of inconsistent State laws since only one State has applied for and received an exemption pursuant to FDCPA section 817 since 1995.611 Nevertheless, FDCPA section 817 refers only to exempting State laws with requirements that are substantially similar to those imposed by the Act and does not mention exempting State laws that afford greater protections to consumers. Accordingly, 611 See E:\FR\FM\30NOR3.SGM 60 FR 66972 (Dec. 27, 1995). 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations the Bureau is modifying § 1006.108(a) to remove the reference to State requirements that ‘‘provide greater protection for consumers than’’ FDCPA sections 803 through 812 and the corresponding provisions of Regulation F. At the same time, the Bureau is not modifying paragraph IV(a)(2). Paragraph IV(a)(2) states that, when assessing whether an applicant State law is substantially similar to relevant Federal law, the Bureau will not consider adversely any additional requirements of State law that are not inconsistent with the purpose of the Act or the requirements imposed under relevant Federal law. Thus, while the Bureau’s exemption standard is whether the State law has ‘‘substantially similar’’ requirements, exemptions may be available for State laws that are both substantially similar to the FDCPA and afford greater consumer protections. The Bureau also is finalizing conforming changes to appendix A. Commenters also provided feedback specific to proposed appendix A. An industry commenter objected to proposed paragraph IV(a)(1)(i)’s use of the phrase ‘‘substantially similar’’ rather than ‘‘the same,’’ which appears in existing § 1006.4(a)(1)(i). According to the commenter, the Bureau’s proposal to permit variation from FDCPA-defined definitions and rules of construction would create uncertainty. The commenter therefore suggested that the Bureau finalize paragraph IV(a)(1)(i) using the language in existing Regulation F. The Bureau declines to adopt this recommendation. As discussed above, FDCPA section 817 and final § 1006.108(a) expressly permit exemptions for State regulation when, under the laws of that State, any class of debt collection practices within that State is subject to requirements that are substantially similar to those imposed under FDCPA sections 803 through 812 and the corresponding provisions of this final rule. To best reflect FDCPA section 817’s statutory language and to ensure consistency throughout Regulation F, the Bureau uses the phrase ‘‘substantially similar’’ in § 1006.108 and appendix A. Thus, the Bureau is finalizing paragraph IV(a)(1)(i) of appendix A as proposed. Trade associations asked the Bureau to mandate a timeframe for when the Bureau would act on State exemption applications. According to these commenters, such a timeframe would benefit States by reducing the likelihood that their requests would become outdated and would provide certainty to consumers and debt collectors. The Bureau declines to adopt this VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 recommendation. The Bureau cannot, in advance, anticipate the questions raised by a given State exemption application. While the Bureau intends to act expeditiously on applications, it is not feasible to commit to a mandatory timeframe for responses, particularly as only one State has obtained an exemption since the FDCPA was passed.612 Notably, other Federal consumer financial laws that involve Bureau determinations regarding State law do not impose response timeframes.613 In addition, the Bureau notes that State government commenters, which commenters stated would benefit from a mandatory timeframe, did not request one. Pursuant to paragraph VI(a) of appendix A, a final rule granting an exemption under this provision becomes effective 90 days after the date of the publication of such rule in the Federal Register. This 90-day grace period provides sufficient time for debt collectors and consumers to adjust to an exemption, which will bolster certainty in the market. Thus, the Bureau concludes that a mandatory timeframe is unnecessary. A consumer advocate recommended that the Bureau expressly require that, when a State informs the Bureau about a change in applicable State laws pursuant to paragraph (VI)(b)(i) of appendix A,614 or the Bureau informs a State about an amendment to the FDCPA or Regulation F pursuant to paragraph (VI)(c) of appendix A, the State must provide a report outlining its continued eligibility for the exemption and that the Bureau conduct a review in light of these changes. The Bureau declines to adopt this recommendation. The purpose of paragraphs (VI)(b) and (c) of appendix A is to help the Bureau monitor whether an exemption granted pursuant to FDCPA section 817 and the corresponding provisions of Regulation F continues to be appropriate. That the Bureau would review reports and information provided pursuant to these paragraphs is implicit in the framework of § 1006.108 and appendix A. Thus, no additional clarification or modification is necessary. Trade associations stated that the proposal did not specify what steps a State would need to take if, after applying, a State withdraws and resubmits its exemption application. The Bureau declines to address this comment as part of the rulemaking but 612 The FTC granted Maine the exemption in 1995. See 60 FR 66972 (Dec. 27, 1995). 613 See, e.g., 12 CFR 1024.5(c)(3). 614 Paragraph (VI)(b)(i) of proposed appendix A would have required a State to provide a report to the Bureau within 30 days of any change in the applicant State law. PO 00000 Frm 00129 Fmt 4701 Sfmt 4700 76861 notes that, if such a scenario occurred, it would work with the State to ensure that the State’s application received appropriate consideration. These commenters also asked whether a State that currently has an exemption under FDCPA section 817 and existing Regulation F will need to reapply or whether the Bureau would grandfather such an exemption. No modification to the proposed appendix text is necessary in response to this comment. Appendix A sections VI and VIII, respectively, provide frameworks for evaluating and revoking existing exemptions. As noted above, to date, only one State has been granted an exemption. Pursuant to the procedures established in sections VI and VIII, the Bureau intends to review in due course whether that exemption remains appropriate in light of this final rule and the upcoming disclosurefocused final rule. A consumer advocate commenter asked the Bureau to clarify in proposed paragraph VI(d) of appendix A that, if an exemption is granted, the State law provisions that parallel the FDCPA and the corresponding provisions of Regulation F constitute Federal law. The Bureau declines to adopt this recommendation. As noted in the proposal, the Bureau did not propose to change existing § 1006.2 language in proposed appendix A because it did not seek to make substantive changes to the requirements for State requests for exemptions.615 Because the commenter did not explain what purpose this clarification would serve, the Bureau adopts paragraph VI(d) of appendix A as proposed. For the reasons described above, the Bureau is finalizing § 1006.108 and appendix A largely as proposed, but with modifications to mirror the statutory language. Accordingly, pursuant to § 1006.108 and appendix A, a State may apply to the Bureau for a determination that, under the laws of that State, any class of debt collection practices within that State is subject to requirements that are substantially similar to those imposed under FDCPA sections 803 through 812 and the corresponding provisions of Regulation F. The Bureau is finalizing § 1006.108 and appendix A to implement and interpret FDCPA section 817 and pursuant to its authority under FDCPA section 814(d) to prescribe rules with respect to the collection of debts by debt collectors. 615 See E:\FR\FM\30NOR3.SGM 84 FR 23274, 23369 (May 21, 2019). 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76862 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations Appendix C to Part 1006—Issuance of Advisory Opinions FDCPA section 813(e) provides that provisions in the FDCPA that impose liability do not apply to any act done or omitted in good faith in conformity with any advisory opinion of the Bureau, notwithstanding that, after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.616 The Bureau proposed to add appendix C to Regulation F to publish a list of any advisory opinions that the Bureau issues pursuant to FDCPA section 813(e).617 Proposed appendix C also would have clarified that any act done or omitted in good faith in conformity with any advisory opinion issued by the Bureau, including those referenced in appendix C, provides the protection from liability for FDCPA-based violations afforded under FDCPA section 813(e). Proposed appendix C also included instructions for requesting an advisory opinion. The Bureau received several comments regarding appendix C from industry trade groups and a group of consumer advocates. The comments uniformly supported including appendix C, and a list of advisory opinions, in the regulation. Industry commenters suggested adopting a timeline component that would require the Bureau to respond to requests for advisory opinions within a certain period of time and publish draft opinions for notice and comment before finalizing. The group of consumer advocates suggested that the Bureau clarify that advisory opinions issued by the FTC prior to the Bureau’s creation no longer have any validity. They also suggested that the Bureau engage in notice and comment rulemaking to amend the regulation or its commentary instead of relying on advisory opinions, or, if the Bureau continues to issue advisory opinions, to do so only in extremely limited circumstances that includes publishing the draft opinion for notice and comment with a minimum review period of 60 days, as well as publishing any denials of requests for advisory opinions. With respect to the commenter’s request to clarify that FTC advisory opinions no longer have any validity, the Bureau declines to do so. As explained in the Bureau’s 2011 Identification of Enforceable Rules and Orders, for laws with respect to which rulemaking authority will transfer to the CFPB, the 616 15 617 84 U.S.C. 1692k(e). FR 23274, 23370 (May 21, 2019). VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 official commentary, guidance, and policy statements issued prior to July 21, 2011, by a transferor agency with exclusive rulemaking authority for the law in question (or similar documents that were jointly agreed to by all relevant agencies in the case of shared rulemaking authority) will be applied by the CFPB pending further CFPB action. The CFPB will give due consideration to the application of other written guidance, interpretations, and policy statements issued prior to July 21, 2011, by a transferor agency in light of all relevant factors, including: Whether the agency had rulemaking authority for the law in question; the formality of the document in question and the weight afforded it by the issuing agency; the persuasiveness of the document; and whether the document conflicts with guidance or interpretations issued by another agency.618 The Bureau is the first Federal agency to possess authority to issue substantive rules for debt collection under the FDCPA. However, the Bureau considers FTC advisory opinions issued before July 21, 2011, to be ‘‘other written guidance, interpretations, and policy statements.’’ Thus, to the extent that this rulemaking does not supersede any such interpretations, the Bureau will continue to give due consideration in light of all relevant factors. The Bureau is finalizing appendix C with revisions to update the process for submitting a request for an advisory opinion. In June 2020, the Bureau launched a new pilot advisory opinion program and, at the same time, proposed a procedural rule for a permanent advisory opinion program.619 The pilot advisory program allows entities seeking to comply with any of the Bureau’s regulations, including this final rule, to submit a request if uncertainty exists.620 Final appendix C reflects this new process. It states that a request for an advisory opinion may be submitted in accordance with the instructions regarding submission and content of requests applicable to any relevant advisory opinion program that the Bureau offers. The Bureau will review requests for advisory opinions and will make advisory opinions public consistent with the process outlined in such a program. The Bureau is finalizing appendix C pursuant to its authority under FDCPA sections 813(e) and 814(d). Final appendix C will facilitate compliance with Regulation F by ensuring that 618 Identification of Enforceable Rules and Orders, 76 FR 43569, 43570 (July 21, 2011). 619 85 FR 37331 (June 22, 2020). 620 The proposed permanent advisory opinion program contemplates expanding the program to allow other individuals and entities to request guidance. PO 00000 Frm 00130 Fmt 4701 Sfmt 4700 participants who have questions know how to request clarification and any interested party can easily locate each advisory opinion addressing questions relating to Regulation F. Supplement I to Part 1006—Official Interpretations The Bureau proposed to add Supplement I to Regulation F to publish official interpretations of the regulation (i.e., commentary).621 Proposed comment I–1 explained that the commentary is the Bureau’s vehicle for supplementing Regulation F and has been issued pursuant to the Bureau’s authority to prescribe rules under 15 U.S.C. 1692l(d) and in accordance with the notice-and-comment procedures for informal rulemaking under the APA. Proposed comment I–2 set forth the procedure for requesting that an official interpretation be added to Supplement I, and proposed comment I–3 described how the commentary is organized and numbered.622 The Bureau is finalizing comment I–3 with certain technical corrections and, as discussed below, is revising comments I–1 and –2 in response to feedback. The Bureau is revising comment I–1 to clarify that the provisions of the commentary are issued under the same authorities as the corresponding provisions of Regulation F. In particular, this amendment has the effect of clarifying that some provisions of the commentary are issued under sections 1022 and 1032 of the Dodd-Frank Act, instead of or in addition to authorities under the FDCPA. The Bureau is also revising comment I–1 for clarity to expressly reference the notice-andcomment procedures of section 553 of the APA,623 rather than referring to such requirements as ‘‘the notice-andcomment procedures for informal rulemaking.’’ The Bureau is revising comment I–2 to clarify that only revisions to the commentary, rather than all Bureau interpretations of the regulation, will be incorporated into the commentary. The Bureau is making this revision to reserve the possibility that the Bureau may interpret the regulation without necessarily adopting such interpretations into the commentary. The Bureau is also revising comment I–2 to clarify that revisions to the commentary made in accordance with the rulemaking procedures of section 553 of the APA (5 U.S.C. 553) will be incorporated in the commentary after 621 84 FR 23274, 23370 (May 21, 2019). commentary relating to specific sections of the regulation is addressed in the section-by-section analyses of those sections, above. 622 Proposed E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations publication in the Federal Register. As proposed, the comment referenced publication in the Federal Register, but not the other requirements of the APA. TKELLEY on DSKBCP9HB2PROD with RULES3 VI. Effective Date 21:38 Nov 27, 2020 VII. Dodd-Frank Act Section 1022(b) Analysis A. Overview The Bureau proposed that the final rule take effect one year after publication in the Federal Register. The Bureau received several comments on this aspect of the proposal. A few industry commenters supported the proposed effective date, stating that a one-year implementation period would provide debt collectors with enough time to comply with the rule. An industry commenter supported an 18month implementation period, stating that the rule, as proposed, would require updated policies and procedures and significant employee training and programming changes that will take time to identify, program, and test. Another industry commenter requested a 24-month implementation period. A government commenter encouraged the Bureau to provide small entities with more than one year to comply, if such entities were not exempted from the rule altogether. Several industry commenters asked the Bureau to clarify that a debt collector is permitted to comply with all or part of the final rule before the effective date. The Bureau has considered these comments and has determined that, as proposed, the final rule will become effective one year after publication in the Federal Register. The Bureau determines that the revisions made to the proposal and discussed in detail in part V will permit debt collectors to meet this effective date period. As discussed in part V, the Bureau intends to issue a disclosure-focused final rule to address all aspects of proposed §§ 1006.26 and 1006.34 and certain related topics, as noted in part V. The Bureau recognizes that all stakeholders may benefit if the effective dates for both rules are harmonized; accordingly, the Bureau will assess the effective date of the disclosure-focused final rule and, if necessary, will consider adjusting the effective date for this final rule. The Bureau notes that debt collectors may, but are not required to, comply with the final rule’s requirements and prohibitions before the effective date. Until that date, the FDCPA and other applicable law continue to govern the conduct of FDCPA debt collectors. Similarly, to the extent the final rule establishes a safe harbor from liability for certain conduct or a presumption that certain conduct complies with or violates the rule, those safe harbors and VerDate Sep<11>2014 presumptions are not effective until the final rule’s effective date. Jkt 253001 In developing the rule, the Bureau has considered the potential benefits, costs, and impacts as required by section 1022(b)(2)(A) of the Dodd-Frank Act.624 Debt collectors play a critical role in markets for consumer financial products and services. Credit markets function because lenders expect that borrowers will pay them back. In consumer credit markets, if borrowers fail to repay what they owe per the terms of their loan agreement, creditors often engage debt collectors to attempt to recover amounts owed, whether through the court system or through less formal demands for repayment. In general, third-party debt collection creates the potential for market failures. Consumers do not choose their debt collectors, and, as a result, debt collectors do not have the same incentives that creditors have to treat consumers fairly.625 Certain provisions of the FDCPA may help mitigate such market failures in debt collection, for example by prohibiting unfair, deceptive, or abusive debt collection practices by third-party debt collectors. Any restriction on debt collection may reduce repayment of debts, providing a benefit to some consumers 624 Specifically, section 1022(b)(2)(A) of the Dodd-Frank Act (12 U.S.C. 5512(b)(2)(A)) requires the Bureau to consider the potential benefits and costs of the regulation to consumers and covered persons, including the potential reduction of access by consumers to consumer financial products or services; the impact of the rule on insured depository institutions and insured credit unions with $10 billion or less in total assets as described in section 1026 of the Dodd-Frank Act (12 U.S.C. 5516); and the impact on consumers in rural areas. 625 Consumers do choose their lenders, and, in principle, consumer loan contracts could specify which debt collector would be used or what debt collection practices would be in the event a loan is not repaid. Some economists have identified potential market failures that prevent loan contracts from including such terms even when they could make both borrowers and lenders better off. For example, terms related to debt collection may not be salient to consumers at the time a loan is made. Alternatively, if such terms are salient, a contract that provides for more lenient collection practices may lead to adverse selection, attracting a disproportionate share of borrowers who know they are more likely to default. See Thomas A. Durkin et al., Consumer Credit and the American Economy 521–25 (Oxford U. Press 2014) (discussing potential sources of market failure and potential problems with some of those arguments). See also Erik Durbin & Charles Romeo, The Economics of Debt Collection: With attention to the issue of salience of collections at the time credit is granted (Sept. 4, 2020), Journal of Credit Risk (discussing how rules that limit debt collection affect consumer welfare when debt collection is not salient to consumers when they borrow). PO 00000 Frm 00131 Fmt 4701 Sfmt 4700 76863 who owe debts and an offsetting cost to creditors and debt collectors. A decrease in repayment will in turn lower the expected return to lending. This can lead lenders to increase interest rates and other borrowing costs and to restrict availability of credit, particularly to higher-risk borrowers.626 Because of this, policies that increase protections for consumers with debts in collection involve a tradeoff between the benefits of protections for those consumers and the possibility of increased costs of credit and reduced availability of credit for all consumers. Whether there is a net benefit from such protections depends on whether consumers value the protections enough to outweigh any associated increase in the cost of credit or reduction in availability of credit. The final rule will further the FDCPA’s goals of eliminating abusive debt collection practices and ensuring that debt collectors who refrain from such practices are not competitively disadvantaged.627 However, as discussed below, it is not clear based on the information available to the Bureau whether the net effect of the final rule will be to make it more costly or less costly for debt collectors to recover unpaid amounts, and therefore not clear whether the rule will tend to increase or decrease the supply of credit. The final rule will benefit both consumers and debt collectors by increasing clarity and certainty about what the FDCPA prohibits and requires. When a law is unclear, it is more likely that parties will disagree about what the law requires, that legal disputes will arise, and that litigation will be required to resolve disputes. Since 2010, consumers have filed approximately 8,000 to 12,000 lawsuits under the FDCPA each year, some of which involve issues on which the law is unclear.628 The 626 See Thomas A. Durkin et al., Consumer Credit and the American Economy 521–25 (Oxford U. Press 2014) (discussing theory and evidence on how restrictions on creditor remedies affect the supply of credit). Empirical evidence on the impact of State laws restricting debt collection is discussed in section G below. The provisions in this final rule could also affect consumer demand for credit, to the extent that consumers contemplate collection practices when making borrowing decisions. However, there is evidence suggesting that consumer demand for credit is generally not responsive to differences in creditor remedies. See James Barth et al., Benefits and Costs of Legal Restrictions on Personal Loan Markets, Journal of Law & Economics, 29(2) (1986). See 15 U.S.C. 1692(e). 627 See id. 628 See WebRecon LLC, WebRecon Stats for Dec 2019 & Year in Review, https://webrecon.com/ webrecon-stats-for-dec-2019-and-year-in-reviewhow-did-your-favorite-statutes-fare/ (last visited Oct. 4, 2020). Greater clarity about legal requirements could reduce unintentional violations E:\FR\FM\30NOR3.SGM Continued 30NOR3 76864 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 number of disputes settled without litigation has likely been much greater.629 Perhaps more important than the costs of resolving legal disputes are the steps that debt collectors take to prevent legal disputes from arising in the first place. This includes direct costs of legal compliance, such as auditing and legal advice, as well as indirect costs from avoiding collection practices that might be both effective and legal but that raise potential legal risks. In some cases, debt collectors seeking to follow the law and avoid litigation have adopted practices that appear to be economically inefficient, with costs that exceed the benefits to consumers or even impose net costs on consumers.630 Several provisions of the final rule will likely change the way debt collectors communicate with consumers, and these provisions are likely to interact with each other in ways that make their net impact difficult for the Bureau to predict. Most significant of these are the provisions related to telephone call frequencies, limited-content messages, and electronic disclosures, although other provisions might fall into this category as well. The communication provisions collectively are likely to reduce the number of telephone calls from debt collectors. Currently many, though by no means all, debt collectors communicate with consumers strictly through live telephone calls and mail, with limited or no communication by voicemail message, email, text message, or other electronic media such as website portals. It is possible that the net effect of the communication provisions will be to make debt collection more effective. Debt collectors who currently communicate by live telephone calls in excess of the rule’s presumption of compliance for telephone call frequencies could substitute for some of the excessive telephone call volume by leaving limited-content messages (which are voicemail messages) and sending email or text messages. Consumers could respond to this change and could also reduce lawsuits because, when parties can better predict the outcome of a lawsuit, they may be more likely to settle claims out of court. 629 Some debt collectors have reported that they receive approximately 10 demand letters from attorneys asserting a violation of the FDCPA for each lawsuit filed. See Small Business Review Panel Outline, supra note 36, at 69 n.105. 630 For example, as discussed further below, many debt collectors currently avoid leaving voicemail messages for consumers or communicating with consumers by email because sending voicemail messages or emails may create legal risks, notwithstanding that consumers may prefer such messages to receiving multiple telephone calls in which no message is left. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 in communication media by engaging with such debt collectors as much as or more than they currently do by telephone. If this occurs, consumers could benefit from a reduction in telephone calls that may annoy, abuse, or harass them, as well as from resolving their outstanding debts in a more timely fashion. At the same time, debt collectors could benefit from reduced time spent making telephone calls and from increased revenue. There is some reason to believe this may occur—as noted below, a substantial fraction of consumers prefer to communicate by email, and consumers may well be more likely to return a voicemail message from an identified caller than to answer their telephones in response to a call from an unknown caller. Alternatively, the provisions of the final rule might make debt collection less effective. Debt collectors could comply with the telephone call frequency provisions, reducing outbound calling for some debt collectors, but not increase contact with consumers by using other communication media. This might occur if debt collectors still fear some legal risk from using other media, or if they find the new communication media are not effective in reaching consumers. In this case, although the number of telephone calls would be reduced, it would come at the cost of making it more difficult for debt collectors to reach some consumers, reducing revenue and potentially imposing costs on both consumers and debt collectors from increased litigation to recover debts. The effect of the final rule on debt collectors would likely lie somewhere in between these two extremes, and the Bureau finds these effects will likely vary by debt collector and type of debt. Some firms will likely adopt or expand use of newer communication media due to the reduced legal risk and find less need for telephone calls, while other firms may not do so or may not experience the same effect. Still other firms may be largely unaffected by the communication-related provisions. As discussed below, some debt collectors currently place only one or two telephone calls per week to any consumer. Such debt collectors are unlikely to change their calling practices and may not find it costeffective to develop the informationtechnology infrastructure necessary to communicate by email or text message. Relatedly, the Bureau is aware of at least one mid-sized collection firm that primarily uses email for communication currently, and such firms also will be unlikely to alter their practices, PO 00000 Frm 00132 Fmt 4701 Sfmt 4700 although they may benefit from reduced litigation costs. In short, the provisions related to communications will likely reduce the overall number of telephone calls per consumer, while at the same time potentially reducing the number of calls required to reach each consumer. Although the Bureau believes it is likely that consumers will benefit directly from a reduction in telephone calls that annoy, abuse, or harass them, the Bureau cannot predict the net effect of these provisions on debt collectors’ costs and revenues or the net change in indirect costs to consumers if debt collectors cannot reach them from, for example, litigation. In developing the final rule, the Bureau has consulted, or offered to consult with, the appropriate prudential regulators and other Federal agencies, including regarding consistency with any prudential, market, or systemic objectives administered by such agencies. B. Provisions To Be Analyzed The analysis below considers the potential benefits, costs, and impacts to consumers and covered persons of key provisions of the final rule (provisions), which include: 1. Prohibited communications with consumers. 2. Telephone call frequencies3 3. Limited-content messages. 4. Prohibition on the sale or transfer of certain debts. 5. Electronic disclosures and communications. In addition to the provisions listed above, the rule restates nearly all of the FDCPA’s substantive provisions and adds certain clarifying commentary. C. Data Limitations and Quantification of Benefits, Costs, and Impacts The discussion in this part VII relies on publicly available information as well as other information the Bureau has obtained. To better understand consumer experiences with debt collection, the Bureau developed its 2015 Debt Collection Consumer Survey, which provides the first comprehensive and nationally representative data on consumers’ experiences and preferences related to debt collection.631 The Bureau 631 The Bureau’s survey was conducted between December 2014 and March 2015. Consumers with and without debts in collection were asked to complete this survey in order to provide the Bureau with data necessary to understand the experience and demographics of consumers who have been contacted by debt collectors. Consumers were selected using the Bureau’s Consumer Credit Panel, a de-identified 1-in-48 sample of Americans with consumer reports at one of the nationwide CRAs. See CFPB Debt Collection Consumer Survey, supra note 16, at 7–10. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 also relies on its consumer complaint data, its Consumer Credit Panel, the Credit Card Database,632 and other sources to understand potential benefits and costs to consumers of the rule.633 To better understand potential effects of the rule on industry, the Bureau has engaged in significant outreach to industry, including through the Operations Study.634 In July 2016, the Bureau consulted with small entities as part of the SBREFA process and obtained important information on the potential impacts of proposals that the Bureau was considering at the time, many of which are included in the final rule.635 The sources described above, together with other sources of information and the Bureau’s market knowledge, form the basis for the Bureau’s consideration of the likely impacts of the rule. The Bureau makes every attempt to provide reasonable estimates of the potential benefits and costs to consumers and covered persons of the rule. While the Debt Collection Consumer Survey provides representative data on consumer experiences with debt collection, the survey responses generally do not permit the Bureau to quantify, in dollar terms, how particular provisions will affect consumers. With respect to industry impacts, much of the Bureau’s existing data come from qualitative input from debt collectors and other entities that operate in the debt collection market rather than representative sampling that would allow the Bureau to estimate total benefits and costs. General economic principles and the Bureau’s expertise in consumer financial markets, together with the data and findings that are available, provide insight into the potential benefits, costs, and impacts of the final rule. Where possible, the Bureau has made quantitative estimates based on these principles and the data available. Some benefits and costs, however, are not amenable to quantification, or are not quantifiable given the data available to the Bureau. The Bureau provides a 632 The Credit Card Database is a compilation of de-identified loan-level information from the credit card portfolios of large banks. See Bureau of Consumer Fin. Prot., Credit Card Agreement Database, https://www.consumerfinance.gov/creditcards/agreements/ (last visited Oct. 15, 2020). 633 For more information about Bureau data sources, see Sources and Uses of Data at the Bureau of Consumer Financial Protection (Sept. 26, 2018), https://www.consumerfinance.gov/data-research/ research-reports/sources-and-uses-data-bureauconsumer-financial-protection/. 634 See CFPB Debt Collection Operations Study, supra note 34. 635 See Small Business Review Panel Report, supra note 37. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 qualitative discussion of those benefits, costs, and impacts. In the proposed rule, the Bureau requested additional data or studies that could help quantify the benefits and costs of the rule to consumers and covered persons. The Bureau summarizes comments on this subject below, but few comments explicitly addressed quantifying the costs and benefits of the rule or provided additional data or studies. Comments on the benefits and costs of the rule are also discussed in part V above. D. Baseline for Analysis In evaluating the potential benefits, costs, and impacts of the final rule, the Bureau takes as a baseline the current legal framework governing debt collection. This includes the requirements of the FDCPA as currently interpreted by courts and law enforcement agencies, other Federal laws, and the rules and statutory requirements promulgated by the States. In the consideration of benefits and costs below, the Bureau discusses its understanding of practices in the debt collection market under this baseline and how those practices are likely to change under the final rule. Until the creation of the Bureau, no Federal agency was given the authority to write substantive regulations implementing the FDCPA, meaning that many of the FDCPA’s requirements are subject to interpretations in court decisions that are not always consistent or do not always definitely resolve an issue, such as a single district court opinion on an issue. Debt collectors’ practices reflect their interpretations of the FDCPA and their decisions about how to balance effective collection practices against litigation risk. Many of the impacts of the final rule relative to the baseline would arise from changes that debt collectors would make in response to additional clarity about the most appropriate interpretation of what conduct is permissible and not permissible under the FDCPA’s provisions. The Bureau received no comments regarding this choice of baseline for its section 1022(b) analysis. E. Goals of the Rule The final rule is intended to further the FDCPA’s goals of eliminating abusive debt collection practices and ensuring that debt collectors who refrain from such practices are not competitively disadvantaged. To these ends, an important goal of the rule is to benefit both consumers and debt collectors by increasing clarity and certainty about what the FDCPA PO 00000 Frm 00133 Fmt 4701 Sfmt 4700 76865 prohibits and requires, which could improve compliance with the FDCPA while reducing unnecessary litigation regarding the FDCPA’s requirements. As discussed in part V and in this part VII, the goals of the rule’s provisions regarding telephone call frequency include reducing consumer annoyance, abuse, or harassment attributable to repeated or continuous debt collection telephone calls, while minimizing inadvertent negative impacts on debt collectors’ ability to collect, by establishing presumptions that, with certain exceptions, debt collectors who place telephone calls at or below specified frequency levels comply with the FDCPA, and debt collectors who place telephone calls exceeding specified frequency levels violate the FDCPA. The provisions regarding limited-content messages are intended to reduce debt collectors’ need to rely on repeated telephone calls to establish contact with consumers by clarifying how a debt collector may leave a voicemail message while minimizing the risk of third-party disclosure. The rule is also intended to protect consumers from the risks associated with electronic communications while also facilitating the use of such communications in debt collection, including by: (1) Clarifying how the FDCPA’s communication restrictions apply to technologies that have developed since the statute was passed, such as mobile telephones, email, text messaging, and social media; (2) enabling consumers who do not wish to engage in electronic communications to opt out of such communications easily; and (3) clarifying how debt collectors can engage in email or text message communications in a way that limits the risk of third-party disclosures. The rule also sets a general standard for sending required disclosures that is intended to provide consumers with the same protection whether the debt collector sends the disclosure in writing or electronically. F. Coverage of the Rule The final rule will apply to debt collectors as defined in the FDCPA. This definition encompasses a number of types of businesses, which can be generally categorized as: Collection agencies, which collect payments owed to their clients, often for a contingency fee; debt buyers, which collect debts that they purchase and own and either regularly collect or attempt to collect debts owned by others or have as their principal purpose the collection of consumer debt; collection law firms that either have as their principal purpose the collection of consumer debt or E:\FR\FM\30NOR3.SGM 30NOR3 76866 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 regularly collect or attempt to collect consumer debt owed to others; and loan servicers when they acquire servicing of loans already in default. Although creditors that collect on debts they own generally will not be affected directly by the rule, they may experience indirect effects. Creditors that hire or sell debts to FDCPA-covered debt collectors may experience higher costs if debt collectors’ costs increase and if those costs are passed on to creditors. As described below, the Bureau believes that many compliance costs on FDCPA-covered debt collectors will be one-time costs to come into compliance rather than ongoing costs to stay in compliance. To the extent compliance costs are incurred only once to adjust existing debt collectors’ systems and do not increase costs for new entrants, they are unlikely to be passed on to creditors because they will not affect either marginal costs or the number of firms in the market. G. Potential Benefits and Costs to Consumers and Covered Persons The Bureau discusses the benefits and costs of the rule to consumers and covered persons (generally FDCPAcovered debt collectors) in detail below.636 The Bureau believes that an important benefit of many of the provisions to both consumers and covered persons—compared to the baseline of the FDCPA as currently interpreted by courts and law enforcement agencies—is an increase in clarity and precision of the law governing debt collection. Greater certainty about legal requirements can benefit both consumers and debt collectors, making it easier for consumers to understand and assert their rights and easier for firms to ensure they are in compliance. The Bureau discusses these benefits in more detail with respect to certain provisions below but believes that they generally apply, in varying degrees, to all of the provisions discussed below. Some commenters urged the Bureau to consider other particular costs and benefits to consumers of restrictions on debt collection beyond those discussed explicitly below. One commenter encouraged the Bureau to consider the effect of aggressive debt collection practices on marital stability and on consumer privacy. A law firm 636 For purposes of the section 1022(b)(2) analysis, the Bureau considers any consequences that consumers perceive as harmful to be a cost to consumers. In considering whether consumers might perceive certain activities as harmful, the Bureau is not analyzing whether those activities would be unlawful under the FDCPA or the DoddFrank Act. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 commenter representing low-income and underserved individuals and families noted that stress resulting from debt collection efforts can have detrimental effects on consumer health. The Bureau acknowledges that, to the extent that the final rule reduces aggressive debt collection, consumers may receive benefits such as those discussed by these commenters. The Bureau does not discuss these benefits explicitly below, as these benefits are not readily quantified, but the qualitative discussion below should be understood to include all consumer benefits. 1. Prohibited Communications With Consumers Section 1006.6(b) generally implements FDCPA section 805(a)’s prohibition on a debt collector communicating with a consumer at unusual or inconvenient times and places, with a consumer represented by an attorney, and at a consumer’s place of employment. This section also expressly prohibits attempts to make such communications, which debt collectors already must avoid given that a successful attempt would be an FDCPA violation. Section 1006.14(h)(1) interprets FDCPA section 806’s prohibition on a debt collector engaging in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt to prohibit debt collectors from communicating or attempting to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person. Debt collectors are already prohibited from communicating with consumers at a time or place that is known or should be known to be inconvenient to the consumer. The Bureau therefore expects that debt collectors already keep track of what consumers tell them about the times and places that they find inconvenient and avoid communicating or attempting to communicate with consumers at those times or places. Similarly, the provisions regarding communication with attorneys and at the consumer’s place of employment track requirements that debt collectors are already required to comply with under the FDCPA. The Bureau understands that many debt collectors currently employ systems and business processes designed to limit communication attempts to consumers at inconvenient times and places and that many debt collectors also use these systems and processes to prevent PO 00000 Frm 00134 Fmt 4701 Sfmt 4700 communications with consumers through media that consumers have told them not to use. The provisions may benefit consumers and debt collectors by further clarifying the requirements of FDCPA sections 805(a) and 806, but the Bureau does not expect that the provisions will cause significant changes to debt collectors’ existing practices. 2. Telephone Call Frequencies Section 1006.14(b)(1) prohibits a debt collector from, in connection with the collection of a debt, placing telephone calls or engaging in telephone conversations repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. Section 1006.14(b)(2)(i) provides for a rebuttable presumption of compliance for a debt collector who places a telephone call to a particular person in connection with the collection of a particular debt neither: (A) More than seven times within seven consecutive days; nor (B) within a period of seven consecutive days after having had a telephone conversation with the person in connection with the collection of such debt, subject to the exclusions in § 1006.14(b)(3). Section 1006.14(b)(2)(ii) sets forth a rebuttable presumption of a violation for a debt collector who places a telephone call to a particular person in connection with the collection of a particular debt: (A) More than seven times within seven consecutive days; or (B) within a period of seven consecutive days after having had a telephone conversation with the person in connection with the collection of such debt. By establishing in the final rule a rebuttable presumption of compliance or of a violation, the Bureau provides additional flexibility relative to the proposal to debt collectors in cases where there may be a good reason to call, or to have a live communication with, a person, more frequently than the bright-line limits in the proposed rule. Debt collectors will also need to determine whether, under the circumstances, their calling might violate the FDCPA and the rule despite a telephone call frequency within the presumption of compliance. The Bureau anticipates that debt collectors will generally choose to call no more often than the specified telephone call frequencies in order to reduce legal risks. Therefore, the discussion below generally assumes that the practical effect of the final rule will be to cause debt collectors to reduce telephone calling frequency, in most cases, to at most the placement of seven telephone calls in a seven-day period and one live E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations telephone conversation in a seven-day period. Thus, many of the benefits and costs of the provision are similar to those under the bright-line rule that was included in the proposal. At the same time, the final rule provides additional flexibility to debt collectors but reduces the legal certainty compared to the proposed bright-line telephone call frequency limits, which will affect the benefits and costs of the call frequency provisions as discussed further below. As discussed above in part V, commenters who addressed the telephone call frequency limits in the proposal strongly opposed the seventelephone call weekly frequency limit. Consumer advocates, some State Attorneys General, and multiple other commenters argued that the limit was too high, while industry commenters and other commenters believed that the limit was too low. Several commenters argued that a bright-line cap conceptually was a good idea for clarity, but that a cap of seven telephone calls was variously too low, too high, not supported by rigorous evidence, or not supportable under the FDCPA. Some industry commenters argued that bright lines are not helpful and that the proposed limits were too low in part because of the need to try multiple telephone numbers. Supporters of a lower limit often also argued that the limits on calling should be per-person. One commenter argued that the proposed limit was a reasonable compromise between preventing consumer harm and minimizing industry burden. Commenters were generally more supportive of the proposed limit of one live conversation per seven-day period, although some industry commenters argued that this limit should be higher, or that the proposed exceptions to the limit were unclear or should be expanded to include circumstances specified by the commenters, such as where there was active litigation or as required by applicable law. Many commenters said that the Bureau did not have evidence to support the specific proposed call limit of seven call attempts in a seven-day period. The Bureau requested data from industry that could provide further evidence on the effects of particular frequency limits but did not receive data that would permit it to quantify the costs and benefits of different frequency limits. The Bureau believes that providing for a rebuttable presumption of compliance or of a violation, rather than a bright-line limit, will reduce the cost to consumers or to industry of selecting a limit that is too high or too low. In addition, other provisions, such VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 as those that address limited-content messages and electronic communications, provide industry with additional tools for reaching consumers. Potential Benefits to Consumers Telephone calls debt collectors make with intent to annoy, abuse, or harass consumers are likely to cause consumers harm, and the Bureau has evidence, discussed below and in part V above, that many consumers perceive harm from debt collectors’ repeated telephone calls.637 The Bureau expects the provision to limit this harm by reducing the frequency of telephone calls and telephone conversations.638 FDCPA section 806 already generally prohibits conduct the natural consequence of which is to harass, oppress, or abuse any person. FDCPA section 806(5) also specifically prohibits repeated or continuous calling and telephone conversations with ‘‘intent to annoy, abuse, or harass any person at the called number.’’ These prohibitions have been interpreted differently by different courts, and, while some debt collectors call consumers less frequently than seven times in a given seven-day period, many debt collectors place telephone calls to consumers or engage consumers in telephone conversations more frequently than this. To quantify consumer benefits from the provision, the Bureau would need information regarding both how much the provision would reduce the number of calls debt collectors place to consumers and the benefit (or harm) each consumer would receive as a result of this reduction. Although the Bureau’s data do not permit it to reliably quantify either the reduction in call frequency or how much consumers would value this reduction in dollar terms, the discussion below summarizes the data available to the Bureau on these two points. 637 The FDCPA’s standard of liability for repeated calling is not perceived harm by consumers, but rather depends on the debt collector’s intent or the ‘‘natural consequence’’ of the conduct. See FDCPA section 806(5) and 806, 15 U.S.C. 1692d(5) and 1692d. Nonetheless, section 1022(b)(2)(A) of the Dodd-Frank Act requires the Bureau to consider the potential benefits and costs of its regulation to consumers and covered persons, which may include potential benefits or costs that were not contemplated or intended by the FDCPA. 638 By leading some debt collectors to further limit telephone calls, the rule could have the ancillary effect of preventing some calls that are not intended to annoy, abuse, or harass consumers and could in fact prevent some calls that consumers would find beneficial, as discussed below under ‘‘Potential costs to consumers.’’ This ancillary effect may be ameliorated by the provision being structured as a rebuttable presumption of violation. Telephone calls that consumers would find beneficial are more likely to have facts that would overcome the presumption of a violation. See comment 14(b)(2)(ii)–2. PO 00000 Frm 00135 Fmt 4701 Sfmt 4700 76867 Data from the Bureau’s Debt Collection Consumer Survey indicate that debt collectors often may attempt to contact consumers more frequently than seven times per week. In the survey, 35 percent of consumers who had been contacted by a debt collector said the debt collector had contacted or attempted to contact them four or more times per week, including 14 percent who said the debt collector had contacted or attempted to contact them eight or more times per week.639 Another 29 percent said that the debt collector had attempted to contact them one to three times per week.640 The survey question did not ask respondents to distinguish between actual contacts and contact attempts, and consumers are likely not aware of all unsuccessful contact attempts.641 Still, the survey responses suggest that it is not uncommon for debt collectors to place telephone calls to consumers more than seven times per week, and the responses would be consistent with many debt collectors having live telephone conversations with consumers more frequently than one time per week, which would be presumed to be a violation under the final rule.642 Based on this, it is reasonable to estimate that at least 6.9 million consumers 643 are 639 CFPB Debt Collection Consumer Survey, supra note 16 at 44 n.5. 640 Id. 641 The survey also did not ask respondents to distinguish between calls about a single debt and calls about multiple debts. 642 The survey questions did not distinguish among different types of contact, and survey responses may have included contacts such as letters or email that would not be subject to the provision. The survey suggests that contact attempts from debt collectors other than by telephone or letter are relatively uncommon. CFPB Debt Collection Consumer Survey, supra note 16. at 42, table 22. The Bureau understands that debt collectors seldom send letters more than once per week, so a large majority of contact attempts likely were by telephone. Information from industry also confirms that debt collectors sometimes place telephone calls to consumers more than seven times per week. See discussion under ‘‘Costs to covered persons’’ below. 643 This is calculated as 14 percent of an estimated 49 million consumers contacted by debt collectors each year. The Bureau estimates that about 32 percent of consumers with a credit file, or about 67 million, are contacted each year by a creditor or debt collector attempting to collect a debt. Of those, 23 percent were most recently contacted by a creditor, 63 percent by a debt collector, and 15 percent did not know whether the contact was from a creditor or debt collector. Based on this, the Bureau estimates that 73 percent of consumers were contacted by a debt collector, assuming that the share of consumers contacted by a debt collector is the same in this group as it is among consumers who did know whether the most recent contact was from a debt collector. See CFPB Debt Collection Consumer Survey, supra note 16 at 13, 40–41. E:\FR\FM\30NOR3.SGM 30NOR3 76868 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations called by debt collectors more than seven times in a week during a year. The Bureau’s Debt Collection Consumer Survey supports an inference that many consumers would benefit if they received fewer calls from debt collectors, although it does not provide evidence with which to estimate the dollar value of those benefits. Most respondents who had been contacted by a debt collector at least once per week said they had been contacted too often. As shown in Table 1, 95 percent of respondents who said debt collectors had contacted or attempted to contact them four or more times per week and 76 percent of those reporting contact or attempted contact one to three times per week said that they had been contacted too often by the debt collector, whereas 22 percent of those contacted less than once a week said they had been contacted too often. TABLE 1—CONSUMERS INDICATING THEY HAD BEEN CONTACTED TOO OFTEN, BY CONTACT FREQUENCY [Percent] Contact frequency Consumers who said they were contacted too often TKELLEY on DSKBCP9HB2PROD with RULES3 Less than once per week ......... One to three times per week .... Four or more times per week ... 22 76 95 A State Attorney General commenter and another commenter interpreted the statistic that many consumers contacted at least once per week reported being contacted too often as evidence that the Bureau’s proposed telephone call frequency limits were too high and allowed too much calling. The Bureau notes again that the survey did not distinguish between contact attempts and live conversations. And, given that many debt collectors do not currently leave voicemails, many survey respondents may not have been aware of (and therefore the survey results may not reflect consumers’ views about) contact attempts that did not result in a conversation. The survey also did not explicitly ask whether the consumers who say they were contacted too often felt harassed. That said, the Bureau agrees that some consumers may consider some telephone call frequencies that would have been permitted under the proposal to be too frequent, but notes that, as discussed elsewhere in this part, restrictions on call frequency can also have negative consequences for consumers. Multiple consumer advocate and other commenters noted that, because VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 the proposed frequency limits were per debt rather than per person, consumers with multiple debts in collection could be called significantly more than seven times in each seven-day period and may be harmed as a result. The Bureau acknowledges that many consumers have multiple debts, and in some cases multiple debts may be collected by the same debt collector, although the Bureau does not have data to show how frequently consumers are called when they have multiple debts being collected by the same debt collector. An industry trade group commenter criticized the Debt Collection Consumer Survey and argued that the Bureau should not rely on the survey’s results. Specifically, the commenter asserted that the survey’s sample size was too small to be reliable and that the estimates of the survey were not statistically significant. The commenter also objected to some of the subsample comparisons made by the Bureau in the study or in the proposed rule. The commenter also argued that the fact that the survey did not distinguish between attempted contacts and actual live contacts made the data unreliable. Finally, the commenter argued that consumer surveys are inherently unreliable. With respect to the size of the survey sample, the Bureau notes that, for binary or categorical outcomes such as those in the survey, a sample size of a few hundred to a thousand is generally sufficient to obtain results that are within a few percentage points of what one would find in the general population, so long as the sampling procedure is random and designed to ensure a representative sample.644 The survey included around 1,000 consumers who had experience with debt collection,645 meaning the sample 644 Indeed, the Bureau’s use of its Consumer Credit Panel as a sampling frame for the survey allowed the Bureau to make the sample more representative of the U.S. population than is usually possible in a survey. See CFPB Debt Collection Consumer Survey, supra note 16, for more details. 645 As noted in the survey report, the Bureau oversampled consumers that it expected to be more likely to have experience with debt collection. Oversampling is a standard procedure in survey methodology that is used when the researcher is interested in analyzing a particular sub-population but also wants to analyze the population as a whole. Groups that are oversampled are assigned a lower weight when analyzing the whole sample but can be treated as individuals with equal weight when analyzing the subsample. Thus, although based upon the survey weights the Bureau estimated that 32 percent of all consumers had experience with debt collection, the survey data included over 1,000 consumers who reported having experience with debt collection in the past year. The commenter mistakenly quotes the size of the subsample as 632 individuals. While incorrect, this is largely beside the point—as long as the sampling was done PO 00000 Frm 00136 Fmt 4701 Sfmt 4700 was large enough for the Bureau to make reasonable statistical inferences based upon it, including for subsamples of that group, such as consumers who reported being contacted one to three times per week. With respect to statistical significance, the commenter is incorrect in stating that the results of the survey were statistically insignificant. The Bureau did not explicitly report measures of statistical precision in the survey report, as the report was intended for a general audience. However, the Bureau calculated measures of statistical significance for all of its estimates and took care in the report to discuss only comparisons that were statistically significant at a 95 percent confidence level or higher.646 Moreover, in general, the 95 percent confidence interval for the statistics cited above is on the order of between three and 10 percentage points, with smaller subsamples having a wider margin.647 For the statistics relied on by the Bureau and discussed above, a difference of plus or minus three to 10 percentage points would not meaningfully change the Bureau’s conclusions. For instance, the survey found that, among consumers who reported being contacted between one and three times per week by debt collectors, 76 percent said they were contacted too often. If the true percentage in the population were 66 percent, or 86 percent, the basic conclusion would be the same. Finally, with respect to the commenter’s assertion that the limitations of the survey make it inherently unreliable, the Bureau disagrees. Although the phrasing of the question about contact frequency does not specifically track the structure of the rule’s telephone call frequency provisions, the Bureau nonetheless believes the survey provides useful information about consumers’ experience with debt collection and about the benefits consumers may receive from the final correctly, even a sample of 600 individuals can be used to make inferences about the whole population, albeit with a larger confidence interval or margin of error. 646 The Bureau followed the same approach in its recent report on its disclosure testing, where it disclosed the approach more explicitly. See CFPB Quantitative Testing Report, supra note 33. 647 While these statistics were not explicitly reported in the survey report, the Bureau notes that the margin of error on a survey of this nature is largely a function of the sample size of the survey, and that margins of error on surveys with sample sizes in the range of 600–1,000 will be familiar to many lay readers. For instance, political polls with sample sizes of 600–1,000 respondents are often reported in the news and have margins of error that are generally in the range of 3 to 5 percentage points. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 rule’s presumptions regarding telephone call frequencies. The Bureau’s consumer complaint data also indicate that consumers find frequent or repeated calls harmful. Communication tactics ranked third in debt collection complaints submitted to the Bureau during 2018 and fourth in 2019, and the majority of complaints in this category—55 percent in both years, or about 6,000 complaints across both years—were about frequent or repeated telephone calls.648 Several industry and other commenters disputed the reliability and representativeness of the Bureau’s complaint data. Some of these commenters pointed to reports of inaccuracies in the complaint data themselves, while others argued that complaints only represent a tiny fraction of all consumers contacted by debt collectors. The Bureau acknowledges that, as in most industries, a relatively small percentage of consumers in collection file formal complaints. The Bureau also notes that not all consumers who have problems with a debt collector file complaints with the Bureau—many may not formally complain at all, and others may file complaints with another source, such as the Federal Trade Commission or their State Attorney General’s office. Nonetheless, the Bureau believes that the rate of consumer complaints provides a useful benchmark as to the importance of the problem of frequent or repeated calls. That is, among the consumers who complain to the Bureau about debt collection communication tactics (one of the most complainedabout categories), more than half complain about repeated calls, indicating that frequent or repeated telephone calls represent a large share of debt collection problems.649 Although the Bureau does not have evidence that could be used to estimate the monetary value consumers attach to 648 See Bureau of Consumer Fin. Prot., Consumer Complaint Database, https:// www.consumerfinance.gov/data-research/ consumer-complaints/search/ ?dataNormalization=None&date_received_ max=2019-12-30&date_received_min=2018-0101&issue=Communication %20tactics%E2%80%A2Frequent%20or %20repeated%20calls&product=Debt %20collection&searchField=all&tab=Map (last visited Oct. 23, 2020). Consumers can identify only one issue to categorize their complaints, so these numbers do not include cases in which a consumer chose a different issue (such as ‘‘I don’t owe the debt’’) but also complained about call frequency. Note that consumers who complain about frequent or repeated telephone calls may not be receiving a frequency of calls that would violate the Rule. 649 Note that not all of the consumers making these complaints would be helped by the rule, as they may have received a frequency of telephone calls that would not violate the rule. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 a reduction in telephone call frequency, there is indirect evidence of costs consumers are willing to bear to avoid unwanted calls. One leading service that offers to block inbound ‘‘robocalls’’ to a consumer’s mobile telephone charges $1.99 per month for the service.650 Such services are an imperfect analogy to the rule’s telephone call frequencies for at least two different reasons: First, they are intended to completely block calls rather than limit their frequency; and second, such services block telemarketing calls in addition to debt collection calls, while not blocking all debt collection calls. Given these differences, the price of this service does not provide a precise analog for the value to consumers of the telephone call frequencies. Nonetheless, the example does provide evidence that many consumers are willing to pay prices in the range of $24 per year to avoid unwanted telephone calls.651 Some of the benefits from the final rule’s telephone call frequency provisions could be obtained if consumers used protections they already have under the FDCPA to help them avoid too-frequent debt collection calls. Debt collectors must cease most communications in response to a written request from the consumer to do so. Furthermore, because section 805(a)(1) of the FDCPA prohibits debt collectors from communicating about a debt at any time or place that the debt collector knows or should know is inconvenient to the consumer, debt collectors risk violating section 805(a)(1) if they do not take heed when consumers say they do not want to communicate at certain times or places. However, many consumers may not want to completely cease communication about a debt because, for example, debt collectors who cannot recover through such communications may initiate litigation to recover on the debt. Additionally, consumers who tell debt collectors to cease communication orally may not benefit because some 650 Nomorobo, https://www.nomorobo.com (last visited Oct. 22, 2020). 651 Another source of indirect evidence of the value to consumers of reduced telephone call frequency is the Bureau’s consumer complaints. Based on the Bureau’s records, the average time for a consumer to file a complaint with the Bureau by telephone or through the web portal is approximately 15 minutes, although this varies over time and across complaint categories. Valuing consumers’ time using the average U.S. private sector wage of approximately $27 per hour suggests that some consumers are willing to give up approximately $6.75 worth of their time in hopes of reducing call frequency from one debt collector. See Bureau of Labor Statistics, U.S. Dep’t of Labor, Economic News Release: Employment Situation, table B–3 (Feb. 1, 2019), https://www.bls.gov/ news.release/empsit.t19.htm. PO 00000 Frm 00137 Fmt 4701 Sfmt 4700 76869 debt collectors may not honor consumers’ requests to cease communications unless they are made in writing. In the Debt Collection Consumer Survey, 42 percent of respondents who had been contacted about a debt in collection reported having requested that a creditor or debt collector stop contacting them.652 These respondents generally did not make the request in writing.653 Of these consumers, approximately 75 percent reported that the creditor or debt collector did not stop attempting to contact them.654 As discussed above, technological solutions are also increasingly available to consumers who want to avoid certain telephone calls and may be used to screen out calls from some debt collectors. However, such solutions may be under-inclusive (in that they do not screen out telephone calls from all debt collectors) or over-inclusive (in that a consumer may want to maintain some telephone contact with a debt collector rather than eliminating all calls from that debt collector). Potential Costs to Consumers Consumers may benefit from communicating with debt collectors about their debts. For consumers being contacted about a debt they in fact owe, communicating with the debt collector may help consumers resolve the debt, which could help avoid further fees and interest, adverse credit reporting, or lawsuits. A few commenters made these points, saying that the proposed brightline limits on telephone call frequency would affect access to and the cost of credit and would lead to more negative credit reporting and litigation. For consumers being contacted about a debt they do not owe, communications from debt collectors may alert consumers to errors in their credit reports or that they are victims of identity theft. During the meeting of the Small Business Review Panel, some debt collectors said that the frequency limits that were then under consideration could extend the period needed to establish contact with a consumer, as further discussed below under ‘‘Potential costs to covered persons.’’ If the telephone call frequencies in the final rule mean that debt collectors are less able to reach some consumers, or that communication with some consumers is delayed, those consumers may be harmed by missing 652 CFPB Debt Collection Consumer Survey, supra note 16, at 35, table 17. 653 Of consumers who asked not to be contacted, 87 percent said they made the request by telephone or in person only. Id. at 34–35. 654 Id. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76870 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations an opportunity to resolve a debt or to resolve a debt sooner. To quantify any such harm, the Bureau would need data to estimate how the telephone call frequencies in the final rule will affect whether and when debt collectors communicate with consumers as well as the harm consumers experience if they do not communicate with debt collectors. In its discussion below of costs to covered persons, the Bureau discusses the available evidence about how the telephone call frequencies in the final rule will affect whether debt collectors communicate with consumers. As discussed there, the data are limited, but evidence the Bureau does have suggests that, if debt collectors limit their calling to the frequency levels specified in final § 1006.14(b)(2), it might somewhat reduce the number of consumers reached by telephone within a few months after a debt collector starts attempting contact, but that the reduction is likely to be limited to a relatively small fraction of debts. The Bureau does not have representative data that can be used to quantify the harm consumers experience when they do not communicate with debt collectors, or when those communications are delayed. If consumers do not communicate with debt collectors about debts, they could suffer additional harm from debt collection in some cases, particularly if the debt collector or creditor initiates a lawsuit. A suit could lead to increased fees, legal costs, and the possibility of a judgment that could lead to garnishment of wages or other legal steps to recover the debt. One large debt buyer’s comment included an analysis of its own data, which found that delaying contacting a consumer by two, four, or 12 months increased the probability of litigation by 15, 19, and 35 percent, respectively. This commenter did not state how much the proposed bright-line limits on telephone call frequencies would delay consumer contact but did state that raising the proposed seven telephone call weekly frequency limit to 15 calls per week would reduce its number of referrals to litigation by 2,459 consumers per year. These data confirm the general principle above, that some consumers may face litigation costs as a consequence of the telephone call frequency levels, but they do not provide enough information for the Bureau to assess the size of the effect. To assess this, the Bureau would need to know how much the rule would be expected to delay consumer contact. For instance, as discussed below, the Bureau estimated in the proposal based VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 on one debt collector’s calling data that the proposed bright-line telephone call frequency limits would increase the time to first contact by an average of about one week. Even taking the commenter’s analysis as given, if the average delay is approximately a week, this would have very different implications for litigation overall compared to an average delay of approximately six months. In addition, both the Bureau’s calling data and the commenter’s litigation likelihood data are each from a single firm and thus unlikely to be representative of the market as a whole. The Bureau expects the delay in making contact, and any resulting increase in litigation, to vary by the age of debt, the type of debt, and firm-specific practices. To the extent that some debt collectors currently call less than the final rule’s telephone call frequencies to avoid legal risks, such debt collectors could perceive a reduction in legal risk that leads them to increase their calling frequency as a result of the final rule. This would result in costs to some consumers if they find the increase in call frequency harmful. Some consumer advocate commenters echoed this point but did not provide any data to help quantify potential increases in telephone call frequency or the effects of such increases on consumers. Because consumers can rebut the presumption that telephone call frequencies below those in final § 1006.14(b)(2) comply with FDCPA section 806(5), any increase in harassment as a result of the provision may also be limited, compared to the bright-line limit in the proposal that the commenters expressed concern about. Potential Benefits to Covered Persons As with several other provisions of the rule, the rebuttable presumptions of compliance and violation with § 1006.14(b)(1) and FDCPA section 806(5) based on the frequencies with which debt collectors placed telephone calls may reduce legal uncertainty about the interpretation of existing FDCPA language. Frequent telephone calls are a consistent source of consumer-initiated litigation and consumer complaints to Federal and State law enforcement agencies. By establishing a standard for call frequency, this provision makes it easier for debt collectors to know what calling patterns are permitted and reduce the costs of litigation and threats of litigation. To the extent that some debt collectors currently call less than the telephone call frequencies to avoid legal risks, they may call more frequently if they see the provision as PO 00000 Frm 00138 Fmt 4701 Sfmt 4700 reducing those legal risks, potentially increasing collection revenue. Some debt collectors might also benefit from a reduction in calls made by other debt collectors. The Bureau understands that many consumers have multiple debts being collected by different debt collectors.655 In seeking payments from consumers, multiple debt collectors compete with each other to obtain consumers’ attention and seek payment, which can lead to a large aggregate number of debt collection calls, potentially overwhelming some consumers and making them less likely to answer calls or otherwise engage with debt collectors.656 This in turn could make it harder for each debt collector to recover outstanding debt.657 Thus, one potential benefit to debt collectors of the provision’s telephone call frequencies is a lower frequency of telephone calls by other debt collectors, which could make consumers more likely to engage and repay. In addition, some debt collectors specialize in approaches to collection that do not rely on frequent call attempts, and these debt collectors may benefit from the telephone call frequency provision. In particular, debt collectors who focus on litigation and those who communicate with consumers primarily by media not covered by the provision, such as letters and email, may be more effective in communicating with consumers relative to debt collectors who focus on communicating by telephone. This, in turn, may increase their market share at the expense of debt collectors who are more dependent on frequent calls. Potential Costs to Covered Persons This provision imposes at least two categories of costs on debt collectors. First, it means that debt collectors must track the frequency of outbound telephone calls, which will require many debt collectors to bear one-time costs to update their systems and train staff, and which will create ongoing costs for some debt collectors. Second, for some debt collectors, the provision may lead to a reduction in the frequency with which they place telephone calls to consumers, which could make it harder 655 The Bureau’s survey indicates that 72 percent of consumers with a debt in collection were contacted about two or more debts in collection, and 16 percent were contacted about five or more debts. Id. at 13, table 1. 656 For example, borrowers could simply ignore telephone calls or could adopt call screening or blocking technology. 657 In other words, debt collectors may face a ‘‘prisoner’s dilemma,’’ in which each debt collector has incentives to call more frequently even though debt collectors might collectively benefit from a mutual reduction in call frequency. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations to reach consumers and delay or reduce collections revenue. With respect to one-time implementation costs, many debt collectors will incur costs to revise their systems to track telephone call frequencies. Such revisions could range from small updates to existing systems to the introduction of completely new systems and processes. The Bureau understands that larger debt collectors generally already implement system limits on call frequency to comply with client contractual requirements, debt collector internal policies, and State and local laws.658 Such debt collectors might need only to revise existing calling restrictions to ensure that existing systems track telephone calls in a manner consistent with the new provision. Larger collection agencies might also need to respond to client requests for additional reports and audit items to verify that they comply with the provision, which could require these agencies to make systems changes to alter the reports and data they currently produce for their clients to review. Smaller debt collectors and collection law firms are less likely to have existing systems that track or limit calling frequency and may therefore face larger costs to establish systems to do so. However, many smaller debt collectors report that they generally attempt to reach each consumer by telephone only one or two times per week and generally do not speak to a consumer more than one time per week, which suggests that their practices would afford them a presumption of compliance (and actual compliance, depending on the circumstances) with respect to telephone call frequencies under the final rule.659 For such debt collectors, existing policies may be sufficient to ensure compliance with the provision, although they may incur one-time costs to establish systems for documenting compliance. With respect to ongoing costs of compliance, the Bureau expects that the telephone call frequencies specified in § 1006.14(b)(2)(i)(A) could reduce some debt collectors’ ability to reach consumers, particularly when the debt collector has not yet established contact with a consumer. These impacts are discussed below. The Bureau’s understanding, based on feedback from small entity representatives and other industry outreach, is that the frequency of one telephone conversation per week in final § 1006.14(b)(2)(i)(B) is unlikely to affect debt collectors’ ability to 658 See CFPB Debt Collection Operations Study, supra note 34, at 28–29. 659 See id. at 29. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 communicate with consumers in most cases.660 Several industry commenters noted ambiguities regarding how the proposed telephone call frequency limits would work if a consumer has multiple debts or if there are multiple consumers on an account. These commenters argued that managing these ambiguities would lead to additional ongoing costs of compliance. As discussed in part V, in the final rule the Bureau has clarified in the official commentary how debt collectors should count calls in various circumstances. This should reduce the ongoing costs of compliance with these provisions compared to the proposal. The final telephone call frequency provisions may cause many debt collectors to place telephone calls less frequently than they currently do. This decrease in telephone calls may impose ongoing costs on debt collectors by increasing the time it takes to establish contact with consumers, all else equal. Most debt collectors currently rely heavily on telephone calls as a means of establishing contact with consumers, although other provisions of this final rule are intended to facilitate debt collectors’ use of electronic communications. While debt collectors generally send letters in addition to calling,661 the Bureau understands that response rates to letters can be quite low. If contact with consumers is delayed, it will delay collection revenue and may reduce revenue if consumers who are reached later are less willing or able to repay the debt. In addition, if the debt collector is unable to reach the consumer during the period that the owner of the debt permits the debt collector to attempt to collect the debt, 660 The impact might be greater if consumers could not consent to more frequent contact. For example, if a debt collector reached a consumer on the telephone and the consumer said it was not a good time to speak, then the rule would permit the debt collector and consumer to agree to speak again at a specified time within less than one week. See the section-by-section analysis of § 1006.14(b)(3)(i); see also comment 14(b)(2)(ii)–2.iii, which clarifies that a factor that may rebut the presumption of a violation is whether, if the exclusion in § 1006.14(b)(3)(i) does not apply, the debt collector placed a telephone call in response to the consumer’s request for information. Similarly, the Bureau expects that debt collectors will be largely unaffected by the application of the telephone call frequencies to location contacts with third parties because the Bureau understands that, while location calls may be made to several numbers, they do not generally involve frequently calling each number. 661 In the Bureau’s survey, 85 percent of respondents who had been contacted by a debt collector said that they had been contacted by telephone and 71 percent said that they had been contacted by letter. Respondents were asked to select all ways in which they had been contacted. CFPB Debt Collection Consumer Survey, supra note 16, at 29–30, table 14. PO 00000 Frm 00139 Fmt 4701 Sfmt 4700 76871 then reducing call frequency in accordance with the provision might prevent a debt collector from reaching the consumer entirely.662 A creditor trade association commenter provided some data that helps to characterize the delays in collection that result from reduced calls made by creditors. The commenter cited two unrelated randomized controlled trials conducted by two of its members, both automotive lenders. The trials estimated the impact on the likelihood of accounts becoming more severely delinquent (i.e., roll rates) by randomly reducing calls to consumers at risk of becoming 31, 61, or 85 days past due on their accounts.663 The first trial reduced calling from an average of 1.06 call attempts per day to an average of 0.76 call attempts per day. The figures presented showed substantial increases in roll rates, but no confidence intervals were presented. The second trial reduced calling from three calls per telephone number per day to three calls per consumer per day then to two calls per consumer per day. The reduction in calls generally increased roll rates, but the differences were often not statistically significant. One debt collection industry commenter stated that it requires an average of 16 calls to reach each consumer. This commenter argued for a limit of 16 calls per week on the basis that most consumers have multiple numbers that have to be tried before a right-party contact (RPC) is achieved, but the commenter did not provide any information as to the expected impact of the proposed frequency limits. Another industry commenter, a large debt buyer, stated that, when searching for a consumer, it places between 50 and 75 calls per debt before achieving RPC. This commenter argued for 15 calls per week, again noting that consumers having multiple telephone numbers increases the number of calls needed to achieve an RPC. The commenter reported that, if the proposed limits were increased to 15 per week, 9,629 more of their consumers would enter a repayment plan and 2,459 fewer would have their account forwarded for litigation. The commenter, however, did 662 If the provision were to cause some debt collectors to lose revenue for this reason, the amounts not collected would generally be transferred to another party: either to consumers (if the amounts were never collected) or to another debt collector (if the amounts were collected through further collection efforts, including through a lawsuit). 663 Because these trials were conducted by firstparty creditors seeking to collect on accounts in relatively early stages of delinquency, their results may not apply to accounts subject to third-party debt collection. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76872 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations not provide any insights into its methodology or the statistical precision of its estimated effects. Some debt collectors do not place telephone calls frequently enough to be affected by the telephone call frequencies that establish a presumption of a violation. While the Bureau understands that some debt collectors regularly call consumers two to three times per day or more, other debt collectors have told the Bureau that they seldom call more than once or twice per week. These differences may reflect different debt types and collection strategies. For example, smaller debt collectors frequently retain debts indefinitely, and they may face less pressure to reach consumers quickly than debt collectors who collect debts for a limited period. Debt collectors who focus on litigation may also place less emphasis on establishing telephone communication with consumers. Some debt collectors have indicated that frequent calling is especially important if the debt collector has multiple potential telephone numbers and does not know the best way to reach the consumer.664 Additionally, some debt collectors specialize in attempting to collect debts for which the creditor has lost contact with the consumer, and frequent call attempts to establish contact with the consumer may be especially important for such debt collectors. For debt collectors who currently call consumers more frequently than the presumptive cap but who will choose to limit their calling such that they receive a presumption of compliance, the telephone call frequencies could affect when and if they establish communication with consumers. The Bureau does not have representative data that permit it to quantify how the telephone call frequencies would impact how long it takes to establish contact or whether contact is established at all. However, the Bureau has analyzed microdata on outbound calling from one large collection agency (‘‘Calling Data’’) that helps illustrate the potential impact of the telephone call frequencies. While the data from this agency may not be representative of the market as a whole, the results of the Bureau’s analysis of the data are generally consistent with summary information shared by other large collection agencies.665 664 See, e.g., Small Business Review Panel Report, letter from FMA Alliance Ltd., supra note 37, at appendix A–6. Multiple industry and trade association commenters on the proposal echoed this sentiment. 665 The summary information was shared with Bureau staff during industry outreach meetings that VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 The Calling Data show that, in the first eight weeks of collections, the overall frequency of call attempts to consumers who have not yet spoken with the debt collector declines slowly. Roughly 40 percent of consumers receive more than seven calls per week in the first four weeks, but this drops to 27 percent by week eight. Although the overall distribution of contact attempts changes slowly from week to week, the data show that, over time, some consumers get called more, while others get called less. Consumers with whom an RPC has been established and who made no payment and consumers for whom RPC has not been achieved tend to receive the most collection calls. Consumers who have engaged but made a partial payment receive fewer calls. Moreover, the debt collector who provided the Calling Data engages in ‘‘call sloping,’’ meaning that it places fewer total calls each week that it works a portfolio of debts. The Calling Data show that, for the debts included in that data set, consumers who take longer to reach are not less likely to pay. Although the probability that each call results in an RPC declines with successive calls, the rate at which RPCs are translated into payments increases steadily through at least the first 50 calls. As a result, an RPC that is achieved in any of the first 50 calls is approximately equal in value to the debt collector as an RPC that is achieved with fewer calls, suggesting that call attempts remain important to debt collection even after many calls have been attempted. Summary data provided by some other large debt collectors indicate that the number of calls needed to reach consumers can vary considerably, but that the majority of debts would not be affected or would be affected very little by reducing current telephone call frequencies to levels that would afford the debt collector a presumption of compliance under the final rule. These data indicate that 50 percent or more of consumers who are ultimately reached by these debt collectors are reached within the first seven calls overall (not per week), though other debt collectors have indicated that it takes 15 to 21 calls to reach 50 percent of such consumers. These data also indicate that reaching 95 percent of consumers may take between 50 and 60 calls, meaning that 5 percent of consumers reached are are part of the Bureau’s routine market-monitoring efforts. Although most debt collectors are small firms, evidence suggests that a majority of debt collected is collected by collection agencies with 100 or more employees. See CFPB Debt Collection Operations Study, supra note 34, at 7. PO 00000 Frm 00140 Fmt 4701 Sfmt 4700 contacted only after more than 50 or 60 calls have been placed. There are limitations to using the data discussed above to make inferences about how the telephone call frequencies in the final rule may affect debt collectors’ ability to reach consumers. This is in part because establishing contact depends on factors other than the number of calls made (e.g., the time of day called) and in part because debt collectors who wish to operate within the presumption of compliance might change their contact behavior in ways that permit them to reach a given number of consumers with fewer calls, as discussed further below. In addition, other aspects of the rule, including the provision that clarifies the legal status of limited-content messages, could make it easier for debt collectors to reach consumers with fewer calls. The data discussed above may not be representative, meaning that some debt collectors might need more or fewer calls to reach similar numbers of consumers. Overall, however, the available data suggest that reducing telephone call frequencies to levels that afford a debt collector a presumption of compliance would somewhat reduce the ability of debt collectors to reach consumers by telephone within a few months, but that the reduction is likely to be limited to a relatively small fraction of debts. This could affect primarily debt collectors who receive placements of debts for four to six months and do not engage in litigation. Such debt collectors could lose revenue if they are unable to establish contact with consumers or if collections based on telephone calls become less effective and, as a result, creditors place more debts with debt collectors specializing in litigation. To illustrate potential effects of the provision on debt collector revenue, the Bureau used the Calling Data to simulate the effect of the provision under an assumption that the debt collector limits telephone call frequency such that it would receive a presumption of compliance under the rule, under specific assumptions about how limiting calls would affect collections. That is, the Bureau created a ‘‘but-for’’ version of the Calling Data in which calls that would exceed those limits were assumed to have been either delayed or eliminated, and the Bureau compared RPCs and payments in this ‘‘but-for’’ data with the actual outcomes achieved by the debt collector. This is at best a rough approximation of the effects of the provision, both because it relies heavily on the assumptions made and because it is based on the data of one particular debt collector, and may E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations not be representative of other firms in the industry. The Bureau created two versions of its simulation analysis, one of which uses more conservative assumptions as to the impact of limiting telephone calls on successful contacts and collections. However, the Bureau believes that even the more conservative version of this analysis likely overstates the potential effects of reducing call frequency because it cannot reflect any changes the debt collector would make to its calling strategy in response to the reduced frequency. That is, one would expect a rational collection firm to strategically choose which calls to eliminate or delay in order to reduce call frequency, while the Bureau’s analysis must to some extent select calls arbitrarily. In particular, at least for the debt collector who provided data to the Bureau, debts with multiple telephone numbers would be most likely to be affected by a decision to limit call frequency. The Bureau is not able to identify telephone type (such as mobile vs. landline, or work vs. home) in the data, but debt collectors are often able to do so. The Bureau would expect debt collectors in similar situations to omit calls to less promising telephone numbers, rather than to call the same numbers, and to cease calling earlier in the process. In the first, more conservative version of the simulation (Version 1), the Bureau assumed that all calls the debt collector did not make each week were simply shifted to the next week.666 The Bureau assumed that any successful RPCs that occurred after the 25th simulated week would never occur because in reality the debt collector was only contracted to collect on the debts in the data for up to 25 weeks. Version 1 implicitly assumes that the probability that a call results in an RPC does not depend on how much time has passed since collection began, only on the number of calls that have been made. In a second, more aggressive version of the simulation (Version 2), the Bureau assumed that any calls that would not be made because they exceed seven calls per week are eliminated, rather than shifted forward. When a consumer’s first RPC would have occurred on a call that would not be made in a given week, the Bureau treats the data for that debt as censored as of that week.667 The Bureau made additional assumptions that were common to both versions of the simulation. For inbound calls, that is, calls from consumers to the debt collector, the Bureau assumed that the calls were not delayed or eliminated. Thus, the Bureau is implicitly assuming that inbound calls are prompted by letters from the debt collector or other external factors, rather than by a number of calls.668 The Bureau made additional assumptions to simulate the effect on payments. The Calling Data indicate if the consumer ever paid and how much, but they do not always indicate when payment was received—the Bureau observes the timing of payments only if the consumer made payment over the telephone. About half of all consumers in the data who make at least a partial payment do so without ever having an RPC. For the simulation, the Bureau assumed that, if the debt collector achieved at least one 76873 RPC in the simulation, then the amount of any payments made by the consumer is unchanged. If the consumer received an RPC in the original data but did not receive any RPC in the simulation, the Bureau assumed that any payments recorded in the original data did not occur for purposes of the simulation. Table 2 shows the results of the simulation analysis described above. Under Version 1, the reduced call frequency would reduce first RPCs by 2.76 percent of the first RPCs and dollars collected by 1 percent.669 The average first RPC would be delayed by less than one week. These effects are not evenly distributed across consumers, however. In the simulation, the debt collector is much more likely to miss an RPC or payment if it calls multiple telephone numbers for a consumer.670 For consumers where the debt collector calls only one telephone number, hardly any miss an RPC in the simulation, and the average delay is almost zero. This is because the debt collector rarely calls a particular telephone more than seven times per week. In contrast, for consumers where the debt collector calls five or more telephone numbers, the simulation predicts that the reduced call frequency will eliminate more than 7 percent of RPCs and delay the remaining RPCs by almost two weeks. The assumptions of Version 2 suggest a more substantial effect on RPCs and collections, although the Bureau notes again that even Version 1 likely overstates the potential effect of the provision. The simulation predicts that RPCs would decline by 15.7 percent, and dollars collected would decline by 7.7 percent. TKELLEY on DSKBCP9HB2PROD with RULES3 TABLE 2—RESULTS OF SIMULATION ANALYSIS Version Assumed effect of call frequency provision Version 1 .......................... Version 2 .......................... Calls above seven roll to next week .......................... Calls above seven eliminated ..................................... Percent change in RPCs within 25 weeks Average delay in remaining RPCs (in weeks) ¥2.76 ¥15.7 0.85 0 Percent change in dollars collected within 25 weeks ¥1.04 ¥7.7 Overall, there is reason to expect that the simulation analysis overstates the potential effect of the final rule’s telephone call frequencies because the simulation ignores any changes debt collectors would make to mitigate the 666 For example, if the debt collector called a particular consumer 10 times in the first week, eight times in the second week, and five times in the third week, in the Bureau’s simulation, the last three calls in the first week would become the first three calls in the second week. The second week would then have a total of 11 calls, and the last four calls would become the first four calls in the third week. The third week would then have eight calls, so the last call would become the first call of the fourth week, and so on. 667 That is, the Bureau assumes that it does not know when or whether that consumer would ever have a successful RPC, only that there was no RPC up until that week. The Bureau then calculates the percentage of debts with an RPC by the 25th week of collections using the Kaplan-Meier product limit estimator for the survival function, a standard tool for measuring rates of an outcome when some observations are censored. It is necessary to assume that such consumers are censored because in reality after an initial RPC, the debt collector generally changes its calling behavior, particularly if it obtains a promise to pay. 668 The debt collector who provided the data does not leave voicemails, but it is possible that consumers eventually return a call in response to repeated missed calls on their telephones. 669 The change in payments is less than the change in RPCs both because some consumers pay without an RPC (and the Bureau assumed this did not change in the simulation) and because consumers in the data who had an earlier first RPC, and thus were less likely to be affected by the frequency limits, were also more likely to pay in full. 670 The Bureau does not observe in the data how many telephone numbers the consumer has, only how many the debt collector chooses to call. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 PO 00000 Frm 00141 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 76874 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 effects of reduced call frequency. The simulation also assumes that debt collectors will not take advantage of the flexibility afforded by the rebuttablepresumption approach to call more frequently in certain circumstances. Nevertheless, certain assumptions that the Bureau makes for simplicity likely reduce the predicted impact of the provision. In particular, in Version 1 the Bureau assumes that a call with an RPC that is shifted later due to reduced call frequency will remain an RPC. This may not be true in practice. Empirically, the probability that a call results in an RPC declines over time—this is evident in the data examined by the Bureau and is consistent with input from industry stakeholders. If consumers are less likely to answer the telephone as time passes, irrespective of the number of calls debt collectors have made, reducing call frequency could reduce payments and revenue by a larger fraction than the simulation suggests (assuming no re-optimization by debt collectors).671 A trade group commenter argued that the Bureau’s analysis of the Calling Data was unreliable for several reasons. The commenter asserted that the Bureau’s analysis was invalid because it did not describe the sample size, because it did not present ‘‘methodology’’ or ‘‘algorithms,’’ and because it did not list assumptions. The Bureau believes the analysis does provide information relevant to understanding potential costs of the rule. The Calling Data contains proprietary information of the submitter that includes confidential commercial information and that is protected by the Bureau’s regulations on the protection of confidential information.672 The Bureau’s confidentiality regulations permit disclosure of materials derived from or 671 Another assumption that might reduce the predicted effect of reduced call frequency in both versions is the assumption that payment is tied to whether or not the first RPC occurs. For instance, in Version 1, the Bureau assumed that a consumer would not pay only if the first RPC would have occurred after the 25th week in the simulation. Yet about a quarter of consumers in the data who eventually pay some portion of their debt had at least two RPCs. It may be that the subsequent RPCs were necessary for the payment to occur, but the Bureau’s analysis did not track whether subsequent RPCs occurred after the 25th week under the simulated frequency reductions. The Bureau also notes that there is an implicit assumption in both versions of the simulation that could lead to overstating the effect of the call frequency reduction. The simulation assumes that, if all RPCs for a consumer were eliminated, then the consumer would never pay. Given that, as noted above, a substantial number of consumers in the original data pay despite having no RPCs, it is possible that some consumers whose RPCs were eliminated by the reduced call frequencies would nonetheless pay eventually. 672 See 12 CFR part 1070. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 created using confidential information to the extent that such materials do not identify, either directly or indirectly, any person to whom the confidential information pertains.673 As such, it would not be appropriate to identify the debt collector explicitly. In addition, disclosing the total number of calls likewise would be inappropriate because, for large debt collectors such as the one who provided the calling data, the total number of calls placed in a sixmonth period is likely sufficient to identify the debt collector. The Bureau fully described the methods used to calculate its simulation analysis in the proposal and has repeated that description above. Finally, the discussion of the analysis in the proposal, repeated above, not only described the Bureau’s assumptions but also discusses the effect that each assumption has on the outcome of the analysis in some detail. The Bureau acknowledges the limitations of the Calling Data, particularly for extrapolating to the market as a whole, but finds that these data provide useful information to at least characterize the scale of the probable effects of the final rule. A State Attorney General commenter argued that the Bureau had no evidence that a frequency limit of seven call attempts per seven-day period would yield more consumer engagement and payments than a lower limit such as three call attempts per week. The Bureau acknowledges that it does not have sufficient evidence to quantify the differences in consumer engagement or payments from different telephone call frequencies. However, the Bureau notes that, in its analysis of the Calling Data, a limit of seven calls in a seven-day period led to measurable reductions in RPCs and payments, and that changing the assumptions in the simulation analysis of the calling data had a measurable effect on RPCs and payments even with the same weekly limits. This provides some basis for finding that limiting calls further would reduce payments further for debt collectors who are similar to the debt collector who provided the Calling Data. Debt collectors could take steps to reduce the number of calls necessary to establish contact and mitigate any lost revenue from limiting call frequency so that they maintain a presumption of compliance. As indicated, if multiple telephone numbers are available, debt collectors might reduce their calls to numbers that they can identify as being less likely to yield a successful contact. In addition, the Bureau understands that 673 See PO 00000 12 CFR 1070.41. Frm 00142 Fmt 4701 Sfmt 4700 debt collectors can reduce the number of calls needed to establish an RPC by purchasing higher-quality contact information from data vendors. Such purchases will be worthwhile if their cost is less than the additional revenue expected from higher contact rates. In addition, and as discussed below, the Bureau’s final rule also includes provisions that could reduce the legal risks associated with other means of communication, such as voicemail messages, text messages, or email, which could enable debt collectors to reach consumers more effectively with fewer calls. This could mitigate the impact of limiting telephone call frequencies to establish a presumption of compliance and might mean that the net effect of the rule would be to increase the likelihood that debt collectors are able to reach consumers. In addition, debt collectors who are unable to reach consumers because they wish to operate within the presumption of compliance might still pursue such debts through litigation. To the extent that frequent call attempts play a more important role in collecting certain types of debt relative to others, some debt collectors might shift their business toward collecting those types for which frequent calls are less important. Alternative Approaches To Limiting the Frequency of Telephone Calls and Telephone Conversations The Bureau considered alternatives to the final rule’s rebuttable-presumption approach to telephone call frequencies on debt collector telephone calls and telephone conversations. The potential benefits and costs of those alternatives to consumers and covered persons relative to the final rule are discussed briefly below. The proposal would have established a bright-line limit on telephone call frequency rather than a rebuttable presumption. Specifically, proposed § 1006.14(b)(1) set forth the general prohibition, § 1006.14(b)(2) described bright-line frequency limits for telephone calls and telephone conversations during a seven-day period, and proposed § 1006.14(b)(3), (4), and (5) described telephone calls excluded from the frequency limits, the effect of complying with the frequency limits, and a definition, respectively. A bright-line limit on telephone call frequency would provide greater clarity to consumers and debt collectors about whether calling practices comply with the FDCPA. For example, under the proposal, a debt collector who did not place telephone calls to consumers more than seven times in a seven-day period would know that it was complying with E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations the provision, whereas, under the final rule, a debt collector following the same practice would also need to consider whether the presumption of compliance might be rebutted in the case of particular consumers or accounts. This could result in greater compliance costs and greater risk of litigation for debt collectors compared with the proposal. On the other hand, the final rule may provide greater flexibility to debt collectors and additional benefits to consumers compared with the proposal. For consumers, the final rule may provide additional benefits in cases where seven or fewer telephone call attempts per week would be harassing, such as rapid succession calling. For debt collectors, the final rule may make it more possible to reach consumers if they are unable to make contact within seven call attempts in a week and additional calls would not be harassing. The Bureau also considered a broader version of § 1006.14(b)(1) that would have set a numerical prohibition on repeated or continuous attempts to contact a person by other media, such as by sending letters, emails, or text messages to a person in connection with the collection of a debt. Such an approach could provide additional benefits to consumers if they are harassed or abused by frequent communication from debt collectors through such media. However, during the SBREFA process, some small entity representatives suggested that compliance with a rule that limited the frequency of communications by media other than telephone calls would be more costly than compliance with a rule that applied only to calls. These small entity representatives indicated that, while many existing debt collection systems already track the frequency of telephone calls, modifying systems to track communication by other media would be significantly more expensive. As discussed in part V, because debt collectors do not presently engage in widespread use of electronic communications, the Bureau concludes that it does not have sufficient information to warrant applying numeric limitations to electronic communications.674 Debt collectors will still need to ensure that their communications other than telephone calls do not violate the FDCPA section 806’s general prohibition on harassment, oppression, and abuse, but the final rule will not require them to 674 The Bureau received no comments advocating that any frequency limits be applied to mailed communications, and the Bureau is unaware of other evidence suggesting that would support such a limit. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 develop systems that treat telephone calls and other communications equivalently for purposes of tracking contact frequency. The Bureau also considered a proposal that would have limited the number of calls permitted to any particular telephone number (e.g., at most two calls to each of a consumer’s landline, mobile, and work telephone numbers). The Bureau considered such a limit either instead of or in addition to an overall limit on the frequency of telephone calls to one consumer. Such an alternative could potentially reduce the effect of frequency limits on debt collector calls if it permitted more total calls when consumers have multiple telephone numbers. Such an approach could impose smaller costs on debt collectors in some cases compared to the final rule by making it easier to contact consumers for whom debt collectors have multiple telephone numbers. At the same time, such an approach might provide smaller consumer benefits compared to the final rule by potentially permitting a high frequency of calls in some cases. Some consumers could receive (and some debt collectors could place) more telephone calls simply based on the number of telephone numbers that certain consumers happened to have (and that debt collectors happened to know about). Such an approach also could create incentives for debt collectors, for example, to place telephone calls to less convenient telephone numbers after exhausting their telephone calls to consumers’ preferred numbers. 3. Limited-Content Messages Section 1006.2(j) defines limitedcontent message as 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. In particular, § 1006.2(j)(1) provides that a limitedcontent message must include all of the following: 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 that the consumer can use to reply to the debt collector. Section 1006.2(j)(2) provides that a limited-content message also may include one or more of the following: A salutation, the date and time of the message, suggested dates and times for the consumer to reply to the message, and a statement that if the consumer replies, the consumer may PO 00000 Frm 00143 Fmt 4701 Sfmt 4700 76875 speak to any of the company’s representatives or associates. Section 1006.2(b) and (d), which define the terms attempt to communicate and communication, respectively, provide that a limited-content message is an attempt to communicate but is not a communication. Potential Benefits and Costs to Consumers As discussed below under ‘‘potential benefits and costs to covered persons,’’ many debt collectors currently do not leave voicemail messages for consumers because of the risk of litigation. The Bureau expects that, by clarifying that ‘‘communication’’ for purposes of the FDCPA does not include the limitedcontent message, the rule will make debt collectors more likely to leave voicemail messages if they are unable to reach consumers by telephone. In general, an increased use of voicemail messages should make it more convenient for consumers to communicate with debt collectors because consumers will be better able to arrange a discussion at a time that is convenient for them rather than at a time when the debt collector happens to reach them. Related to this, some consumers express annoyance at receiving repeated calls from callers who do not leave messages. To the extent that debt collectors respond to the rule by leaving messages when a consumer does not answer the telephone, the provision might help address that problem. If more debt collectors are willing to leave messages, it may lead to an indirect benefit to consumers by reducing the number of unwanted call attempts without reducing the likelihood that consumers communicate with debt collectors. Although some debt collectors may leave frequent messages or continue to call frequently despite having left messages, an industry trade publication recommends a best practice of waiting three to seven days after leaving a message to give the consumer an opportunity to return the call.675 During the meeting of the Small Business Review Panel, small entity representatives indicated that limitedcontent messages would reduce the need for frequent calling.676 One commenter on the proposal, a large debt buyer, indicated the same. Thus, some consumers may experience reduced numbers of calls if more debt collectors 675 insideARM, Operations Guide: Call Volume 10 (Nov. 14, 2014). 676 Small Business Review Panel Report, supra note 37, at 25. E:\FR\FM\30NOR3.SGM 30NOR3 76876 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations leave messages and wait for a return call. Debt collectors cannot be certain that a voicemail message will be heard only by the consumer for whom it was left. Some consumers could be harmed by an increase in limited-content messages, either because they are harassed by frequent messages or because the messages increase the risk of third-party disclosure. Although the message itself would not convey any information about the debt, the message will include a business name for the debt collector that does not indicate that the debt collector is in the debt collection business and some third parties who hear the message may assume or discover that the caller is a debt collector attempting to collect a debt from the recipient. On the other hand, the provision might lead debt collectors who currently leave more detailed messages that pose greater risk of revealing the purpose of the call to third parties to switch to messages that pose less risk. In such instances, the impact of the provision may be to reduce the likelihood of third-party disclosures. Multiple consumer advocate and other commenters argued that the proposed limited-content message would quickly become associated with debt collectors, such that a third party overhearing a limited-content message would immediately recognize it as a message from a debt collector. These commenters asserted that as a result, consumers would suffer privacy harms from the use of limited-content messages. Whether or not the commenters are correct in their argument, the changes the Bureau has made to the required content of the limited-content message in the final rule should, on balance, reduce the privacy risks to consumers. By including the name of the company (that does not indicate that the debt collector is in the debt collection business) but not the consumer, the limited-content message will both sound less unique (the commenters noted that few legitimate businesses currently leave messages without leaving their business name) and will not identify the call as being intended for a particular consumer. In addition, the Bureau notes that the potential scope of harm from third parties overhearing voicemail messages is smaller than it may have been in past years and is shrinking. As more consumers transition away from landline telephones to personal mobile phones, the possibility of a third party overhearing a voicemail message becomes less likely, as voicemails on mobile devices generally are not played in a way that allows bystanders to overhear. A voicemail on a mobile device may have no more risk of thirdparty disclosure than other forms of communication, and in some circumstances may have less risk. Survey results indicate that consumers are concerned about third parties overhearing voicemail messages left by debt collectors, with nearly twothirds of consumers saying it is very important that others do not hear or see a message from a creditor or debt collector, as shown in Table 3 below. However, most respondents also said that they would prefer that a voicemail message from a debt collector indicate that the caller is attempting to collect a debt. Even among consumers who said it was ‘‘very important’’ that others not see or hear messages about debt collection, 63 percent said they preferred that the purpose of the call be included in a message from a creditor or debt collector attempting to collect the debt. This suggests that many consumers either do not expect third parties to overhear voicemail messages left for them or attach greater importance to knowing what the call is about than to the risk a third party will overhear the message. TABLE 3—PREFERENCES REGARDING OTHERS SEEING OR HEARING DEBT COLLECTOR MESSAGE [Percent] Importance of others not seeing or hearing a message All consumers Very important ......................................................................................................................................................... Somewhat important ................................................................................................................................................ Not at all important .................................................................................................................................................. TKELLEY on DSKBCP9HB2PROD with RULES3 Potential Benefits and Costs to Covered Persons The Bureau understands that many debt collectors avoid leaving voicemail messages, or leave them only under limited circumstances, because of the legal risk associated with doing so. Currently, debt collectors leaving a voicemail message for a consumer either do not include the statement that the call is from a debt collector (the socalled ‘‘mini–Miranda’’ warning) and risk being deemed in violation of FDCPA section 807(11) or include that statement and risk that the existence of a debt will be disclosed to a third party hearing the message and that they will be deemed in violation of FDCPA section 805(b). The provision in the final rule will reduce both direct and indirect costs to some debt collectors by VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 interpreting the FDCPA not to require the mini–Miranda warning in a limitedcontent message, which will reduce legal risks associated with such messages. Debt collectors may indirectly benefit from clarification of the type of messages that may be left because messages may make it easier to establish contact with consumers. Currently, many debt collectors limit or avoid leaving voicemail messages for fear of FDCPA liability.677 Leaving voicemail messages may be a more efficient way of reaching consumers than repeated 677 In the Bureau’s Debt Collection Operations Study, 42 of 58 respondents reported sometimes leaving voice messages. Of those that do leave voice messages, many reported leaving them only under certain specific circumstances. See CFPB Debt Collection Operations Study, supra note 34, at 29– 30. PO 00000 Frm 00144 Fmt 4701 Sfmt 4700 64 23 14 Consumers contacted about a debt in collection 65 24 10 call attempts without leaving such messages. For example, consumers who do not answer calls from callers they do not recognize might return a voicemail message. If so, the provision could permit debt collectors to reach such consumers with fewer contact attempts. Commenters were divided on whether the proposed limited-content message would increase the ability of debt collectors to reach consumers. An industry trade group commenter and a State Attorney General commenter argued that consumers would not respond to the proposed limited-content messages and would treat them as spam calls. A different industry trade group commenter argued that the proposed limited-content message would in fact increase consumer engagement and reduce the need for repeated telephone E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations calls. As discussed above, the Bureau has revised the requirements for the limited-content message in ways that should decrease the likelihood that consumers treat the messages as spam, such as by requiring debt collectors to include the name of the collection firm that does not indicate that the debt collector is in the debt collection business. As such, the Bureau believes that it is more likely than not that the provision will make it easier for debt collectors to establish contact with consumers. The provision may also reduce the direct costs of voicemail-related litigation, which can be large.678 While the Bureau does not have data on the costs to debt collectors of defending such litigation, some debt collectors have suggested that resolving an individual lawsuit typically costs $5,000 to $10,000, and resolving a class action could cost much more. Moreover, debt collectors report that the large majority of threatened lawsuits are settled before a suit is filed, so the frequency of filed lawsuits substantially understates how often debt collectors bear costs from claimed FDCPA violations.679 The Bureau anticipates that the clarification of the definition of communication will significantly reduce the legal risk to debt collectors of leaving voicemail messages. The provision generally does not require debt collectors to incur new costs because it does not require any debt collectors to change their policies regarding messages. However, in order to obtain benefits from the provision, debt collectors who plan to adopt the practice of leaving limited-content messages will incur one-time costs to develop policies and procedures to implement limited-content messages under the rule and to train employees on these policies and procedures. TKELLEY on DSKBCP9HB2PROD with RULES3 4. Prohibition on the Sale or Transfer of Certain Debts Section 1006.30(b)(1) prohibits a debt collector from selling, transferring for consideration, or placing for collection a debt if the debt collector knows or should know that the debt was paid or 678 There were at least 162 voicemail-related lawsuits filed in 2015 under section 805(b) of the FDCPA, which prohibits third-party disclosures; of these, 11 cases were class actions. In addition, at least 125 voicemail-related lawsuits were pursued under section 807(11), which prohibits communicating with a consumer without providing the mini–Miranda disclosure; of these 49 cases were class actions. See Small Business Review Panel Outline, supra note 36 at 69 n.104 (citing data provided by WebRecon, LLC). 679 Some debt collectors have reported that they receive approximately 10 demand letters for every lawsuit filed and that FDCPA claims are typically settled for $1,000 to $3,000. See id. at 69 n.105. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 settled or discharged in bankruptcy. Section 1006.30(b)(2) creates some exceptions to this prohibition. The Bureau understands, based on its market knowledge and outreach to debt collectors, that debt collectors generally do not sell, transfer, or place for collections debts (other than in circumstances covered in the exceptions) if they have reason to believe the debts cannot be validly collected because they have been paid or settled or discharged in bankruptcy. The final rule provides an exception for transfer of secured debt that has been discharged in bankruptcy, provided that the debt collector provides notice to the transferee that the debt has been discharged. The Bureau understands that, if debt collectors transfer such secured debt, they generally already provide such notice in the ordinary course of business. Therefore, the Bureau expects the benefits and costs of this provision to be minimal. 5. Electronic Disclosures and Communications The final rule includes provisions that clarify how debt collectors can communicate with consumers by email and text message in compliance with the FDCPA and the final rule. With respect to the validation notice, which most debt collectors currently provide by mail, § 1006.42 sets forth standards that debt collectors must meet if they send notices electronically. With respect to any communications about a debt, § 1006.6(d)(3) through (5) specifies procedures that debt collectors may use to send an email or text message to a consumer about a debt such that the debt collector may obtain a safe harbor from civil liability under the FDCPA for an unintentional disclosure of the debt to a third party. Potential Benefits and Costs to Consumers Today, most debt collectors generally communicate with consumers by letter and telephone. If the rule leads debt collectors to increase their use of email and text messages, it will benefit consumers who prefer electronic communications to letters or telephone calls. Many consumers appear to prefer to receive certain disclosures about financial products by electronic means rather than mail. In 2016, of a sample of 203 million active general purpose credit card accounts, approximately 141 million accounts (69 percent of all accounts) were enrolled in online servicing, of which approximately 80 million (39 percent of all accounts) opted into delivery of periodic PO 00000 Frm 00145 Fmt 4701 Sfmt 4700 76877 statements by electronic means only.680 Because consumers who experience debt collection differ from consumers who do not,681 these estimates would be more accurate if the Bureau knew how many consumers who experience debt collection have opted into receiving electronic-only (paperless) disclosures from their creditors. It is not clear whether consumers who experience debt collection would be more or less digitally engaged with disclosures than their counterparts without debt collection experience.682 Other data from the Debt Collection Consumer Survey show that about 15 percent of consumers indicate that email is their most preferred method of being contacted about a debt in collection, with almost half of consumers indicating that a letter is their most preferred method, and about a quarter identifying a telephone as their most preferred method.683 At the time of the survey very few debt collectors communicated by email, whereas many debt collectors communicated by telephone and letter, so survey respondents may have found it more difficult to evaluate their preferences for receiving debt collection communications by email. That said, the lower percentage for email may suggest that consumers are more likely to prefer electronic communications for periodic statements and similar disclosures than for debt collection communications. Taken together, these data suggest that a minority of consumers—between 15 and 39 percent—might prefer electronic validation notices, while a majority—as many as 69 percent—might prefer to receive electronic communications (other than the validation notice) 680 These estimates are based on data reported in Bureau of Consumer Fin. Prot., The Consumer Credit Card Market, at 164–66 (Dec. 2017), https:// files.consumerfinance.gov/f/documents/cfpb_ consumer-credit-card-market-report_2017.pdf. This rate has increased every year since at least 2013. These rates were lower for private label and retail co-brand cards, suggesting that the product’s use case, acquisition channel, and consumer base composition may all affect both provider practices and consumer behavior. 681 See CFPB Debt Collection Consumer Survey, supra note 16, at 15–17. Consumers who have experienced debt collection tend to have lower incomes, be under age 62, and be non-white. 682 An FDIC survey that addressed access to banking services found that the share of respondents accessing bank accounts through online or mobile methods generally increased with income and was lower for respondents aged 65 or more. See Fed. Deposit Ins. Corp., 2017 FDIC National Survey of Unbanked & Underbanked Households at 27 & table 4.4 (Oct. 2018), https:// www.fdic.gov/householdsurvey/. 683 CFPB Debt Collection Consumer Survey, supra note 16, at 23. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76878 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations instead of or in addition to paper communications or telephone calls. As discussed above with respect to the rule’s provisions regarding call frequency, most consumers experiencing debt collection report that debt collectors call too often. The provisions regarding electronic communications may have the indirect effect of reducing call frequency. These provisions may cause debt collectors to substitute email or text messages for telephone calls, and email or text messages may provide an easier channel for consumers to ask debt collectors to call less often. The benefits to consumers of reduced call frequency generally are discussed above. While some consumers prefer not to receive electronic communications from debt collectors, the final rule’s provisions requiring opt-out notices and specifying that consumers can limit the method of communication should reduce any harm to such consumers by making it relatively easy to stop or restrict attempts at electronic communication. Consumer advocates argued that some specific groups may be adversely impacted by specifying how validation notices may be sent by email, including by hyperlink. In particular, these commenters noted that older consumers and poorer consumers are generally less likely to have readily available access to the internet. The commenters expressed concern that these consumers, who may be vulnerable in other ways as well, might not receive required notices and be harmed as a result. The Bureau agrees that some consumers may be less likely than others to receive notices sent electronically. In addition, in quantitative testing completed by the Bureau after publication of the proposal, the Bureau found a strong preference among consumers for receiving validation notices through the mail and much less willingness by consumers to receive validation notices by email or text message.684 As discussed in part V, the Bureau is not finalizing the proposed exemption to the E–SIGN Act and the alternative procedures under which debt collectors could send required disclosures electronically, including through a hyperlink, and is not finalizing the specific safe harbor for sending a validation notice electronically in an initial communication with a consumer. When the validation notice is not part of the initial communication, debt collectors will not be permitted to send it electronically without having obtained the consumer’s E–SIGN 684 See CFPB Quantitative Testing Report, supra note 33, at 33. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 consent. The Bureau does not believe that consumers will generally provide E–SIGN consent if they do not have ready access to email and the internet. In addition, under the final rule (and consistent with the proposal), all required disclosures sent in writing or electronically (including the validation notice sent as an initial communication) must be sent in a manner that is reasonably expected to provide actual notice to the consumer, and in a form that the consumer may keep and access later. This requirement reduces the risk that debt collectors will send validation notices electronically unless they are able to show that the electronic method used to send the validation notice is reasonably expected to provide actual notice to the consumer. The risk of third-party disclosure may be different for electronic debt collection communications than for letters or telephone calls, although the Bureau is not aware of evidence that would indicate whether such risk is higher or lower. Bureau data suggests that almost two-thirds of consumers consider it very important that third parties do not hear or see a message from a creditor or debt collector.685 To the extent that information in an electronic disclosure is less likely or more likely to be seen or heard by third parties than communications by mail or telephone, consumers receiving validation notices electronically are likely to experience a benefit or a cost, respectively. Receiving disclosures electronically rather than in the mail may affect the likelihood that consumers notice and read the disclosures, which could lead to benefits or costs for consumers if they become more or less likely to inadvertently ignore or miss important information. The Bureau does not have information about how frequently consumers currently read validation notices sent by mail or how often they would read disclosures sent electronically.686 685 See CFPB Debt Collection Consumer Survey, supra note 16, at 38. 686 One debt collector who currently communicates with consumers by email reports that 60 percent of consumers open at least one email and 25 percent click a link to review their options. See Small Business Review Panel Report, supra note 37, at 7. As of 2015, about one-tenth of all mass-market credit card consumers accessed their online PDF periodic account statements in the final quarter of the year, which implies that fewer than one-half of consumers who receive only electronic statements viewed those statements. See Bureau of Consumer Fin. Prot., The Consumer Credit Card Market, at 134 figure 8 (Dec. 2015), https://files.consumerfinance.gov/f/201512_cfpb_ report-the-consumer-credit-card-market.pdf. However, the Bureau does not have data about the frequency with which consumers open or otherwise PO 00000 Frm 00146 Fmt 4701 Sfmt 4700 Multiple commenters, including individual commenters, a State Attorney General commenter, and consumer advocate commenters, identified other potential costs to consumers of the proposed electronic communications provisions. Several commenters noted that sending validation notices through a hyperlink would be problematic because of the security risks of clicking on links in emails from unknown senders. In these commenters’ view, consumers would either decline to click on the links and so would not receive important disclosures, or they would click and be more likely to click on dangerous links in the future. Multiple commenters raised the concern that debt collectors would make it difficult to opt out of electronic communications. Under the final rule, for validation notices that are not provided in the initial communication, the requirement to comply with the E–SIGN Act will mean that consumers have consented to receive electronic communications before the validation notice is sent electronically, which should help to address these commenters’ concerns. In addition, under the final rule (and consistent with the proposal), all required disclosures sent in writing or electronically must be sent in a manner reasonably expected to provide actual notice, and in a form that the consumer may keep and access later. This should reduce the risk that debt collectors will send required communications in a manner that consumers are unlikely to read or are unable to keep and access later. In addition, the final rule requires debt collectors that use electronic communications to provide consumers with a reasonable and simple method to opt out of such communications. Potential Benefits and Costs to Covered Persons Debt collectors who send required disclosures electronically rather than sending letters could benefit because they would no longer have to print and mail disclosures. The Bureau estimates that the marginal cost of mailing a validation notice is approximately $0.50 to $0.80, whereas the marginal cost of sending the same communication by email would be approximately zero. The Bureau estimates that approximately 140 million validation notices are mailed each year.687 Assuming average access paper periodic statements. In addition, notices of debts in collection may seem more serious or important than periodic statements and may be more likely to be opened. 687 The assumption of 140 million validation notices per year is based on an estimated 49 million consumers contacted by debt collectors each year E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations mailing costs of $0.65, this would result in annual validation notice mailing costs of approximately $91 million per year. If the rule leads a significant percentage of validation notices to be sent electronically rather than by postal mail, it could reduce mailing costs for debt collectors by millions or tens of millions of dollars per year. Debt collectors who use electronic communications may also benefit to the extent that some consumers are more likely to engage with debt collectors electronically than by telephone or letter. During the SBREFA process, several small entity representatives said that communication by email or text was preferred by some consumers and would be a more effective way to engage with them about their debts.688 One debt collector who currently uses email to contact consumers reports that its collection rates are greater than those of traditional debt collectors. While collection rates are likely to vary according to debt collector, type of debt, and related factors, clarifying the legality of electronic communications and disclosures will make it easier for debt collectors to test the efficacy of electronic communication and use it if they find it effective, potentially lowering costs and increasing the overall effectiveness of collections. Some commenters, including consumer advocates and individual commenters, disagreed with the principle of saving debt collectors money by explicitly providing alternative procedures and safe harbors for electronic communication at, according to these commenters, the expense of consumers. As discussed above, the Bureau believes that some consumers will benefit from electronic communications, and that it can be appropriate to reduce regulatory burden even in cases where there may be countervailing costs to some consumers. The Bureau understands that few debt collectors currently communicate with consumers using electronic means. For debt collectors who do communicate with consumers electronically, the rule requires them to provide a method for opting out of such communications. The Bureau understands that such methods are common features of services that provide the ability to send electronic communications to consumers. The Bureau therefore does not anticipate that these requirements will impose significant costs on debt collectors that and an assumption that each receives an average of approximately 2.8 notices during the year. 688 See, e.g., Small Business Review Panel Report, supra note 37, at appendix A. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 choose to communicate with consumers electronically. H. Potential Reduction of Access by Consumers to Consumer Financial Products and Services This rule contains a mix of provisions that will either restrict or encourage certain debt collection activities, the net impact of which is uncertain. Economic theory indicates that it is possible for changes in debt collection rules, such as those contained in this final rule, to affect consumers’ access to credit positively or negatively. Theory says that creditors should decide to extend credit based on the discounted expected value of the revenue stream from that extension of credit. This entails considering the possibility that the consumer will ultimately default. Specifically, the discounted expected value of an extension of credit will be the discounted present value of the stream of interest payments under the terms of the credit agreement, multiplied by the probability that the consumer pays, plus the discounted expected value of the creditor’s recovery should the consumer default, times the probability of default. A profitmaximizing creditor will only extend credit to a given consumer if this expected value is positive.689 Anything that reduces the expected value of a creditor’s recovery in the event of default, in general, will lower the discounted expected value of the extension of credit as a whole. This, in turn, may make potential extensions of credit with a discounted expected value only slightly above zero to become negative, such that a creditor will be less willing to extend credit. Likewise, anything that increases the expected value of a creditor’s recovery increases the discounted expected value of the credit extension and may change the sign of the expected value of potential credit extensions that had negative expected values, such that a profitmaximizing creditor will be more willing to extend credit. There are a few ways that the rule might increase or decrease the expected value of creditors’ recovery in the event 689 For purposes of this discussion, the Bureau ignores risk preferences and assumes that creditors are risk neutral. That is, while a risk-averse decision maker would prefer a certain payment of $100 to an uncertain investment with expected value of $100, the discussion in this section assumes creditors are indifferent between these options. Creditors may be risk averse to some degree, such that they would prefer the certain investment to the gamble, or even risk seeking, such that they prefer a gamble with the prospect of a higher return. The theoretical argument described here does not hinge on creditors’ risk preferences—the Bureau makes this assumption solely for ease of exposition. PO 00000 Frm 00147 Fmt 4701 Sfmt 4700 76879 of a consumer’s default, although theory alone gives no indication whether any of these actual effects on recovery would be large enough to have practical significance. The additional clarity provided by the final rule regarding limited-content messages and the use of electronic communications should facilitate some communications and thereby tend to increase the expected value of recovery, while the call frequency presumption may reduce the expected value of recovery. First, to the extent that the rule raises costs for debt collectors, debt collectors in theory could pass these costs on to creditors, whether by charging higher contingency fees to creditors or by paying lower prices to creditors when buying debt.690 Second, the rule may reduce the amount of expected recovery, either by making it less likely that consumers ultimately pay, or by reducing the amount that consumers pay in the event of a settlement. Finally, the rule could increase the time it takes for debt collectors to recover. A rational creditor would discount future income more the further in the future it occurs, and so later payment of the same amount of money would reduce the discounted expected value of the payment. Alternatively, the rule might lower costs for debt collectors, increase expected recovery and decrease the time it takes for debt collectors to recover amounts owed.691 If the rule reduces the expected value of extending credit, creditors might respond in three ways: (1) Increase their standards for lending, with an aim of reducing the probability of default; (2) reduce the amount of credit offered, thus reducing their losses in the event of a default; or (3) increase interest rates or other costs of credit such as fees, thus increasing their revenue from consumers who do not default. Which of these mechanisms any given creditor would pursue with respect to any given credit transaction depends on the specifics of the particular credit market. 690 The Bureau notes that the degree of this passthrough depends on the relative degree of market power held by debt collectors and creditors. If creditors have more market power, debt collectors will have limited ability to demand higher fees or lower wholesale prices. Many comments on the Small Business Review Panel Outline indicated that debt collectors have little market power in their interactions with creditors, which is consistent with little pass-through of additional costs. See, e.g., Small Business Review Panel Report, supra note 37, at 16–17. 691 Because creditors are generally not subject to the FDCPA, creditors could also respond to changes to debt collection rules by changing their decisions about whether to use third-party debt collectors or to collect debts themselves. The option to move debt collection activities ‘‘in house’’ could reduce any impact of the final rule on the costs of recovering unpaid debts. E:\FR\FM\30NOR3.SGM 30NOR3 76880 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 A number of industry and other commenters agreed with the general principle that debt collection restrictions may reduce access to credit, although these comments generally did not specifically address the analysis above. One commenter argued that access to credit is not always a good thing and asserted that debts under collection are more likely to be the result of high-interest, predatory lending. The Bureau is aware of three empirical, academic studies using modern data and methods that estimate the magnitude of the effect of debt collection restrictions on access to credit,692 one by a researcher affiliated with the Federal Reserve Bank of Philadelphia (Fedaseyeu Study),693 another by researchers at the Federal Reserve Bank of New York (Fonseca Study),694 and a third by researchers at the Bureau (Romeo-Sandler Study).695 All three empirical studies use changes in State or local debt collection laws and regulations to examine the effect of those laws on measures of credit access. The Fedaseyeu Study used aggregate data on new credit card accounts combined with credit union call report data to examine the effect of various State law changes between 1999 and 2012 on the number of new revolving lines of credit opened each year in each State. This study finds that an additional restriction on debt collectors decreases the number of new accounts by about two accounts per quarter per 1000 consumers residing in a State. For comparison, the data used for the Fedaseyeu Study showed an average of 120 new accounts per quarter per 1000 consumers. The Fedaseyeu Study finds no effect of debt collection laws on the average credit card interest rate.696 However, the Fedaseyeu Study has 692 In addition, earlier empirical research examined the relationship between restrictions on creditor remedies and the supply of credit. See Thomas A. Durkin et al., Consumer Credit and the American Economy 521–525 (Oxford U. Press 2014) (summarizing this empirical literature). 693 Viktar Fedaseyeu, Debt Collection Agencies and the Supply of Consumer Credit, Journal of Financial Economics, 138 (2020). 694 Julia Fonseca et al., Access to Credit and Financial Health: Evaluating the Impact of Debt Collection (Fed. Reserve Bank of N.Y. Staff Report No. 814, 2017). 695 Charles Romeo & Ryan Sandler, The Effect of Debt Collection Laws on Access to Credit, Journal of Public Economics, (Forthcoming). 696 In addition to the results described here, the Fedaseyeu Study also examines the effect of debt collection laws on the number of debt collection firms per capita and a measure of the recovery rate from debt collection. The Bureau omits discussion of these results here because they are not directly relevant to the question of consumer access—the Bureau discusses potential effects on debt collection firms above. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 some important limitations, particularly regarding extrapolating its results to the effects of the rule. Most importantly, it considers a wide variety of types of debt collection laws, including provisions with limited consumer protection aspects. Specifically, a majority of the debt collection law changes included in the Fedaseyeu Study largely involve changes to licensing fees, bonds, or levels of statutory penalties for violations, rather than prohibiting or requiring specific conduct, and each such change is given the same weight as a law governing conduct.697 Leaving aside the question of whether monetary adjustments under State law are of a comparable magnitude to the final rule under Federal law, the final rule focuses on conduct, rather than State licensing fees, bonds, or penalty amounts. As such, the results of the Fedaseyeu Study are less informative as to the effects of the final rule than they would be if the legal changes at issue were more comparable to those in the final rule. The data analysis in the Fedaseyeu Study is also somewhat limited by the data that were available. The aggregate data used make it difficult to control for confounding factors, such as differences in credit scores among consumers. The Fonseca Study follows a similar design as the Fedaseyeu Study and examines the same set of State law changes, but it employs microdata from the Federal Reserve Bank of New York’s Consumer Credit Panel, a nationally representative sample of credit records from Equifax. The main results of the Fonseca Study focus on the initial loan amounts or limits for automobile loans, credit cards, and non-traditional finance loans.698 The study finds a moderate effect on automobile loan amounts, and a small effect on initial credit card limits. Like the Fedaseyeu Study, a major limitation of the Fonseca Study is its focus on licensing requirements, which are not directly comparable to the provisions in the rule. That the Fonseca Study finds larger effects on automobile loans than credit cards also raises questions. Although third-party debt collectors are sometimes involved in collecting on automobile loans when the 697 Specifically, Fedaseyeu created an index of debt collection regulation, with one point added for a tightening in any one of six categories of regulation, including licensing requirements, bonding requirements, and the creation of a board to regulate third-party debt collectors. 698 The Fonseca Study defines non-traditional finance loans as ‘‘retail cards, personal loans and a residual loan category.’’ Like the Fedaseyeu Study, the Fonseca Study also examines the effect of the debt collection laws studied on the number of debt collectors present in each State; again, the Bureau omits discussion of those results in this section. PO 00000 Frm 00148 Fmt 4701 Sfmt 4700 loan balance exceeds the value of the car, most delinquent automobile debt is resolved through repossession. The fact that the Fonseca Study nonetheless found a moderately large effect on automobile balances suggests that possibly the study’s methodology was not successful in isolating the causal effect of the debt collection laws, but instead was picking up other, unrelated, factors. The Romeo-Sandler Study uses microdata from two large administrative datasets: The Bureau’s Consumer Credit Panel (CCP) 699 and Credit Card Database (CCDB).700 This study focuses on four recent major changes in State or local laws and regulations that imposed additional conduct requirements on either debt buyers or on all debt collectors.701 By focusing on the effect of changes to laws that regulate debt collector conduct, the results of the Romeo-Sandler Study are arguably more applicable to understanding effects of the rule, although the specific changes to State or local laws studied differ considerably from the provisions of the rule. The Romeo-Sandler Study assesses three main outcomes: The probability that a credit inquiry results in an open credit card account, the credit limit on newly opened credit card accounts, and initial interest rates on credit card accounts. As discussed above, creditors might limit any of these factors to adjust for the effects of a regulation such as the final rule. The Romeo-Sandler Study 699 Although similar in nature, the Bureau’s CCP is not the same as the Federal Reserve Bank of New York’s Consumer Credit Panel, discussed above. The Bureau’s CCP is an anonymized sample of credit records from one of the three nationwide CRAs, containing a 1-in-48 representative sample of all adults with a credit record. The data contain all credit accounts (trade lines) and hard inquiries on a consumer’s credit report, with a unique, anonymous identifier linking records belonging to the same consumer. This CCP does not contain any personally identifying information on individual consumers. 700 The CCDB is a monthly panel describing balances, payments, and interest rates on all credit card accounts issued by a set of major banks, representing roughly 90 percent of the credit card market. As with the CCP, accounts are identified by an anonymous identifier, and the CCDB does not contain any personally identifying information. 701 New laws were put into effect in North Carolina in October 2009 and California in January 2014; both of these laws focused exclusively on debt buyers. In addition, New York City, in April 2010, and New York State, in December 2014, introduced new debt collection restrictions through administrative regulations. These updated restrictions generally require debt collectors to take additional steps before collecting, including requiring additional documents to substantiate debts before collections can begin, requiring disclosures or additional documentation before lawsuits can be filed to enforce a debt, and requiring disclosures once the State’s statute of limitations has run. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 controls for individual consumers’ credit scores and census tract demographic information and flexibly adjusts for State-level trends over time that might otherwise bias the estimates of an analysis. As with the Fedaseyeu Study and Fonseca Study, the RomeoSandler Study found effects of debt collection laws that are in the direction predicted by theory (i.e., increased regulation increases the cost or decreases the availability of credit), but the effects are quite small in magnitude. Using the CCP, this study found that additional regulations on debt collectors’ conduct caused the success rate of a credit inquiry to decline by less than 0.02 percentage points off a base rate of about 43 percent. The study concludes that one can statistically reject that the effect was as large as 0.7 percentage points. The study provides some context for these effects by comparing them to the effect of changing consumers’ credit scores. The study found that each credit score point increases the probability of a successful credit inquiry for subprime borrowers by about 0.2 percentage points. Thus, the estimated effect of a debt collection law is equivalent to lowering consumers’ credit scores by less than one point.702 The Romeo-Sandler Study finds similarly small effects on credit limits, which are again equivalent to a very small change in credit score. The magnitude of the credit limit effect in the Romeo-Sandler Study is smaller than that found in the Fonseca Study. The Romeo-Sandler Study also analyzes the effect of debt collection laws on credit card interest rates using the CCDB. The study finds that initial interest rates increase slightly following a State or local debt collection law or regulation, but that this entirely takes the form of a reduced frequency of accounts with an introductory APR of 0 percent—the level of positive initial interest rates are essentially unchanged. The Romeo-Sandler Study is also able to shed light on potential areas of heterogeneity in the effects of State debt collection laws because of its access to rich microdata. The Romeo-Sandler Study explores the effects separately for consumers with high and low credit scores and finds somewhat larger (although still small) effects on consumers with sub-prime credit scores. 702 The study notes, as a point of comparison, that this effect is considerably smaller than that of routine errors in credit reports. See Fed. Trade Comm’n, Report to Congress Under Section 319 of the Fair and Accurate Credit Transactions Act of 2003, at 43 (Dec. 2012), https://www.ftc.gov/sites/ default/files/documents/reports/section-319-fairand-accurate-credit-transactions-act-2003-fifthinterim-federal-trade-commission/130211facta report.pdf. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 This is consistent with theory. Even within the sub-sample of consumers with sub-prime credit scores, the effect of the laws is equivalent to a three-point decrease in sub-prime borrowers’ credit scores. The studies discussed above provide evidence that regulation of debt collection can affect consumer access to credit in ways consistent with economic theory. However, these studies do not speak directly to the likely effects of the final rule on consumer credit markets. The State or local laws analyzed in these studies implement a different set of consumer protections than those in the final rule. The final rule includes some provisions likely to increase debt collector costs, but also includes other provisions, such as those related to limited-content messages and email and text messages, which could lower costs for some debt collectors. In addition, creditors and debt collectors might react differently to changes in State or local collection standards than the standards in the Bureau’s rules, which could affect all U.S. consumers. For instance, a nationwide creditor might choose not to adjust its credit standards in response to a change in only one State’s debt collection laws, but might find it optimal to change its standards if similar laws applied nationwide or to a large share of its potential borrowers. The Bureau received several comments from industry and trade association commenters generally asserting that restrictions on debt collection would have negative effects on access to credit and cited one or more of the studies above as support for this contention. None of these commenters addressed the Bureau’s interpretation of the studies as showing that past restrictions had a quantitatively small effect on credit access, and none disagreed with the Bureau’s observations about the limitations of the Fedaseyeu Study and the Fonseca Study. I. Potential Specific Impacts of the Rule 1. Depository Institutions and Credit Unions With $10 Billion or Less in Total Assets, as Described in Dodd-Frank Act Section 1026 Depository institutions and credit unions are generally not debt collectors under the FDCPA and therefore are generally not covered by the rule. However, as noted above, creditors could experience indirect effects from the rule to the extent they hire FDCPAcovered debt collectors or sell debt in default to such debt collectors. Such creditors could experience higher costs if debt collectors’ costs increase and if PO 00000 Frm 00149 Fmt 4701 Sfmt 4700 76881 debt collectors are able to pass those costs on to creditors. The Bureau understands that many depository institutions and credit unions with $10 billion or less in total assets rely on FDCPA-covered debt collectors to collect debts, but the Bureau does not have data indicating whether such institutions are more or less likely than other creditors to do so. The Bureau did not receive any comments on this issue with respect to the final rule. 2. Impact of the Rule on Consumers in Rural Areas Consumers in rural areas may experience benefits from the rule that are different in certain respects from the benefits experienced by consumers in general. For example, consumers in rural areas may be more likely to borrow from small local banks and credit unions that may be less likely to outsource debt collection to FDCPAcovered debt collectors. Debts owed by consumers in rural areas may also be more likely to be collected by smaller debt collectors, which the Bureau understands are less likely to place telephone calls to consumers in excess of the call frequencies in the final rule. The telephone call frequencies may therefore have less of an impact on consumers in rural areas. The Bureau requested interested parties to provide data, research results, and other factual information on how the proposed rule, if finalized, would affect consumers in rural areas, but the Bureau did not receive any comments on this subject. VIII. Final Regulatory Flexibility Act Analysis The Regulatory Flexibility Act (RFA) generally requires an agency to conduct an Initial Regulatory Flexibility Analysis (IRFA) and a Final Regulatory Flexibility Analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements.703 Section 604(a) of the RFA sets forth the required elements of the FRFA. Section 604(a)(1) requires a statement of the need for, and objectives of, the rule.704 Section 604(a)(2) requires a statement of the significant issues raised by the public comments in response to the IRFA, a statement of the assessment of the agency of such issues, and a statement of any changes made in the proposed rule as a result of such comments. Section 604(a)(3) requires the response of the agency to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration in response to the proposed rule and a 703 5 704 5 E:\FR\FM\30NOR3.SGM U.S.C. 604(a). U.S.C. 604(a)(1). 30NOR3 76882 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations detailed statement of any change made to the proposed rule in the final rule as a result of the comments. Section 604(a)(4) requires a description of and, where feasible, an estimate of the number of small entities to which the rule will apply.705 Section 604(a)(5) requires a description of the projected reporting, recordkeeping, and other compliance requirements of the rule, including an estimate of the classes of small entities that will be subject to the requirement and the types of professional skills necessary for the preparation of the report or record.706 Section 604(a)(6) requires a description of any significant alternatives to the rule that accomplish the stated objectives of applicable statutes and that minimize any significant economic impact of the rule on small entities.707 Finally, section 604(a)(7) requires a description of the steps the agency has taken to minimize any additional cost of credit for small entities.708 TKELLEY on DSKBCP9HB2PROD with RULES3 A. Statement of the Need for, and Objectives of, the Final Rule The Bureau issues this rule primarily pursuant to its authority under the FDCPA and the Dodd-Frank Act.709 The objectives of the rule are to answer certain interpretive questions that have arisen since the FDCPA’s passage and to further the FDCPA’s goals of eliminating abusive debt collection practices and ensuring that debt collectors who refrain from abusive debt collection practices are not competitively disadvantaged.710 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 issues this rule to clarify how debt collectors may appropriately employ newer communication technologies in compliance with the FDCPA and to address other communications-related practices that currently pose a risk of harm to consumers, legal uncertainty to industry, or both. The Bureau intends that these clarifications will help to eliminate abusive debt collection practices and ensure that debt collectors who refrain from abusive debt collection practices are not competitively disadvantaged.711 As amended by the Dodd-Frank Act, FDCPA section 814(d) provides that the Bureau may ‘‘prescribe rules with 705 5 U.S.C. 604(a)(4). U.S.C. 604(a)(5). 707 5 U.S.C. 604(a)(6). 708 Id. 709 See part IV, supra. 710 See 15 U.S.C. 1692(e). 711 See id. 706 5 VerDate Sep<11>2014 21:38 Nov 27, 2020 respect to the collection of debts by debt collectors,’’ as that term is defined in the FDCPA.712 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.’’ 713 ‘‘Federal consumer financial law’’ includes title X of the Dodd-Frank Act and the FDCPA. The legal basis for the rule is discussed in detail in the legal authority analysis in part IV and in the section-by-section analysis in part V. B. Significant Issues Raised by the Public Comments in Response to the Initial Regulatory Flexibility Analysis The Bureau received comments on the IRFA from the Acting Chief Counsel for Advocacy of the Small Business Administration, which are discussed in the next section. The Bureau did not receive other comments that referenced the IRFA specifically; however, several commenters did raise issues about the burdens of the proposed rule’s provisions, and the Bureau’s response to these issues is discussed in parts V and VI above and in this part below. C. Response to Any Comments Filed by the Chief Counsel for Advocacy of the Small Business Administration The Acting Chief Counsel for Advocacy of the Small Business Administration filed a public comment letter on the proposed rule that discusses both the IRFA and certain of the proposed requirements (the ‘‘SBA letter’’). This section first responds to comments on the IRFA and then responds to the substantive comments on the proposed rule’s provisions. The SBA letter notes that the IRFA did not estimate the cost to small entities of establishing systems to comply with the proposed telephone call frequency limits. As discussed below and in the section 1022(b)(2) analysis, the Bureau does not have representative data that can be used to reliably measure the one-time costs of revising systems to comply with the telephone frequency provisions, but does discuss the qualitative information it has. The SBA letter notes that some small entity representatives said that one-time costs to revise systems could range from $35,000 to $200,000 and argues that these estimates should be included in the analysis. These estimates refer to costs for system improvements that would have been required to comply with information 712 15 713 12 Jkt 253001 PO 00000 U.S.C. 1692l(d). U.S.C. 5512(a). Frm 00150 Fmt 4701 transfer requirements that were in the proposals under consideration during the SBREFA process but that were not included in the proposed rule.714 While some small entity representatives said that it could be costly to modify their systems to comply with the contact limits then under consideration, they emphasized that those costs could be high in part because of the need to design limits that apply to forms of communication other than telephone calls, such as mail. The frequency limits in the proposed rule were limited to telephone calls, as are the telephone call frequency provisions in the final rule. The fact that these provisions apply only to the placement of telephone calls and to telephone conversations should limit the system investments that are required to track call frequency, because call frequency is something that many debt collectors already track in light of the FDCPA’s existing prohibition on ‘‘causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.’’ The SBA letter also notes that the proposed rule could impose costs to read, understand, and train employees in new practices. The Bureau discussed these costs in the IRFA in the context of some specific provisions of the proposal; the Bureau has added a more general discussion of these costs in section E of the FRFA, below. The SBA letter also notes that the Bureau claims some provisions will cause no significant impact because those provisions are already part of debt collectors’ business practices and argues that the Bureau should clarify what the benefit of such provisions is to consumers if they will not change debt collector practices. As discussed in part V and the section 1022(b)(2) analysis, the Bureau believes that, by clarifying the FDCPA’s requirements, the rule will benefit both consumers and debt collectors, including small entities. Many market participants have identified a need for greater clarity in interpreting many of the FDCPA’s provisions. For example, an industry comment letter emphasized that ambiguities in the FDCPA lead to unnecessary and costly litigation. The Bureau believes that there is a benefit to clarifying the FDCPA’s requirements even if the vast majority of debt collectors follow practices that meet those requirements. The additional clarity helps those debt collectors to avoid unnecessary litigation and to have 714 Small Business Review Panel Report, supra note 37, at 21. Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations confidence in what practices do and do not violate the law. The additional clarity also makes it easier to establish whether less scrupulous debt collectors have violated the statute and to hold them accountable, which benefits debt collectors who do comply with the law as well as consumers. The SBA letter points out that the proposed rule’s PRA section estimated 1,029,500 burden hours and argues that this could translate into millions of dollars in recordkeeping and reporting costs. Most of this burden is not attributable to the rule itself but rather to the requirements of the FDCPA. As discussed in the supporting statement accompanying the Bureau’s information collection request, the PRA estimates include the burden not only of complying with the new requirements introduced by the final rule but also of complying with the FDCPA itself. These burdens had not previously been accounted for under the PRA. Thus, the large majority of the estimated burden hours represent the burden of complying with FDCPA requirements that exist independent of the rule, in particular the requirement to provide a validation notice under section 809(a) of the FDCPA and the requirement to respond to consumer disputes under section 809(b) of the FDCPA. There are, of course, burdens associated with other information collections that are being introduced or clarified by the final rule, and those burdens are discussed in this FRFA as well as in the supporting statement. The SBA letter also expressed several concerns about specific provisions of the proposed rule and recommended changes to those provisions. These concerns and recommendations, and the Bureau’s response, are discussed in the section-by-section analysis of the relevant provisions in part V. D. Description and, Where Feasible, Provision of an Estimate of the Number of Small Entities to Which the Final Rule Will Apply As discussed in the Small Business Review Panel Report, for the purposes of assessing the impacts of the rule on small entities, ‘‘small entities’’ is defined in the RFA to include small businesses, small nonprofit organizations, and small government 76883 jurisdictions.715 A ‘‘small business’’ is determined by application of SBA regulations in reference to the North American Industry Classification System (NAICS) classifications and size standards.716 Under such standards, the Small Business Review Panel (Panel) identified four categories of small entities that may be subject to the provisions: Collection agencies (NAICS 561440) with $16.5 million or less in annual receipts, debt buyers (NAICS 522298) with $41.5 million or less in annual revenues, collection law firms (NAICS 541110) with $12.0 million or less in annual receipts, and servicers who acquire accounts in default. These servicers include depository institutions (NAICS 522110, 522120, and 522130) with $600 million or less in annual receipts or non-depository institutions (NAICS 522390) with $22.0 million or less in annual receipts. The Panel did not meet with small nonprofit organizations or small government jurisdictions.717 The following table provides the Bureau’s estimate of the number and types of entities that may be affected by the final rule: TABLE 4—ESTIMATED NUMBER OF AFFECTED ENTITIES AND SMALL ENTITIES BY CATEGORY Category NAICS Small-entity threshold Collection agencies .... Debt buyers ................ Collection law firms .... Loan servicers ............ 561440 ................................................. 522298 ................................................. 541110 ................................................. 522110, 522120, and 522130 (depositories); 522390 (non-depositories). $16.5 million in annual receipts ........... $41.5 million in annual receipts ........... $12.0 million in annual receipts ........... $600 million in annual receipts for depository institutions; $22.0 million or less for non-depositories. Descriptions of the four categories: Collection agencies. The Census Bureau defines ‘‘collection agencies’’ (NAICS code 561440) as ‘‘establishments primarily engaged in collecting payments for claims and remitting payments collected to their clients.’’ 718 In 2012, according to the Census Bureau, there were approximately 4,000 collection agencies with paid employees in the United States. Of these, the Bureau estimates that 3,800 collection agencies have 715 5 TKELLEY on DSKBCP9HB2PROD with RULES3 Estimated total number of debt collectors within category U.S.C. 601(6). current SBA size standards are found on SBA’s website, https://www.sba.gov/content/tablesmall-business-size-standards. 717 Small Business Review Panel Report, supra note 37, at 29. 718 As defined by the U.S. Census Bureau, collection agencies include entities that collect only commercial debt, and the rule applies only to debt collectors of consumer debt. However, the Bureau 716 The VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 9,000 330 1,000 700 Estimated number of small-entity debt collectors within category 8,800 300 950 200 $16.5 million or less in annual receipts and are therefore small entities.719 Census Bureau estimates indicate that in 2012 there were also more than 5,000 collection agencies without employees, all of which are presumably small entities. Debt buyers. Debt buyers purchase delinquent accounts and attempt to collect amounts owed, either themselves or through agents. The Bureau estimates that there are approximately 330 debt buyers in the United States, and that a substantial majority of these are small entities.720 Many debt buyers— particularly those that are small entities—also collect debt on behalf of other debt owners.721 Collection law firms. The Bureau estimates that there are 1,000 law firms in the United States that either have as their principal purpose the collection of consumer debt or regularly collect consumer debt owed to others, so that the rule would apply to them. The understands that relatively few collection agencies collect only commercial debt. 719 The U.S. Census Bureau estimates average annual receipts of $95,000 per employee for collection agencies. Given this, the Bureau assumes that all firms with fewer than 100 employees and approximately one-half of the firms with 100 to 499 employees are small entities, which implies approximately 3,800 firms. 720 The Receivables Management Association, the largest trade group for this industry segment, states that it has approximately 300 debt buyer members and believes that 90 percent of debt buyers are current members. 721 The Bureau understands that debt buyers are generally nondepositories that specialize in debt buying and, in some cases, debt collection. The Bureau understands that debt buyers that are not collection agencies would be classified by the Census Bureau under ‘‘all other nondepository credit intermediation’’ (NAICS Code 522298). PO 00000 Frm 00151 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR3.SGM 30NOR3 76884 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations Bureau estimates that 95 percent of such law firms are small entities.722 Loan servicers. Loan servicers would be covered by the rule if they acquire servicing of loans already in default.723 The Bureau believes that this is most likely to occur with regard to companies that service mortgage loans or student loans. The Bureau estimates that approximately 200 such mortgage servicers may be small entities and that few, if any, student loan servicers that would be covered by the rule are small.724 TKELLEY on DSKBCP9HB2PROD with RULES3 E. Projected Reporting, Recordkeeping, and Other Compliance Requirements of the Rule, Including an Estimate of Classes of Small Entities That Will Be Subject to the Requirement and the Type of Professional Skills Necessary for the Preparation of the Report or Record The final rule will not impose new reporting requirements, but it will impose new recordkeeping and compliance requirements on small entities subject to the rule. The requirements and the costs associated with them are discussed below. In addition to the specific costs discussed below, all small entities will incur costs to read the rule and incorporate its provisions into their policies and procedures, and small entities with employees will need to train employees in new policies and procedures. The extent of training required will depend on debt collectors’ existing practices and on the roles performed by individual employees. Debt collectors employ an estimated 123,000 workers.725 If, on average, the rule required an additional hour of training 722 The primary trade association for collection attorneys, the National Creditors Bar Association (NARCA), states that it has approximately 600 law firm members, 95 percent of which are small entities. The Bureau estimates that approximately 60 percent of law firms that collect debt are NARCA members and that a similar fraction of non-member law firms are small entities. 723 The Bureau understands that loan servicers are generally classified under NAICS code 522390, ‘‘Other Activities Related to Credit Intermediation.’’ Some depository institutions (NAICS codes 522110, 522120, and 522130) also service loans for others and may be covered by the rule. 724 Based on the December 2015 Call Report data as compiled by SNL Financial (with respect to insured depositories) and December 2015 data from the Nationwide Mortgage Licensing System and Registry (with respect to non-depositories), the Bureau estimates that there are approximately 9,000 small entities engaged in mortgage servicing, of which approximately 100 service more than 5,000 loans. See 81 FR 72160, 72363 (Oct. 19, 2016). The Bureau’s estimate is based on the assumption that all those servicing more than 5,000 loans may acquire servicing of loans when loans are in default and that at most 100 of those servicing 5,000 loans or fewer acquire servicing of loans when loans are in default. 725 2020 FDCPA Annual Report, supra note 9, at 7. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 for each of these employees, at an average cost of $22 per hour, the total training cost would be approximately $2,700,000.726 1. Recordkeeping Requirements Section 1006.100 generally will require FDCPA-covered debt collectors to retain evidence of compliance or noncompliance with the FDCPA and Regulation F starting on the date that the debt collector begins collection activity on a debt and ending three years after the debt collector’s last collection activity on the debt. For recordings of telephone calls, § 1006.100(b) establishes a different retention period, under which the debt collector must retain the recordings for three years after the dates of the telephone calls. Thus, in contrast to other record types, a debt collector could delete a call recording after three years and yet collection activity on the relevant account could continue after that time. The Bureau believes that most debt collectors are already maintaining records for three or more years for legal purposes and therefore will not incur significant costs as a result of the record retention requirement. During the SBREFA process, nearly all small entity representatives stated that their current practices are already consistent with a three-year record retention requirement, and some said that they retain records for longer periods ranging from five to ten years.727 Some participants said, however, that they retain some information for a shorter period of time such as one year. Such small entities would incur additional costs for data storage and to update systems to reflect the longer storage period. 2. Compliance Requirements The rule contains a number of compliance requirements that will apply to FDCPA-covered debt collectors who are small entities. The anticipated costs of compliance for small entities of these requirements are discussed below. In evaluating the potential impacts of the rule on small entities, the Bureau takes as a baseline conduct in the debt collection markets under the current legal framework governing debt collection. This includes debt collector practices as they currently exist, responding to the requirements of the FDCPA as currently interpreted and 726 The estimated hourly cost is based on an estimated wage of $15 per hour and taxes, benefits, and incentives of $7 per hour. See CFPB Debt Collection Operations Study, supra note 34, at 17 (describing estimated debt collector wages ranging from $10 to $20 per hour). 727 Small Business Review Panel Report, supra note 37, at 28. PO 00000 Frm 00152 Fmt 4701 Sfmt 4700 other Federal laws as well as State statutes and rules. This baseline represents the status quo from which the impacts of this rule will be evaluated. The Bureau requested that interested parties provide data and quantitative analysis of the benefits, costs, or impacts of the proposed rule on small entities but did not receive any comments on this subject. The discussion here is limited to the direct costs to small entities of complying with the requirements of the final rule. Other impacts, such as the impacts of reduced call frequency on debt collectors’ ability to contact consumers, are discussed at length in part VII. The Bureau believes that, except where otherwise noted, the impacts discussed in part VII apply to small entities. (a) Prohibited Communications With Consumers Section 1006.6(b) generally implements FDCPA section 805(a)’s prohibition on a debt collector communicating with a consumer at unusual or inconvenient times and places, with a consumer represented by an attorney, and at a consumer’s place of employment. This section also expressly prohibits attempts to make such communications, which debt collectors already must avoid given that a successful attempt would be an FDCPA violation. Section 1006.14(h)(1) interprets FDCPA section 806’s prohibition on a debt collector engaging in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt to prohibit debt collectors from communicating or attempting to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person. Debt collectors are already prohibited from communicating with consumers at a time or place that is known or should be known to be inconvenient to the consumer. The Bureau therefore expects that debt collectors already keep track of what consumers tell them about the times and places that they find inconvenient and avoid communicating or attempting to communicate with consumers at those times or places. Similarly, the provisions regarding communication with attorneys and at the consumer’s place of employment track requirements that debt collectors are already required to comply with under the FDCPA. The Bureau understands that many debt collectors E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 currently employ systems and business processes designed to limit communication attempts to consumers at inconvenient times and places and that many debt collectors also use these systems and processes to prevent communications with consumers through media that consumers have told them not to use. For these reasons, the Bureau does not expect that the provisions will significantly impact small entities subject to the final rule. (b) Telephone Call Frequencies Section 1006.14(b)(1) prohibits a debt collector from, in connection with the collection of a debt, placing telephone calls or engaging in telephone conversations repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. Section 1006.14(b)(2)(i) provides for a rebuttable presumption of compliance for a debt collector who places a telephone call to a particular person in connection with the collection of a particular debt neither: (A) More than seven times within sevenconsecutive-days; nor (B) within a period of seven-consecutive-days after having had a telephone conversation with the person in connection with the collection of such debt, subject to the exclusions in § 1006.14(b)(3). Section 1006.14(b)(2)(ii) sets forth a rebuttable presumption of a violation for a debt collector who places a telephone call to a particular person in connection with the collection of a particular debt: (A) More than seven times within sevenconsecutive-days; or (B) within a period of seven-consecutive-days after having had a telephone conversation with the person in connection with the collection of such debt. The provision imposes at least two categories of costs on small entities subject to the final rule. First, it means that debt collectors must track the frequency of outbound telephone calls, which will require many debt collectors to bear one-time costs to update their systems and train staff, and which will create ongoing costs for some debt collectors. Second, for some debt collectors, the provision will require a reduction in the frequency with which they place telephone calls to consumers, which could make it harder to reach consumers and delay or reduce collections revenue. With respect to one-time implementation costs, many debt collectors will incur costs to revise their systems to track telephone call frequencies. Such revisions could range from small updates to existing systems to the introduction of completely new systems and processes. The Bureau VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 understands that larger debt collectors (including those that are small entities) generally already implement system limits on call frequency to comply with client contractual requirements, debt collector internal policies, and State and local laws.728 Such debt collectors might need only to revise existing calling restrictions to ensure that existing systems track telephone calls in a manner consistent with the new provision. Larger collection agencies might also need to respond to client requests for additional reports and audit items to verify that they comply with the provision, which could require these agencies to make systems changes to alter the reports and data they currently produce for their clients to review. Smaller debt collectors and collection law firms are less likely to have existing systems that track or limit communication frequency and may therefore face larger costs to establish systems to do so. However, many smaller debt collectors report that they generally attempt to reach each consumer by telephone only one or two times per week and generally do not speak to a consumer more than one time per week, which suggests that their practices would afford them a presumption of compliance with respect to telephone call frequencies under the final rule.729 For such debt collectors, existing policies may be sufficient to ensure compliance with the provision, although they may incur one-time costs to establish systems for documenting compliance. (c) Prohibition on the Sale or Transfer of Certain Debts Section 1006.30(b)(1) prohibits a debt collector from selling, transferring for consideration, or placing for collection a debt if the debt collector knows or should know that the debt was paid or settled or discharged in bankruptcy. Section 1006.30(b)(2) creates several exceptions to this prohibition. The Bureau understands, based on its market knowledge and outreach to debt collectors, that debt collectors generally do not sell, transfer, or place for collection debts (other than in circumstances covered in the exceptions) if they have reason to believe the debts cannot be validly collected because they have been paid or settled or discharged in bankruptcy. The final rule provides an exception for transfer of secured debt that has been discharged in bankruptcy, provided that the debt collector provides notice to the 728 Id. at 26. Debt Collection Operations Study, supra note 34, at 29. transferee that the debt has been discharged. The Bureau understands that, if debt collectors transfer such secured debt, they generally already provide such notice in the ordinary course of business. Therefore, the Bureau does not expect this provision to create significant compliance costs for small entities. (d) Electronic Disclosures and Communications The final rule includes provisions that clarify how debt collectors can communicate with consumers by email and text message in compliance with the FDCPA and the final rule. With respect to the validation notice, which most debt collectors currently provide by mail, § 1006.42 sets forth general standards for debt collectors to send notices electronically in a way that complies with the FDCPA’s validation notice requirements. With respect to any communications about a debt, § 1006.6(d)(3) through (5) specifies procedures that debt collectors may use to send an email or text message to a consumer about a debt such that the debt collector may obtain a safe harbor from civil liability under the FDCPA for an unintentional disclosure of the debt to a third party. The Bureau understands that few debt collectors currently communicate with consumers using electronic means. For debt collectors who do communicate with consumers electronically, the rule requires them to provide a method for opting out of such communications. The Bureau understands that such methods are common features of services that provide the ability to send electronic communications to consumers. The Bureau therefore does not anticipate that these requirements will impose significant costs on small entities that choose to communicate with consumers electronically. F. Description of Any Significant Alternatives to the Final Rule That Accomplish the Stated Objectives of the Applicable Statutes and Minimize Any Significant Economic Impact of the Rule on Small Entities Section 604(a)(6) of the RFA requires the Bureau to describe in the FRFA any significant alternatives to the rule that accomplish the stated objectives of applicable statutes and that minimize any significant economic impact of the rule on small entities.730 In developing the rule, the Bureau has considered alternative provisions and believes that none of the alternatives considered would be as effective at accomplishing 729 CFPB PO 00000 Frm 00153 Fmt 4701 Sfmt 4700 76885 730 5 E:\FR\FM\30NOR3.SGM U.S.C. 604(a)(6). 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76886 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations the stated objectives of the FDCPA and the applicable provisions of title X of the Dodd-Frank Act while minimizing the impact of the rule on small entities. In developing the rule, the Bureau considered a number of alternatives, including those considered as part of the SBREFA process and certain alternative provisions that were part of the proposal. Many of the alternatives considered would have resulted in greater costs to small entities than would the rule. For example, the Bureau considered limiting the frequency of contacts or contact attempts by any media, rather than by telephone calls only. Because such alternatives would result in a greater economic impact on small entities than the rule, they are not discussed here. The Bureau also considered alternatives that might have resulted in a smaller economic impact on small entities than the rule. Certain of these alternatives are briefly described and their impacts relative to the rule provisions are discussed below. Limitations on call frequency. The Bureau considered a proposal that would have limited the number of calls permitted to any particular telephone number (e.g., at most two calls to each of a consumer’s landline, mobile, and work telephone numbers). The Bureau considered such a limit either instead of or in addition to an overall limit on the frequency of telephone calls to one consumer. Such an alternative could potentially reduce the effect on debt collector calls if it permitted more calls when consumers have multiple telephone numbers. The Bureau decided to propose an aggregate approach because of concerns that a more prescriptive, per-telephone number approach could less effectively carry out the consumer protection purposes of the FDCPA—some consumers could receive (and some debt collectors could place) more telephone calls simply based on the number of telephone numbers that certain consumers happened to have (and that debt collectors happened to know about). Such an approach also could create incentives for debt collectors to, for example, place telephone calls to less convenient telephone numbers after exhausting their telephone calls to consumers’ preferred numbers. The proposed rule would have established a bright-line limit on telephone call frequency rather than a rebuttable presumption. Specifically, proposed § 1006.14(b)(1) set forth the general prohibition, § 1006.14(b)(2) described bright-line frequency limits for telephone calls and telephone conversations during a seven-day period, and proposed § 1006.14(b)(3), VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 (4), and (5) described telephone calls excluded from the frequency limits, the effect of complying with the frequency limits, and a definition, respectively. The proposed rule’s bright-line limit would impose lower costs on debt collectors than the final rule in some ways, although it would impose greater costs in other ways. Specifically, a bright-line limit on telephone call frequency would provide greater clarity to debt collectors about whether calling practices comply with the FDCPA. For example, under the proposal, a debt collector who did not place telephone calls to consumers more than seven times in a seven-day period would know that it was complying with the provision, whereas, under the final rule, a debt collector following the same practice would also need to consider whether the presumption of compliance might be rebutted in the case of particular consumers or accounts. This could result in greater compliance costs and greater risk of litigation for debt collectors compared with the proposal. On the other hand, the final rule may provide greater flexibility to debt collectors and additional benefits to consumers compared with the proposal. For debt collectors, the final rule may make it more possible to reach consumers if they are unable to make contact within seven call attempts in a week and additional calls would not be harassing. G. Discussion of Impact on Cost of Credit for Small Entities Section 604(a)(6) of the RFA requires the Bureau to a description of the steps the agency has taken to minimize any additional cost of credit for small entities.731 The Bureau provided notification to the Chief Counsel for Advocacy of the Small Business Administration (Chief Counsel) that the Bureau would collect the advice and recommendations of the same small entity representatives identified in consultation with the Chief Counsel through the SBREFA process concerning any projected impact and the rule on the cost of credit for small entities. The Bureau sought to collect the advice and recommendations of the small entity representatives during the Small Business Review Panel meeting regarding the potential impact on the cost of business credit because, as small debt collectors with credit needs, the small entity representatives could provide valuable input on any such impact related to the rule. The Bureau’s Small Business Review Panel Outline asked small entity 731 Id. PO 00000 Frm 00154 Fmt 4701 Sfmt 4700 representatives to comment on how proposed provisions will affect cost of credit to small entities. The Bureau believes that the rule will have little impact on the cost of credit. However, it does recognize that consumer credit may become more expensive and less available as a result of some of these provisions, although the Romeo-Sandler Study indicates that the magnitude of the cost and availability of consumer credit from recent changes to State debt collection laws is small. Many small entities affected by the rule use consumer credit as a source of credit and may, therefore, see costs rise if consumer credit availability decreases. The Bureau does not expect this to be a large effect and does not anticipate measurable impact.732 During the SBREFA process, several small entity representatives said that the proposals under consideration at that time could have an impact on the cost of credit for them and for their small business clients. Some small entity representatives said that they use lines of credit in their business and that regulations that raise their costs or reduce their revenue could mean they are unable to meet covenants in their loan agreements, causing lenders to reduce access to capital or increase their borrowing costs. The final rule’s provisions are more limited than those that were under consideration during the SBREFA process and should not raise costs or reduce revenue to the same degree. The Bureau did not receive public comments on the effect of the proposed rule on the cost of credit for small entities. IX. Paperwork Reduction Act Under the Paperwork Reduction Act of 1995 (PRA),733 Federal agencies are generally required to seek approval from the Office of Management and Budget (OMB) for information collection requirements prior to implementation. Under the PRA, the Bureau may not conduct or sponsor, and, notwithstanding any other provision of law, a person is not required to respond to, an information collection unless the information collection displays a valid control number assigned by OMB. As part of its continuing effort to reduce paperwork and respondent burden, the Bureau conducts a preclearance consultation program to provide the general public and Federal agencies with an opportunity to comment on the information collection 732 Charles Romeo & Ryan Sandler, The Effect of Debt Collection Laws on Access to Credit (Off. of Research, Bureau of Consumer Fin. Prot., Working Paper No. 2018–01, 2018). 733 44 U.S.C. 3501 et seq. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations requirements in accordance with the PRA. This helps ensure that the public understands the Bureau’s requirements or instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Bureau can properly assess the impact of collection requirements on respondents. The final rule amends 12 CFR part 1006 (Regulation F), which implements the FDCPA. The Bureau’s OMB control number for Regulation F is 3170–0056. This rule revises the information collection requirements contained in Regulation F that OMB has approved under that OMB control number. Under the final rule, the Bureau requires six information collection requirements in Regulation F: 1. State application for exemption (current § 1006.2, final rule § 1006.108). 2. Opt-out notice for electronic communications or attempts to communicate (final rule § 1006.6(e)). 3. Providing notice to transferee that secured debt was discharged in bankruptcy (final rule § 1006.30(b)(2)(ii)). 4. Responses to requests for originalcreditor information (final rule § 1006.38(c)). 5. Responses to disputes (final rule § 1006.38(d)(2)). 6. Record retention (final rule § 1006.100). The first collection, the State application for an exemption, is required to obtain a benefit and its respondents are exclusively State governments. The information collected under this collection regards State law, and so no issue of confidentiality arises. The remaining collections provide protection for consumers and will be mandatory. Because the Bureau does not collect any information in these remaining collections, no issue of confidentiality arises. The likely respondents are for-profit businesses that are FDCPA-covered debt collectors, including contingency debt collection agencies, debt buyers, law firms, and loan servicers, or State governments in the case of applications under § 1006.2 (final § 1006.108). The collections of information contained in this rule, and identified as such, have been submitted to OMB for review under section 3507(d) of the PRA. A complete description of the information collection requirements, including the burden estimate methods, is provided in the information collection request (ICR) that the Bureau has submitted to OMB under the requirements of the PRA. The Bureau VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 will publish a separate notice in the Federal Register when these information collections have been approved by OMB. Please send your comments to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for the Bureau of Consumer Financial Protection. Send these comments by email to oira_submission@omb.eop.gov or by fax to 202–395–6974. If you wish to share your comments with the Bureau, please send a copy of these comments as described in the Addresses section above. The ICR submitted to OMB requesting approval under the PRA for the information collection requirements contained herein is available at www.regulations.gov as well as on OMB’s public-facing docket at www.reginfo.gov. Title of Collection: Regulation F: Fair Debt Collection Practices Act. OMB Control Number: 3170–0056. Type of Review: Revision of a currently approved collection. Affected Public: Private Sector; State Governments. Estimated Number of Respondents: 12,027. Estimated Total Annual Burden Hours: 860,500. The Bureau has a continuing interest in the public’s opinion of its collections of information. At any time, comments regarding the burden estimate, or any other aspect of the information collection, including suggestions for reducing the burden, may be sent to the Consumer Financial Protection Bureau (Attention: PRA Office), 1700 G Street NW, Washington, DC 20552, or by email to CFPB _PRA@cfpb.gov. Where applicable, the Bureau will display the control number assigned by OMB to any documents associated with any information collection requirements adopted in this rule. X. Congressional Review Act Pursuant to the Congressional Review Act,734 the Bureau will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States at least 60 days prior to the rule’s published effective date. The Office of Information and Regulatory Affairs has designated this rule as a ‘‘major rule’’ as defined by 5 U.S.C. 804(2). XI. Signing Authority The Director of the Bureau, Kathleen L. Kraninger, having reviewed and approved this document, is delegating the authority to electronically sign this 734 5 PO 00000 U.S.C. 801 et seq. Frm 00155 Fmt 4701 Sfmt 4700 76887 document to Laura Galban, a Bureau Federal Register Liaison, for purposes of publication in the Federal Register. List of Subjects in 12 CFR Part 1006 Administrative practice and procedure, Consumer protection, Credit, Debt collection, Intergovernmental relations. Authority and Issuance For the reasons set forth above, the Bureau revises Regulation F, 12 CFR part 1006, to read as follows: ■ PART 1006—DEBT COLLECTION PRACTICES (REGULATION F) Subpart A—General Sec. 1006.1 Authority, purpose, and coverage. 1006.2 Definitions. Subpart B—Rules for FDCPA Debt Collectors 1006.6 Communications in connection with debt collection. 1006.10 Acquisition of location information. 1006.14 Harassing, oppressive, or abusive conduct. 1006.18 False, deceptive, or misleading representations or means. 1006.22 Unfair or unconscionable means. 1006.26 [Reserved] 1006.30 Other prohibited practices. 1006.34 [Reserved] 1006.38 Disputes and requests for originalcreditor information. 1006.42 Sending required disclosures. Subpart C—[Reserved] Subpart D—Miscellaneous 1006.100 Record retention. 1006.104 Relation to State laws. 1006.108 Exemption for State regulation. Appendix A to Part 1006—Procedures for State Application for Exemption From the Provisions of the Act Appendix B to Part 1006—[Reserved] Appendix C to Part 1006—Issuance of Advisory Opinions Supplement I to Part 1006—Official Interpretations Authority: 12 U.S.C. 5512, 5514(b), 5532; 15 U.S.C. 1692l(d), 1692o, 7004. Subpart A—General § 1006.1 Authority, purpose, and coverage. (a) Authority. This part, known as Regulation F, is issued by the Bureau of Consumer Financial Protection pursuant to sections 814(d) and 817 of the Fair Debt Collection Practices Act (FDCPA or Act), 15 U.S.C. 1692l(d), 1692o; title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act), 12 U.S.C. 5481 et seq.; and paragraph (b)(1) of section 104 of the Electronic Signatures in Global and National Commerce Act (E–SIGN Act), 15 U.S.C. 7004. E:\FR\FM\30NOR3.SGM 30NOR3 76888 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations (b) Purpose. This part carries out the purposes of the FDCPA, which include eliminating abusive debt collection practices by debt collectors, ensuring that debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and promoting consistent State action to protect consumers against debt collection abuses. This part also prescribes requirements to ensure that certain features of debt collection are disclosed fully, accurately, and effectively to consumers in a manner that permits consumers to understand the costs, benefits, and risks associated with debt collection, in light of the facts and circumstances. Finally, this part imposes record retention requirements to enable the Bureau to administer and carry out the purposes of the FDCPA, the Dodd-Frank Act, and this part, as well as to prevent evasions thereof. The record retention requirements also will facilitate supervision of debt collectors and the assessment and detection of risks to consumers. (c) Coverage. (1) Except as provided in § 1006.108 and appendix A of this part regarding applications for State exemptions from the FDCPA, this part applies to debt collectors, as defined in § 1006.2(i), other than a person excluded from coverage by section 1029(a) of the Consumer Financial Protection Act of 2010, title X of the Dodd-Frank Act (12 U.S.C. 5519(a)). (2) [Reserved] TKELLEY on DSKBCP9HB2PROD with RULES3 § 1006.2 Definitions. For purposes of this part, the following definitions apply: (a) Act or FDCPA means the Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.). (b) 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. An attempt to communicate includes leaving a limited-content message, as defined in paragraph (j) of this section. (c) Bureau means the Bureau of Consumer Financial Protection. (d) Communicate or communication means the conveying of information regarding a debt directly or indirectly to any person through any medium. (e) Consumer means any natural person obligated or allegedly obligated to pay any debt. For purposes of § 1006.6, the term consumer includes the persons described in § 1006.6(a). The Bureau may further define this term by regulation to clarify its application when the consumer is deceased. (f) [Reserved] VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 (g) Creditor means any person who offers or extends credit creating a debt or to whom a debt is owed. The term creditor does not, however, include any person to the extent that such person receives an assignment or transfer of a debt in default solely to facilitate collection of the debt for another. (h) Debt means 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. (i)(1) Debt collector means any person who uses any instrumentality of interstate commerce or mail in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due, or asserted to be owed or due, to another. Notwithstanding paragraph (i)(2)(vi) of this section, the term debt collector includes any creditor that, in the process of collecting its own debts, uses any name other than its own that would indicate that a third person is collecting or attempting to collect such debts. For purposes of § 1006.22(e), the term also includes any person who uses any instrumentality of interstate commerce or mail in any business the principal purpose of which is the enforcement of security interests. (2) The term debt collector excludes: (i) Any officer or employee of a creditor while the officer or employee is collecting debts for the creditor in the creditor’s name; (ii) Any person while acting as a debt collector for another person if: (A) The person acting as a debt collector does so only for persons with whom the person acting as a debt collector is related by common ownership or affiliated by corporate control; and (B) The principal business of the person acting as a debt collector is not the collection of debts; (iii) Any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of the officer’s or employee’s official duties; (iv) Any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt; (v) Any nonprofit organization that, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in liquidating their debts by receiving payment from such PO 00000 Frm 00156 Fmt 4701 Sfmt 4700 consumers and distributing such amounts to creditors; (vi) Any person collecting or attempting to collect any debt owed or due, or asserted to be owed or due to another, to the extent such debt collection activity: (A) Is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (B) Concerns a debt that such person originated; (C) Concerns a debt that was not in default at the time such person obtained it; or (D) Concerns a debt that such person obtained as a secured party in a commercial credit transaction involving the creditor; and (vii) A private entity, to the extent such private entity is operating a bad check enforcement program that complies with section 818 of the Act. (j) Limited-content message means a voicemail message for a consumer that includes all of the content described in paragraph (j)(1) of this section, that may include any of the content described in paragraph (j)(2) of this section, and that includes no other content. (1) Required content. A limitedcontent message is a voicemail message for a consumer that includes: (i) A business name for the debt collector that does not indicate that the debt collector is in the debt collection business; (ii) A request that the consumer reply to the message; (iii) The name or names of one or more natural persons whom the consumer can contact to reply to the debt collector; and (iv) A telephone number or numbers that the consumer can use to reply to the debt collector. (2) Optional content. In addition to the content described in paragraph (j)(1) of this section, a limited-content message may include one or more of the following: (i) A salutation; (ii) The date and time of the message; (iii) Suggested dates and times for the consumer to reply to the message; and (iv) A statement that if the consumer replies, the consumer may speak to any of the company’s representatives or associates. (k) Person includes natural persons, corporations, companies, associations, firms, partnerships, societies, and joint stock companies. (l) State means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations Subpart B—Rules for FDCPA Debt Collectors TKELLEY on DSKBCP9HB2PROD with RULES3 § 1006.6 Communications in connection with debt collection. (a) Definition. For purposes of this section, the term consumer includes: (1) The consumer’s spouse; (2) The consumer’s parent, if the consumer is a minor; (3) The consumer’s legal guardian; (4) The executor or administrator of the consumer’s estate, if the consumer is deceased; and (5) A confirmed successor in interest, as defined in Regulation X, 12 CFR 1024.31, or Regulation Z, 12 CFR 1026.2(a)(27)(ii). (b) Communications with a consumer—(1) Prohibitions regarding unusual or inconvenient times or places. Except as provided in paragraph (b)(4) of this section, a debt collector must not communicate or attempt to communicate with a consumer in connection with the collection of any debt: (i) At any unusual time, or at a time that the debt collector knows or should know is inconvenient to the consumer. In the absence of the debt collector’s knowledge of circumstances to the contrary, a time before 8:00 a.m. and after 9:00 p.m. local time at the consumer’s location is inconvenient; or (ii) At any unusual place, or at a place that the debt collector knows or should know is inconvenient to the consumer. (2) Prohibitions regarding consumer represented by an attorney. Except as provided in paragraph (b)(4) of this section, a debt collector must not communicate or attempt to communicate with a consumer in connection with the collection of any debt if the debt collector knows the consumer is represented by an attorney with respect to such debt and knows, or can readily ascertain, the attorney’s name and address, unless the attorney: (i) Fails to respond within a reasonable period of time to a communication from the debt collector; or (ii) Consents to the debt collector’s direct communication with the consumer. (3) Prohibitions regarding consumer’s place of employment. Except as provided in paragraph (b)(4) of this section, a debt collector must not communicate or attempt to communicate with a consumer in connection with the collection of any debt at the consumer’s place of employment, if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 (4) Exceptions. The prohibitions in paragraphs (b)(1) through (3) of this section do not apply when a debt collector communicates or attempts to communicate with a consumer in connection with the collection of any debt with: (i) The prior consent of the consumer, given directly to the debt collector during a communication that does not violate paragraphs (b)(1) through (3) of this section; or (ii) The express permission of a court of competent jurisdiction. (c) Communications with a consumer—after refusal to pay or cease communication notice—(1) Prohibition. Except as provided in paragraph (c)(2) of this section, if a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wants the debt collector to cease further communication with the consumer, the debt collector must not communicate or attempt to communicate further with the consumer with respect to such debt. (2) Exceptions. The prohibition in paragraph (c)(1) of this section does not apply when a debt collector communicates or attempts to communicate further with a consumer with respect to such debt: (i) To advise the consumer that the debt collector’s further efforts are being terminated; (ii) To notify the consumer that the debt collector or creditor may invoke specified remedies that the debt collector or creditor ordinarily invokes; or (iii) Where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy. (d) Communications with third parties—(1) Prohibitions. Except as provided in paragraph (d)(2) of this section, a debt collector must not communicate, in connection with the collection of any debt, with any person other than: (i) The consumer; (ii) The consumer’s attorney; (iii) A consumer reporting agency, if otherwise permitted by law; (iv) The creditor; (v) The creditor’s attorney; or (vi) The debt collector’s attorney. (2) Exceptions. The prohibition in paragraph (d)(1) of this section does not apply when a debt collector communicates, in connection with the collection of any debt, with a person: (i) For the purpose of acquiring location information, as provided in § 1006.10; (ii) With the prior consent of the consumer given directly to the debt collector; PO 00000 Frm 00157 Fmt 4701 Sfmt 4700 76889 (iii) With the express permission of a court of competent jurisdiction; or (iv) As reasonably necessary to effectuate a postjudgment judicial remedy. (3) Reasonable procedures for email and text message communications. A debt collector maintains procedures that are reasonably adapted, for purposes of FDCPA section 813(c), to avoid a bona fide error in sending an email or text message communication that would result in a violation of paragraph (d)(1) of this section if those procedures include steps to reasonably confirm and document that: (i) The debt collector communicated with the consumer by sending an email to an email address described in paragraph (d)(4) of this section or a text message to a telephone number described in paragraph (d)(5) of this section; and (ii) The debt collector did not communicate with the consumer by sending an email to an email address or a text message to a telephone number that the debt collector knows has led to a disclosure prohibited by paragraph (d)(1) of this section. (4) Procedures for email addresses. For purposes of paragraph (d)(3)(i) of this section, a debt collector may send an email to an email address if: (i) Procedures based on communication between the consumer and the debt collector. (A) The consumer used the email address to communicate with the debt collector about the debt and the consumer has not since opted out of communications to that email address; or (B) The debt collector has received directly from the consumer prior consent to use the email address to communicate with the consumer about the debt and the consumer has not withdrawn that consent; or (ii) Procedures based on communication by the creditor. (A) A creditor obtained the email address from the consumer; (B) The creditor used the email address to communicate with the consumer about the account and the consumer did not ask the creditor to stop using it; (C) Before the debt collector used the email address to communicate with the consumer about the debt, the creditor sent the consumer a written or electronic notice, to an address the creditor obtained from the consumer and used to communicate with the consumer about the account, that clearly and conspicuously disclosed: (1) That the debt has been or will be transferred to the debt collector; E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76890 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations (2) The email address and the fact that the debt collector might use the email address to communicate with the consumer about the debt; (3) That, if others have access to the email address, then it is possible they may see the emails; (4) Instructions for a reasonable and simple method by which the consumer could opt out of such communications; and (5) The date by which the debt collector or the creditor must receive the consumer’s request to opt out, which must be at least 35 days after the date the notice is sent; (D) The opt-out period provided under paragraph (d)(4)(ii)(C)(5) of this section has expired and the consumer has not opted out; and (E) The email address has a domain name that is available for use by the general public, unless the debt collector knows the address is provided by the consumer’s employer. (iii) Procedures based on communication by the prior debt collector. (A) Any prior debt collector obtained the email address in accordance with paragraph (d)(4)(i) or (ii) of this section; (B) The immediately prior debt collector used the email address to communicate with the consumer about the debt; and (C) The consumer did not opt out of such communications. (5) Procedures for telephone numbers for text messages. For purposes of paragraph (d)(3)(i) of this section, a debt collector may send a text message to a telephone number if: (i) The consumer used the telephone number to communicate with the debt collector about the debt by text message, the consumer has not since opted out of text message communications to that telephone number, and within the past 60 days either: (A) The consumer sent the text message described in paragraph (d)(5)(i) of this section or a new text message to the debt collector from that telephone number; or (B) The debt collector confirmed, using a complete and accurate database, that the telephone number has not been reassigned from the consumer to another user since the date of the consumer’s most recent text message to the debt collector from that telephone number; or (ii) The debt collector received directly from the consumer prior consent to use the telephone number to communicate with the consumer about the debt by text message, the consumer has not since withdrawn that consent, VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 and within the past 60 days the debt collector either: (A) Obtained the prior consent described in paragraph (d)(5)(ii) of this section or renewed consent from the consumer; or (B) Confirmed, using a complete and accurate database, that the telephone number has not been reassigned from the consumer to another user since the date of the consumer’s most recent consent to use that telephone number to communicate about the debt by text message. (e) Opt-out notice for electronic communications or attempts to communicate. A debt collector who communicates or attempts to communicate with a consumer electronically in connection with the collection of a debt using a specific email address, telephone number for text messages, or other electronicmedium address must include in such communication or attempt to communicate a clear and conspicuous statement describing a reasonable and simple method by which the consumer can opt out of further electronic communications or attempts to communicate by the debt collector to that address or telephone number. The debt collector may not require, directly or indirectly, that the consumer, in order to opt out, pay any fee to the debt collector or provide any information other than the consumer’s opt-out preferences and the email address, telephone number for text messages, or other electronic-medium address subject to the opt-out request. § 1006.10 Acquisition of location information. (a) Definition. The term location information means a consumer’s: (1) Place of abode and telephone number at such place; or (2) Place of employment. (b) Form and content of location communications. A debt collector communicating with a person other than the consumer for the purpose of acquiring location information must: (1) Identify himself or herself individually by name, state that he or she is confirming or correcting the consumer’s location information, and, only if expressly requested, identify his or her employer; (2) Not state that the consumer owes any debt; (3) Not communicate by postcard; (4) Not use any language or symbol on any envelope or in the contents of any communication by mail indicating that the debt collector is in the debt collection business or that the PO 00000 Frm 00158 Fmt 4701 Sfmt 4700 communication relates to the collection of a debt; and (5) After the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney’s name and address, not communicate with any person other than that attorney, unless the attorney fails to respond to the debt collector’s communication within a reasonable period of time. (c) Frequency of location communications. In addition to complying with § 1006.14(b)(1), a debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer must not communicate more than once with such person unless requested to do so by such person, or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information. § 1006.14 Harassing, oppressive, or abusive conduct. (a) In general. A debt collector must not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt, including, but not limited to, the conduct described in paragraphs (b) through (h) of this section. (b) Repeated or continuous telephone calls or telephone conversations—(1) In general. In connection with the collection of a debt, a debt collector must not place telephone calls or engage any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. (2) Telephone call frequencies; presumptions of compliance and violation. (i) Subject to the exclusions in paragraph (b)(3) of this section, a debt collector is presumed to comply with paragraph (b)(1) of this section and FDCPA section 806(5) (15 U.S.C. 1692d(5)) if the debt collector places a telephone call to a particular person in connection with the collection of a particular debt neither: (A) More than seven times within seven consecutive days; nor (B) Within a period of seven consecutive days after having had a telephone conversation with the person in connection with the collection of such debt. The date of the telephone conversation is the first day of the seven-consecutive-day period. (ii) Subject to the exclusions in paragraph (b)(3) of this section, a debt E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations collector is presumed to violate paragraph (b)(1) of this section and FDCPA section 806(5) if the debt collector places a telephone call to a particular person in connection with the collection of a particular debt in excess of either of the telephone call frequencies described in paragraph (b)(2)(i) of this section. (3) Certain telephone calls excluded from the telephone call frequencies. Telephone calls placed to a person do not count toward the telephone call frequencies described in paragraph (b)(2)(i) of this section if they are: (i) Placed with such person’s prior consent given directly to the debt collector and within a period no longer than seven consecutive days after receiving the prior consent, with the date the debt collector receives prior consent counting as the first day of the seven-consecutive-day period; (ii) Not connected to the dialed number; or (iii) Placed to the persons described in § 1006.6(d)(1)(ii) through (vi). (4) Definition. For purposes of this paragraph (b), particular debt means each of a consumer’s debts in collection. However, in the case of student loan debts, the term particular debt means all student loan debts that a consumer owes or allegedly owes that were serviced under a single account number at the time the debts were obtained by a debt collector. (c) Violence or other criminal means. In connection with the collection of a debt, a debt collector must not use or threaten to use violence or other criminal means to harm the physical person, reputation, or property of any person. (d) Obscene or profane language. In connection with the collection of a debt, a debt collector must not use obscene or profane language, or language the natural consequence of which is to abuse the hearer or reader. (e) Debtor’s list. In connection with the collection of a debt, a debt collector must not publish a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of sections 603(f) or 604(a)(3) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f) or 1681b(a)(3)). (f) Coercive advertisements. In connection with the collection of a debt, a debt collector must not advertise for sale any debt to coerce payment of the debt. (g) Meaningful disclosure of identity. In connection with the collection of a debt, a debt collector must not place telephone calls without meaningfully VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 disclosing the caller’s identity, except as provided in § 1006.10. (h) Prohibited communication media—(1) In general. In connection with the collection of any debt, a debt collector must not communicate or attempt to communicate with a person through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person. (2) Exceptions. Notwithstanding the prohibition in paragraph (h)(1) of this section: (i) If a person opts out of receiving electronic communications from a debt collector, a debt collector may send an electronic confirmation of the person’s request to opt out, provided that the electronic confirmation contains no information other than a statement confirming the person’s request and that the debt collector will honor it; (ii) If a person initiates contact with a debt collector using a medium of communication that the person previously requested the debt collector not use, the debt collector may respond once through the same medium of communication used by the person; or (iii) 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. § 1006.18 False, deceptive, or misleading representations or means. (a) In general. A debt collector must not use any false, deceptive, or misleading representation or means in connection with the collection of any debt, including, but not limited to, the conduct described in paragraphs (b) through (d) of this section. (b) False, deceptive, or misleading representations. (1) A debt collector must not falsely represent or imply that: (i) The debt collector is vouched for, bonded by, or affiliated with the United States or any State, including through the use of any badge, uniform, or facsimile thereof. (ii) The debt collector operates or is employed by a consumer reporting agency, as defined by section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)). (iii) Any individual is an attorney or that any communication is from an attorney. (iv) The consumer committed any crime or other conduct in order to disgrace the consumer. PO 00000 Frm 00159 Fmt 4701 Sfmt 4700 76891 (v) A sale, referral, or other transfer of any interest in a debt causes or will cause the consumer to: (A) Lose any claim or defense to payment of the debt; or (B) Become subject to any practice prohibited by this part. (vi) Accounts have been turned over to innocent purchasers for value. (vii) Documents are legal process. (viii) Documents are not legal process forms or do not require action by the consumer. (2) A debt collector must not falsely represent: (i) The character, amount, or legal status of any debt. (ii) Any services rendered, or compensation that may be lawfully received, by any debt collector for the collection of a debt. (3) A debt collector must not represent or imply that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action. (c) False, deceptive, or misleading collection means. A debt collector must not: (1) Threaten to take any action that cannot legally be taken or that is not intended to be taken. (2) Communicate or threaten to communicate to any person credit information that the debt collector knows or should know is false, including the failure to communicate that a disputed debt is disputed. (3) Use or distribute any written communication that simulates or that the debt collector falsely represents to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or that creates a false impression about its source, authorization, or approval. (4) Use any business, company, or organization name other than the true name of the debt collector’s business, company, or organization. (d) False representations or deceptive means. A debt collector must not use any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer. (e) Disclosures required—(1) Initial communications. A debt collector must disclose in its initial communication with a consumer that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose. If the debt collector’s initial communication with the consumer is oral, the debt collector E:\FR\FM\30NOR3.SGM 30NOR3 76892 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations must make the disclosure required by this paragraph again in its initial written communication with the consumer. (2) Subsequent communications. In each communication with the consumer subsequent to the communications described in paragraph (e)(1) of this section, the debt collector must disclose that the communication is from a debt collector. (3) Exception. Disclosures under paragraphs (e)(1) and (2) of this section are not required in a formal pleading made in connection with a legal action. (4) Translated disclosures. A debt collector must make the disclosures required by paragraphs (e)(1) and (2) of this section in the same language or languages used for the rest of the communication in which the debt collector conveyed the disclosures. Any translation of the disclosures a debt collector uses must be complete and accurate. (f) Assumed names. This section does not prohibit a debt collector’s employee from using an assumed name when communicating or attempting to communicate with a person, provided that the employee uses the assumed name consistently and that the debt collector can readily identify any employee using an assumed name. TKELLEY on DSKBCP9HB2PROD with RULES3 § 1006.22 means. Unfair or unconscionable (a) In general. A debt collector must not use unfair or unconscionable means to collect or attempt to collect any debt, including, but not limited to, the conduct described in paragraphs (b) through (f) of this section. (b) Collection of unauthorized amounts. A debt collector must not collect any amount unless such amount is expressly authorized by the agreement creating the debt or permitted by law. For purposes of this paragraph, the term ‘‘any amount’’ includes any interest, fee, charge, or expense incidental to the principal obligation. (c) Postdated payment instruments. A debt collector must not: (1) Accept from any person a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector’s intent to deposit such check or instrument not more than ten, nor less than three, days (excluding legal public holidays identified in 5 U.S.C. 6103(a), Saturdays, and Sundays) prior to such deposit. (2) Solicit any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution. (3) Deposit or threaten to deposit any postdated check or other postdated VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 payment instrument prior to the date on such check or instrument. (d) Charges resulting from concealment of purpose. A debt collector must not cause charges to be made to any person for communications by concealment of the true purpose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees. (e) Nonjudicial action regarding property. A debt collector must not take or threaten to take any nonjudicial action to effect dispossession or disablement of property if: (1) There is no present right to possession of the property claimed as collateral through an enforceable security interest; (2) There is no present intention to take possession of the property; or (3) The property is exempt by law from such dispossession or disablement. (f) Restrictions on use of certain media. A debt collector must not: (1) Communicate with a consumer regarding a debt by postcard. (2) Use any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by mail, except that a debt collector may use the debt collector’s business name on an envelope if such name does not indicate that the debt collector is in the debt collection business. (3) Communicate or attempt to communicate with a consumer by sending an email to an email address that the debt collector knows is provided to the consumer by the consumer’s employer, unless the email address is one described in § 1006.6(d)(4)(i) or (iii). (4) Communicate or attempt to communicate with a person in connection with the collection of a debt through a social media platform if the communication or attempt to communicate is viewable by the general public or the person’s social media contacts. (g) Safe harbor for certain emails and text messages relating to the collection of a debt. A debt collector who communicates with a consumer by sending an email or text message in accordance with the procedures described in § 1006.6(d)(3) does not violate paragraph (a) of this section by revealing in the email or text message the debt collector’s name or other information indicating that the communication relates to the collection of a debt. § 1006.26 [Reserved] § 1006.30 Other prohibited practices. (a) [Reserved] PO 00000 Frm 00160 Fmt 4701 Sfmt 4700 (b) Prohibition on the sale, transfer for consideration, or placement for collection of certain debts—(1) In general. Except as provided in paragraph (b)(2) of this section, a debt collector must not sell, transfer for consideration, or place for collection a debt if the debt collector knows or should know that the debt has been paid or settled or discharged in bankruptcy. (2) Exceptions—(i) In general. A debt collector may transfer for consideration a debt described in paragraph (b)(1) of this section if the debt collector: (A) Transfers the debt to the debt’s owner; (B) Transfers the debt to a previous owner of the debt, if the transfer is authorized under the terms of the original contract between the debt collector and the previous owner; or (C) Transfers the debt as a result of a merger, acquisition, purchase and assumption transaction, or a transfer of substantially all of the debt collector’s assets. (ii) Secured claims in bankruptcy. A debt collector may sell, transfer for consideration, or place for collection a debt that has been discharged in bankruptcy if the debt is secured by an enforceable lien and the debt collector notifies the transferee that the consumer’s personal liability for the debt was discharged in bankruptcy. (iii) Securitizations and pledges of debt. Paragraph (b)(1) of this section does not prohibit the securitization of a debt or the pledging of a portfolio of debt as collateral in connection with a borrowing. (c) Multiple debts. If a consumer makes any single payment to a debt collector with respect to multiple debts owed by the consumer to the debt collector, the debt collector: (1) Must not apply the payment to any debt that is disputed by the consumer; and (2) If applicable, must apply the payment in accordance with the consumer’s directions. (d) Legal actions by debt collectors— (1) Action to enforce interest in real property. A debt collector who brings a legal action against a consumer to enforce an interest in real property securing the consumer’s debt must bring the action only in a judicial district or similar legal entity in which such real property is located. (2) Other legal actions. A debt collector who brings a legal action against a consumer other than to enforce an interest in real property securing the consumer’s debt must bring such action only in the judicial district or similar legal entity in which the consumer: (i) Signed the contract sued upon; or E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations (ii) Resides at the commencement of the action. (3) Authorization of actions. Nothing in this part authorizes debt collectors to bring legal actions. (e) Furnishing certain deceptive forms. A debt collector must not design, compile, and furnish any form that the debt collector knows would be used to cause a consumer falsely to believe that a person other than the consumer’s creditor is participating in collecting or attempting to collect a debt that the consumer allegedly owes to the creditor. § 1006.34 [Reserved] TKELLEY on DSKBCP9HB2PROD with RULES3 § 1006.38 Disputes and requests for original-creditor information. (a) Definitions. For purposes of this section, the following definitions apply: (1) Duplicative dispute means a dispute submitted by the consumer in writing within the validation period that: (i) Is substantially the same as a dispute previously submitted by the consumer in writing within the validation period for which the debt collector already has satisfied the requirements of paragraph (d)(2)(i) of this section; and (ii) Does not include new and material information to support the dispute. (2) Validation period means the thirty-day period after a consumer’s receipt of the written notice of debt described in FDCPA section 809 (15 U.S.C. 1692g) as defined by this part. (b)(1) Overshadowing of rights to dispute or request original-creditor information. During the validation period, a debt collector must not engage in any collection activities or communications that overshadow or are inconsistent with the disclosure of the consumer’s rights to dispute the debt and to request the name and address of the original creditor. The Bureau may provide by regulation a safe harbor for debt collectors when they use certain Bureau-approved disclosures. (2) [Reserved] (c) Requests for original-creditor information. (1) Upon receipt of a request for the name and address of the original creditor submitted by the consumer in writing within the validation period, a debt collector must cease collection of the debt until the debt collector sends the name and address of the original creditor to the consumer in writing or electronically in the manner required by § 1006.42. The Bureau may provide by regulation for alternative procedures when the original creditor is the same as the current creditor. (2) [Reserved] VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 (d) Disputes—(1) Failure to dispute. The failure of a consumer to dispute the validity of a debt does not constitute a legal admission of liability by the consumer. (2) Response to disputes. Upon receipt of a dispute submitted by the consumer in writing within the validation period, a debt collector must cease collection of the debt, or any disputed portion of the debt, until the debt collector: (i) Sends a copy either of verification of the debt or of a judgment to the consumer in writing or electronically in the manner required by § 1006.42; or (ii) In the case of a dispute that the debt collector reasonably determines is a duplicative dispute, either: (A) Notifies the consumer in writing or electronically in the manner required by § 1006.42(a)(1) that the dispute is duplicative, provides a brief statement of the reasons for the determination, and refers the consumer to the debt collector’s response to the earlier dispute; or (B) Satisfies paragraph (d)(2)(i) of this section. § 1006.42 Sending required disclosures. (a) Sending required disclosures—(1) In general. A debt collector who sends disclosures required by the Act and this part in writing or electronically must do so in a manner that is reasonably expected to provide actual notice, and in a form that the consumer may keep and access later. (2) Exceptions. A debt collector need not comply with paragraph (a)(1) of this section when sending the disclosure required by § 1006.6(e) or § 1006.18(e) in writing or electronically, unless the disclosure is included on a notice required by FDCPA section 809(a) (15 U.S.C. 1692g(a)), as implemented by this part, or § 1006.38(c) or (d)(2). (b) Requirements for certain disclosures sent electronically. To comply with paragraph (a) of this section, a debt collector who sends the notice required by FDCPA section 809(a), as implemented by this part, or the disclosures described in § 1006.38(c) or (d)(2)(i), electronically must do so in accordance with section 101(c) of the Electronic Signatures in Global and National Commerce Act (E–SIGN Act) (15 U.S.C. 7001(c)). Subpart C—[Reserved] Subpart D—Miscellaneous § 1006.100 Record retention. (a) In general. Except as provided in paragraph (b) of this section, a debt collector must retain records that are PO 00000 Frm 00161 Fmt 4701 Sfmt 4700 76893 evidence of compliance or noncompliance with the FDCPA and this part starting on the date that the debt collector begins collection activity on a debt until three years after the debt collector’s last collection activity on the debt. (b) Special rule for telephone call recordings. If a debt collector records telephone calls made in connection with the collection of a debt, the debt collector must retain the recording of each such telephone call for three years after the date of the call. § 1006.104 Relation to State laws. Neither the Act nor the corresponding provisions of this part annul, alter, affect, or exempt any person subject to the provisions of the Act or the corresponding provisions of this part from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of the Act or the corresponding provisions of this part, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with the Act or the corresponding provisions of this part if the protection such law affords any consumer is greater than the protection provided by the Act or the corresponding provisions of this part. § 1006.108 Exemption for State regulation. (a) Exemption for State regulation. Any State may apply to the Bureau for a determination that, under the laws of that State, any class of debt collection practices within that State is subject to requirements that are substantially similar to those imposed under sections 803 through 812 of the Act (15 U.S.C. 1692a through 1692j) and the corresponding provisions of this part, and that there is adequate provision for State enforcement of such requirements. (b) Procedures and criteria. The procedures and criteria whereby States may apply to the Bureau for exemption of a class of debt collection practices within the applying State from the provisions of the Act and the corresponding provisions of this part as provided in section 817 of the Act (15 U.S.C. 1692o) are set forth in appendix A of this part. Appendix A to Part 1006—Procedures for State Application for Exemption From the Provisions of the Act I. Purpose and Definitions (a) This appendix establishes procedures and criteria whereby States may apply to the Bureau for exemption of a class of debt collection practices within the applying State from the provisions of the Act and the E:\FR\FM\30NOR3.SGM 30NOR3 76894 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations corresponding provisions of this part as provided in section 817 of the Act (15 U.S.C. 1692o). (b) For purposes of this appendix: (1) Applicant State law means the State law that, for a class of debt collection practices within that State, is claimed to contain requirements that are substantially similar to the requirements that relevant Federal law imposes on that class of debt collection practices, and that contains adequate provision for State enforcement. (2) Class of debt collection practices includes one or more such classes of debt collection practices referred to in paragraph I(b)(1) of this appendix. (3) Relevant Federal law means sections 803 through 812 of the Act (15 U.S.C. 1692a through 1692j) and the corresponding provisions of this part. (4) State law includes State statutes, any regulations that implement State statutes, and formal interpretations of State statutes or regulations by a court of competent jurisdiction or duly authorized State agency. TKELLEY on DSKBCP9HB2PROD with RULES3 II. Application Any State may apply to the Bureau pursuant to the terms of this appendix for a determination that the applicant State law contains requirements that, for a class of debt collection practices within that State, are substantially similar to the requirements that relevant Federal law imposes on that class of debt collection practices, and that the applicant State law contains adequate provision for State enforcement. The application must be in writing, addressed to the Assistant Director, Office of Regulations, Division of Research, Markets, and Regulations, Bureau of Consumer Financial Protection, 1700 G Street NW, Washington, DC 20552, signed by the Governor, Attorney General, or State official having primary enforcement responsibility under the State law that applies to the class of debt collection practices, and must be supported by the documents specified in this appendix. III. Supporting Documents The application must be accompanied by the following, which may be submitted in paper or electronic form: (a) A copy of the applicant State law. (b) A comparison of each provision of relevant Federal law with the corresponding provisions of the applicant State law, together with reasons supporting the claim that the corresponding provisions of the applicant State law are substantially similar to the provisions of relevant Federal law, and an explanation as to why any differences between the State statute or regulation and Federal law are not inconsistent with the provisions of relevant Federal law and do not result in a diminution in the protection otherwise afforded consumers; and a statement that no other State laws (including administrative or judicial interpretations) are related to, or would have an effect upon, the State law that is being considered by the Bureau in making its determination. (c) A comparison of the provisions of the State law that provide for enforcement with the provisions of section 814 of the Act (15 U.S.C. 1692l), together with reasons VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 supporting the claim that the applicant State law provides for adequate administrative enforcement. (d) A statement identifying the office designated or to be designated to enforce the applicant State law. The statement must show how the office provides for adequate enforcement of the applicant State law, including by showing that the office has necessary facilities, personnel, and funding. The statement must include, for example, complete information regarding the fiscal arrangements for administrative enforcement (including the amount of funds available or to be provided), the number and qualifications of personnel engaged or to be engaged in enforcement, and a description of the procedures under which the applicant State law is to be enforced by the State. IV. Criteria for Determination The Bureau will consider the criteria set forth below, and any other relevant information, in determining whether the applicant State law is substantially similar to relevant Federal law and whether there is adequate provision for enforcement of the applicant State law. In making that determination, the Bureau primarily will consider each provision of the applicant State law in comparison with each corresponding provision in relevant Federal law, and not the State law as a whole in comparison with the Act as a whole. (a)(1) In order for the applicant State law to be substantially similar to relevant Federal law, the applicant State law at least must provide that: (i) Definitions and rules of construction, as applicable, import a meaning and have an application that are substantially similar to those prescribed by relevant Federal law. (ii) Debt collectors provide all of the applicable notices required by relevant Federal law, with the content and in the terminology, form, and time periods prescribed pursuant to relevant Federal law. The Bureau may determine whether additional notice requirements under the applicant State law affect a determination that the applicant State law is substantially similar to relevant Federal law. (iii) Debt collectors take all affirmative actions and abide by obligations substantially similar to those prescribed by relevant Federal law under substantially similar conditions and within substantially similar time periods as are prescribed under relevant Federal law; (iv) Debt collectors abide by prohibitions that are substantially similar to those prescribed by relevant Federal law; (v) Consumers’ obligations or responsibilities are no more costly, lengthy, or burdensome than consumers’ corresponding obligations or responsibilities under relevant Federal law; and (vi) Consumers’ rights and protections are substantially similar to those provided by relevant Federal law under conditions or within time periods that are substantially similar to those prescribed by relevant Federal law. (2) In applying the criteria set forth in paragraph IV(a)(1) of this appendix, the Bureau will not consider adversely any PO 00000 Frm 00162 Fmt 4701 Sfmt 4700 additional requirements of State law that are not inconsistent with the purpose of the Act or the requirements imposed under relevant Federal law. (b) In determining whether provisions for enforcement of the applicant State law are adequate, consideration will be given to the extent to which, under the applicant State law, provision is made for administrative enforcement, including necessary facilities, personnel, and funding. V. Public Comment In connection with any application that has been filed in accordance with the requirements of parts II and III of this appendix and following initial review of the application, a proposed rule concerning the application for exemption will be published by the Bureau in the Federal Register, and a copy of such application will be made available for examination by interested persons during business hours at the Bureau of Consumer Financial Protection, 1700 G Street NW, Washington, DC 20552. A comment period will be allowed from the date of such publication for interested parties to submit written comments to the Bureau regarding that application. VI. Exemption From Requirements If the Bureau determines on the basis of the information before it that, under the applicant State law, a class of debt collection practices is subject to requirements substantially similar to those imposed under relevant Federal law and that there is adequate provision for State enforcement, the Bureau will exempt the class of debt collection practices in that State from the requirements of relevant Federal law and section 814 of the Act in the following manner and subject to the following conditions: (a) A final rule granting the exemption will be published in the Federal Register, and the Bureau will furnish a copy of such rule to the State official who made application for such exemption, to each Federal authority responsible for administrative enforcement of the requirements of relevant Federal law, and to the Attorney General of the United States. Any exemption granted will be effective 90 days after the date of publication of such rule in the Federal Register. (b) Any State that receives an exemption must, through its appropriate official, take the following steps: (i) Inform the Assistant Director, Office of Regulations, Division of Research, Markets, and Regulations, Bureau of Consumer Financial Protection, 1700 G Street NW, Washington, DC 20552 in writing within 30 days of any change in the applicant State law. The report of any such change must contain copies of the full text of that change, together with statements setting forth the information and opinions regarding that change that are specified in paragraph III. (ii) Provide, not later than two years after the date the exemption is granted, and every two years thereafter, a report to the Bureau in writing concerning the manner in which the State has enforced the applicant State law in the preceding two years and an update of the information required under paragraph III(d) of this appendix. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations (c) The Bureau will inform any State that receives such an exemption, through its appropriate official, of any subsequent amendments of the Act or this part that might necessitate the amendment of State law for the exemption to continue. (d) After an exemption is granted, the requirements of the applicable State law constitute the requirements of relevant Federal law, except to the extent such State law imposes requirements not imposed by the Act or this part. TKELLEY on DSKBCP9HB2PROD with RULES3 VII. Adverse Determination (a) If, after publication of a proposed rule in the Federal Register as provided under part V of this appendix, the Bureau finds on the basis of the information before it that it cannot make a favorable determination in connection with the application, the Bureau will notify the appropriate State official of the facts upon which such findings are based and will afford that State authority a reasonable opportunity to submit additional materials that demonstrate the basis for granting an exemption. (b) If, after having afforded the State authority such opportunity to demonstrate the basis for granting an exemption, the Bureau finds on the basis of the information before it that it still cannot make a favorable determination in connection with the application, the Bureau will publish in the Federal Register a final rule containing its determination regarding the application and will furnish a copy of such rule to the State official who made application for such exemption. VIII. Revocation of Exemption (a) The Bureau reserves the right to revoke any exemption granted under the provisions of the Act or this part, if at any time it determines that the State law does not, in fact, impose requirements that are substantially similar to relevant Federal law or that there is not, in fact, adequate provision for State enforcement. (b) Before revoking any such exemption, the Bureau will notify the State of the facts or conduct that, in the Bureau’s opinion, warrant such revocation, and will afford that State such opportunity as the Bureau deems appropriate in the circumstances to demonstrate continued eligibility for an exemption. (c) If, after having been afforded the opportunity to demonstrate or achieve compliance, the Bureau determines that the State has not done so, a proposed rule to revoke such exemption will be published in the Federal Register. A comment period will be allowed from the date of such publication for interested persons to submit written comments to the Bureau regarding the intention to revoke. (d) If such exemption is revoked, a final rule revoking the exemption will be published by the Bureau in the Federal Register, and a copy of such rule will be furnished to the State, to the Federal authorities responsible for enforcement of the requirements of the Act, and to the Attorney General of the United States. The revocation becomes effective, and the class of debt collection practices affected within that State VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 become subject to the requirements of sections 803 through 812 of the Act and the corresponding provisions of this part, 90 days after the date of publication of the final rule in the Federal Register. Appendix B to Part 1006—[Reserved] Appendix C to Part 1006—Issuance of Advisory Opinions 1. Advisory opinions. Any act done or omitted in good faith in conformity with any advisory opinion issued by the Bureau, including advisory opinions referenced in this appendix, provides the protection afforded under section 813(e) of the Act. The Bureau will amend this appendix periodically to incorporate references to advisory opinions that the Bureau issues. 2. Requests for issuance of advisory opinions. A request for an advisory opinion may be submitted in accordance with the instructions regarding submission and content of requests applicable to any relevant advisory opinion program that the Bureau offers. Requests for advisory opinions will be reviewed consistent with the process outlined in any such program, and any resulting advisory opinions will be published in the Federal Register and on consumerfinance.gov. 3. Bureau-issued advisory opinions. The Bureau has issued the following advisory opinions: a. Safe Harbors from Liability under the Fair Debt Collection Practices Act for Certain Actions Taken in Compliance with Mortgage Servicing Rules under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z), 81 FR 71977 (Oct. 19, 2016). Supplement I to Part 1006—Official Interpretations Introduction 1. Official status. This commentary is the vehicle by which the Bureau of Consumer Financial Protection supplements Regulation F, 12 CFR part 1006. The provisions of the commentary are issued under the same authorities as the corresponding provisions of Regulation F and have been adopted in accordance with the notice-and-comment procedures of the Administrative Procedure Act (5 U.S.C. 553). Unless specified otherwise, references in this commentary are to sections of Regulation F or the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. No commentary is expected to be issued other than by means of this Supplement I. 2. Procedure for requesting interpretations. Anyone may request that an official interpretation of the regulation be added to this commentary. A request for such an official interpretation must be in writing and addressed to the Associate Director, Division of Research, Markets, and Regulations, Bureau of Consumer Financial Protection, 1700 G Street NW, Washington, DC 20552. The request must contain a complete statement of all relevant facts concerning the issue, including copies of all pertinent documents. Revisions to this commentary that are adopted in accordance with the rulemaking procedures of section 553 of the Administrative Procedure Act (5 U.S.C. 553) PO 00000 Frm 00163 Fmt 4701 Sfmt 4700 76895 will be incorporated in the commentary following publication in the Federal Register. 3. Comment designations. Each comment in the commentary is identified by a number and the regulatory section or paragraph that it interprets. The comments are designated with as much specificity as possible according to the particular regulatory provision addressed. For example, comments to § 1006.6(d)(4) are further divided by subparagraph, such as comment 6(d)(4)(i)–1 and comment 6(d)(4)(ii)–1. Comments that have more general application are designated, for example, as comments 38–1 and 38–2. This introduction may be cited as comments I–1, I–2, and I–3. Subpart A—General Section 1006.2—Definitions 2(b) Attempt To Communicate 1. Examples. Section 1006.2(b) defines an attempt to communicate as 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. An act to initiate a communication or other contact about a debt 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. For example: i. Assume that a debt collector places a telephone call to a person about a debt. Regardless of whether the debt collector reaches the person, the debt collector has attempted to communicate with the person. ii. Assume that a debt collector places a telephone call to a person about a debt and leaves a voicemail message. Regardless of whether the voicemail message consists solely of a limited-content message or includes content that conveys, directly or indirectly, information about a debt, the debt collector has attempted to communicate with the person. 2(d) Communicate or Communication 1. Any medium. Section 1006.2(d) provides, in relevant part, that a communication can occur through any medium. ‘‘Any medium’’ includes any oral, written, electronic, or other medium. For example, a communication may occur in person or by telephone, audio recording, paper document, mail, email, text message, social media, or other electronic media. 2. Information regarding a debt. Section 1006.2(d) provides, in relevant part, that a communication means conveying information regarding a debt. A debt collector does not convey information regarding a debt directly or indirectly to any person if the debt collector leaves only a limited-content message, as defined in § 1006.2(j). A debt collector who provides marketing or advertising that does not contain information about a specific debt or debts has not communicated under § 1006.2(d), even if the debt collector transmits the marketing or advertising message to a consumer, because the debt collector has not conveyed information regarding a debt. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76896 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 2(h) Debt 1. Consumer. Section 1006.2(h) defines debt to mean, in part, any obligation or alleged obligation of a consumer to pay money arising out of a transaction. Section 1006.2(e), in turn, defines consumer to mean any natural person obligated or allegedly obligated to pay any debt. Only natural persons, therefore, can incur debts as defined in § 1006.2(h). 2(i) Debt Collector 1. In general. Section 1006.2(i) provides, in part, that a debt collector is any person who uses any instrumentality of interstate commerce or mail in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due, or asserted to be owed or due, to another. 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). 2(j) Limited-Content Message 1. In general. Section 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. Any other message is not a limitedcontent message. If a voicemail message includes content other than the specific items described in § 1006.2(j)(1) and (2), and such other content directly or indirectly conveys any information about a debt, the message is a communication, as defined in § 1006.2(d). For example, a voicemail message that includes a statement that the message is from a debt collector and a request to speak to a particular consumer is not a limited-content message because it includes more than the required or permitted content. 2. Message for a consumer. Section 1006.2(j) provides, in part, that a limitedcontent message is a voicemail message for a consumer. A message knowingly left for a third party is not a limited-content message because it is not for a consumer. For example, assume that a debt collector has a telephone number that the debt collector knows belongs to the consumer’s friend. A voicemail message left after calling that number is not a limited-content message, even if the message includes no more than the content described in § 1006.2(j)(1) and (2) because the debt collector knowingly left the message for someone other than the consumer. Other provisions of this part may, in certain circumstances, restrict a debt collector from leaving a limited-content message or otherwise attempting to communicate with a consumer. See §§ 1006.6(b) and (c) and 1006.22(f) and their related commentary for further guidance regarding when a debt collector is prohibited from attempting to communicate with a consumer. 3. Meaningful disclosure of identity. A debt collector who leaves only a limited-content VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 message for a consumer does not violate § 1006.14(g)’s requirement to meaningfully disclose the caller’s identity with respect to that voicemail message. 2(j)(1) Required Content 1. Example. The following example illustrates a limited-content message that includes only the content described in § 1006.2(j)(1): ‘‘This is Robin Smith calling from ABC Inc. Please contact me or Jim Johnson at 1–800–555–1212.’’ 2(j)(2) Optional Content 1. In general. Section 1006.2(j)(2)(iv) provides that a limited-content message may include a statement that, if the consumer replies, the consumer may speak to any of the company’s representatives or associates. A message that includes a more detailed description of the representative or associate group is not a limited-content message. For example, a reference to an agent with the ‘‘credit card receivables group’’ is not a limited-content message because it includes more than a statement that the consumer’s reply may be answered by a representative or associate. 2. Example. The following example illustrates a limited-content message that includes the content described in both § 1006.2(j)(1) and (2): ‘‘Hi, this is Robin Smith calling from ABC Inc. It is 4:15 p.m. on Wednesday, September 1. Please contact me or any of our representatives at 1–800– 555–1212 today until 6:00 p.m. Eastern time, or any weekday from 8:00 a.m. to 6:00 p.m. Eastern time.’’ Subpart B—Rules for FDCPA Debt Collectors Section 1006.6—Communications in Connection With Debt Collection 6(a) Consumer Paragraph 6(a)(1) 1. Spouse. Section 1006.6(a)(1) provides that, for purposes of § 1006.6, the term consumer includes a consumer’s spouse. The surviving spouse of a deceased consumer is a spouse as that term is used in § 1006.6(a)(1). Paragraph 6(a)(2) 1. Parent. Section 1006.6(a)(2) provides that, for purposes of § 1006.6, the term consumer includes a consumer’s parent, if the consumer is a minor. A parent of a deceased minor consumer is a parent as that term is used in § 1006.6(a)(2). Paragraph 6(a)(4) 1. Personal representative. Section 1006.6(a)(4) provides that, for purposes of § 1006.6, the term consumer includes the executor or administrator of the consumer’s estate, if the consumer is deceased. The terms executor or administrator include the personal representative of the consumer’s estate. A personal representative is any person who is authorized to act on behalf of the deceased consumer’s estate. Persons with such authority may include personal representatives under the informal probate and summary administration procedures of many States, persons appointed as universal successors, persons who sign declarations or affidavits to effectuate the transfer of estate PO 00000 Frm 00164 Fmt 4701 Sfmt 4700 assets, and persons who dispose of the deceased consumer’s financial assets or other assets of monetary value extrajudicially. 6(b) Communications With a Consumer 6(b)(1) Prohibitions Regarding Unusual or Inconvenient Times or Places 1. Designation of inconvenience. Section 1006.6(b)(1) prohibits a debt collector from, among other things, 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, unless an exception in § 1006.6(b)(4) applies. For example, a debt collector knows or should know that a time or place is inconvenient to a consumer if the consumer uses the word ‘‘inconvenient’’ to notify the debt collector. In addition, depending on the facts and circumstances, the debt collector knows or should know that a time or place is inconvenient even if the consumer does not specifically state to the debt collector that a time or place is ‘‘inconvenient.’’ The debt collector may ask follow-up questions regarding whether a time or place is convenient to clarify statements by the consumer. For example: i. Assume that a creditor places a debt for collection with a debt collector. To facilitate collection of the debt, the creditor provides the debt collector a file that includes recent notes stating that the consumer cannot be disturbed on Tuesdays and Thursdays through the end of the calendar year. Based on these facts, the debt collector knows or should know that Tuesdays and Thursdays through the end of the calendar year are inconvenient to the consumer. Unless the consumer informs the debt collector that those times are no longer inconvenient, § 1006.6(b)(1)(i) prohibits the debt collector from communicating or attempting to communicate with the consumer on those days through the end of the calendar year. ii. Assume that a debt collector calls a consumer. The consumer answers the call but states ‘‘I am busy’’ or ‘‘I cannot talk now.’’ The debt collector asks the consumer when would be a convenient time. The consumer responds, ‘‘on weekdays, except from 3:00 p.m. to 5:00 p.m.’’ The debt collector asks the consumer whether there would be a convenient time on weekends. The consumer responds ‘‘no.’’ Based on these facts, the debt collector knows or should know that the time period between 3:00 p.m. and 5:00 p.m. on weekdays, and all times on weekends, are inconvenient to the consumer. Thereafter, unless the consumer informs the debt collector that those times are no longer inconvenient, § 1006.6(b)(1)(i) prohibits the debt collector from communicating or attempting to communicate with the consumer at those times. iii. Assume that a consumer tells a debt collector not to communicate with the consumer at a particular place, such as the consumer’s home. The debt collector asks whether the consumer intends to prohibit the debt collector from communicating with the consumer through all media associated with the consumer’s home, including, for example, mail. Absent such additional information, the debt collector knows or E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations should know that communications to the consumer at home, including mail to the consumer’s home address and calls to the consumer’s home landline telephone number, are inconvenient. Thereafter, unless the consumer informs the debt collector that the place is no longer inconvenient, § 1006.6(b)(1)(ii) prohibits the debt collector from communicating or attempting to communicate with the consumer at the consumer’s home. See comment 6(b)(1)(ii)–1 for additional guidance regarding communications or attempts to communicate at an inconvenient place. 2. Consumer-initiated communication. If a consumer initiates a communication with a debt collector at a time or from a place that the consumer previously designated as inconvenient, the debt collector may respond once at that time or place through the same medium of communication used by the consumer. (For more on medium of communication, see § 1006.14(h) and its associated commentary.) After that response, § 1006.6(b)(1) prohibits the debt collector from communicating or attempting to communicate further with the consumer at that time or place until the consumer conveys that the time or place is no longer inconvenient, unless an exception in § 1006.6(b)(4) applies. For example: i. Assume the same facts as in comment 6(b)(1)–1.ii, except that, after the consumer tells the debt collector that weekdays from 3:00 p.m. to 5:00 p.m. and weekends are inconvenient, the consumer sends an email message to the debt collector at 3:30 p.m. on Wednesday. Based on these facts, § 1006.6(b)(1)(i) does not prohibit the debt collector from responding once by email message before 5:00 p.m. on that day. Unless the consumer informs the debt collector that those times are no longer inconvenient, § 1006.6(b)(1)(i) prohibits the debt collector from future communications or attempts to communicate with the consumer on weekdays between 3:00 p.m. and 5:00 p.m. and on weekends. Additionally, if the consumer responds to the debt collector’s email message, the debt collector may continue to respond once to each consumerinitiated email message before 5:00 p.m. on that day. ii. Assume the same facts as in comment 6(b)(1)–1.iii, except that, after the consumer tells the debt collector not to communicate with the consumer at home, the consumer calls the debt collector from the consumer’s home landline telephone number. Based on these facts, § 1006.6(b)(1)(ii) does not prohibit the debt collector from responding once by communicating with the consumer on that telephone call. Unless the consumer informs the debt collector that the place is no longer inconvenient, § 1006.6(b)(1)(ii) prohibits the debt collector from future communications or attempts to communicate with the consumer at home. iii. Assume that a consumer tells a debt collector that all communications to the consumer on Friday every week are inconvenient to the consumer. On a Friday, the consumer visits the debt collector’s website and uses the debt collector’s mobile application. Based on these facts, while the consumer navigates the website or uses the VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 mobile application, § 1006.6(b)(1)(i) does not prohibit the debt collector from conveying information to the consumer about the debt through the website or mobile application. Once the consumer stops navigating the website or using the mobile application, however, § 1006.6(b)(1)(i) prohibits the debt collector from further communications or attempts to communicate on that day. And unless the consumer informs the debt collector that those times are no longer inconvenient, § 1006.6(b)(1)(i) prohibits the debt collector from future communications or attempts to communicate with the consumer on Fridays. iv. Assume the same facts as in comment 6(b)(1)–2.iii, except that after the consumer visits the debt collector’s website and uses the debt collector’s mobile application, the consumer sends an email message to the debt collector at 8:30 p.m. on Friday. Based on these facts, § 1006.6(b)(1)(i) does not prohibit the debt collector from responding once, such as by sending an automated email message reply generated in response to the consumer’s email message. Unless the consumer informs the debt collector that those times are no longer inconvenient, § 1006.6(b)(1)(i) prohibits the debt collector from future communications or attempts to communicate with the consumer on Fridays. Paragraph 6(b)(1)(i) 1. Time of electronic communication. Section 1006.6(b)(1)(i) prohibits a debt collector from communicating or attempting to communicate, including through electronic communication media, at any unusual time, or at a time that the debt collector knows or should know is inconvenient to the consumer. For purposes of determining the time of an electronic communication, such as an email or text message, under § 1006.6(b)(1)(i), an electronic communication occurs when the debt collector sends it, not, for example, when the consumer receives or views it. 2. Consumer’s location. Under § 1006.6(b)(1)(i), in the absence of a debt collector’s knowledge of circumstances to the contrary, an inconvenient time for communicating with a consumer is before 8:00 a.m. and after 9:00 p.m. local time at the consumer’s location. If a debt collector has conflicting or ambiguous information regarding a consumer’s location, then, in the absence of knowledge of circumstances to the contrary, the debt collector complies with § 1006.6(b)(1)(i) if the debt collector communicates or attempts to communicate with the consumer at a time that would be convenient in all of the locations at which the debt collector’s information indicates the consumer might be located. The following examples, which assume that the debt collector has no information about times the consumer considers inconvenient or other information about the consumer’s location, illustrate the rule. i. Assume that a debt collector’s information indicates that a consumer has a mobile telephone number with an area code associated with the Eastern time zone and a residential address in the Pacific time zone. The convenient times to communicate with the consumer are after 11:00 a.m. Eastern PO 00000 Frm 00165 Fmt 4701 Sfmt 4700 76897 time (8:00 a.m. Pacific time) and before 9:00 p.m. Eastern time (6:00 p.m. Pacific time). ii. Assume that a debt collector’s information indicates that a consumer has a mobile telephone number with an area code associated with the Eastern time zone and a landline telephone number with an area code associated with the Mountain time zone. The convenient times to communicate with the consumer are after 10:00 a.m. Eastern time (8:00 a.m. Mountain time) and before 9:00 p.m. Eastern time (7:00 p.m. Mountain time). Paragraph 6(b)(1)(ii) 1. Communications or attempts to communicate at unusual or inconvenient places. Section 1006.6(b)(1)(ii) prohibits a debt collector from communicating or attempting to communicate with a consumer in connection with the collection of any debt at any unusual place, or at a place that the debt collector knows or should know is inconvenient to the consumer. Some communication media, such as mailing addresses and landline telephone numbers, are associated with a place. Pursuant to § 1006.6(b)(1)(ii), a debt collector must not communicate or attempt to communicate with a consumer through media associated with an unusual place, or with a place that the debt collector knows or should know is inconvenient to the consumer. Other communication media, such as email addresses and mobile telephone numbers, are not associated with a place. Section 1006.6(b)(1)(ii) does not prohibit a debt collector from communicating or attempting to communicate with a consumer through such media unless the debt collector knows that the consumer is at an unusual place, or at a place that the debt collector knows or should know is inconvenient to the consumer. For example: i. Assume the same facts as in comment 6(b)(1)–1.iii. Unless the debt collector knows that the consumer is at home, a telephone call to the consumer’s mobile telephone number or an electronic communication, including, for example, an email message or a text message to the consumer’s mobile telephone, does not violate § 1006.6(b)(1)(ii) even if the consumer receives or views the communication while at home. 6(b)(2) Prohibitions Regarding Consumer Represented by an Attorney 1. Consumer-initiated communications. A consumer-initiated communication from a consumer represented by an attorney constitutes the consumer’s prior consent to that communication under § 1006.6(b)(4)(i); therefore, a debt collector may respond to that consumer-initiated communication. However, the consumer’s act of initiating the communication does not negate the debt collector’s knowledge that the consumer is represented by an attorney and does not revoke the protections afforded the consumer under § 1006.6(b)(2). After the debt collector’s response, the debt collector must not communicate or attempt to communicate further with the consumer unless the debt collector knows the consumer is not represented by an attorney with respect to the debt, either based on information from the consumer or the consumer’s attorney, or unless an exception under § 1006.6(b)(2)(i) or (ii) or § 1006.6(b)(4) applies. E:\FR\FM\30NOR3.SGM 30NOR3 76898 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 6(b)(3) Prohibitions Regarding Consumer’s Place of Employment 1. Communications at consumer’s place of employment. Section 1006.6(b)(3) prohibits a debt collector from communicating or attempting to communicate with a consumer in connection with the collection of any debt at the consumer’s place of employment, if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication. A debt collector knows or has reason to know that a consumer’s employer prohibits the consumer from receiving such communication if, for example, the consumer tells the debt collector that the consumer cannot take personal calls at work. The debt collector may ask follow-up questions regarding the employer’s prohibitions or limitations on contacting the consumer at the place of employment to clarify statements by the consumer. 2. Employer-provided email. For special rules regarding employer-provided email addresses, see § 1006.22(f)(3) and its associated commentary. 6(b)(4) Exceptions TKELLEY on DSKBCP9HB2PROD with RULES3 Paragraph 6(b)(4)(i) 1. Prior consent—in general. Section 1006.6(b)(4)(i) provides, in part, that the prohibitions in § 1006.6(b)(1) through (3) on a debt collector communicating or attempting to communicate with a consumer in connection with the collection of any debt do not apply if the debt collector communicates or attempts to communicate with the prior consent of the consumer. If the debt collector learns during a communication that the debt collector is communicating with the consumer at an inconvenient time or place, for example, the debt collector may ask the consumer during that communication what time or place would be convenient. However, § 1006.6(b)(4)(i) prohibits the debt collector from asking the consumer to consent to the continuation of that inconvenient communication. 2. Directly to the debt collector. Section 1006.6(b)(4)(i) requires the prior consent of the consumer to be given directly to the debt collector. For example, a debt collector cannot rely on the prior consent of the consumer given to a creditor or to a previous debt collector. 6(c) Communications With a Consumer— After Refusal To Pay or Cease Communication Notice 6(c)(1) Prohibitions 1. Notification complete upon receipt. If, pursuant to § 1006.6(c)(1), a consumer notifies a debt collector in writing or electronically using a medium of electronic communication through which a debt collector accepts electronic communications from consumers that the consumer either refuses to pay a debt or wants the debt collector to cease further communication with the consumer, notification is complete upon the debt collector’s receipt of that information. The following example illustrates the rule. i. Assume that on August 3, a consumer places in the mail a written notification to a VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 debt collector that the consumer either refuses to pay a debt or wants the debt collector to cease further communication with the consumer pursuant to § 1006.6(c)(1). On August 4, the debt collector sends the consumer an email message. The debt collector receives the consumer’s written notification on August 6. Because the consumer’s notification is complete upon the debt collector’s receipt of that information on August 6, the debt collector’s email message communication on August 4 does not violate § 1006.6(c)(1). 2. Interpretation of the E–SIGN Act. Comment 6(c)(1)–1 constitutes the Bureau’s interpretation of section 101 of the E–SIGN Act as applied to FDCPA section 805(c). Under this interpretation, section 101(a) of the E–SIGN Act enables a consumer to satisfy the requirement in FDCPA section 805(c) that the consumer’s notification of the debt collector be ‘‘in writing’’ through an electronic request. Further, because the consumer may only satisfy the writing requirement using a medium of electronic communication through which a debt collector accepts electronic communications from consumers, section 101(b) of the E– SIGN Act is not contravened. 6(c)(2) Exceptions 1. Written early intervention notice for mortgage servicers. The Bureau has interpreted the written early intervention notice required by 12 CFR 1024.39(d)(3) to fall within the exceptions to the cease communication provision in FDCPA section 805(c)(2) and (3). See 12 CFR 1024.39(d)(3), its commentary, and the Bureau’s 2016 FDCPA Interpretive Rule (81 FR 71977 (Oct. 19, 2016)). 2. Other mortgage servicing rule provisions. Notwithstanding a consumer’s cease communication request pursuant to § 1006.6(c)(1), a mortgage servicer who is subject to the FDCPA with respect to a mortgage loan is not liable under the FDCPA for complying with certain servicing rule provisions, including requirements to provide a consumer with disclosures regarding the forced placement of hazard insurance as required by 12 CFR 1024.37, a disclosure regarding an adjustable-rate mortgage’s initial interest rate adjustment as required by 12 CFR 1026.20(d), and a periodic statement for each billing cycle as required by 12 CFR 1026.41. See CFPB Bulletin 2013–12 (Oct. 15, 2013) providing implementation guidance for certain mortgage servicing rules. 6(d) Communications With Third Parties 6(d)(2) Exceptions 1. Prior consent. See the commentary to § 1006.6(b)(4)(i) for guidance concerning a consumer giving prior consent directly to a debt collector. 6(d)(3) Reasonable Procedures for Email and Text Message Communications Paragraph 6(d)(3)(ii) 1. Knowledge of prohibited disclosure. For purposes of § 1006.6(d)(3)(ii), a debt collector knows that sending an email to an email address or a text message to a telephone number has led to a disclosure prohibited by PO 00000 Frm 00166 Fmt 4701 Sfmt 4700 § 1006.6(d)(1) if any person has informed the debt collector of that fact. 6(d)(4) Procedures for Email Addresses 6(d)(4)(i) Procedures Based on Communication Between the Consumer and the Debt Collector Paragraph 6(d)(4)(i)(B) 1. Prior consent—in general. Section 1006.6(d)(4)(i)(B) provides that, for purposes of § 1006.6(d)(3)(i), a debt collector may send an email to an email address if, among other things, the debt collector has received directly from the consumer prior consent to use the email address to communicate with the consumer about the debt. For purposes of § 1006.6(d)(4)(i)(B), a consumer may provide consent directly to a debt collector through any medium of communication, such as in writing, electronically, or orally. 2. Prior consent—consumer-provided email address. If a consumer provides an email address to a debt collector (including on the debt collector’s website or online portal), the debt collector may treat the consumer as having consented directly to the debt collector’s use of the email address to communicate with the consumer about the debt for purposes of § 1006.6(d)(4)(i)(B) if the debt collector discloses clearly and conspicuously that the debt collector may use the email address to communicate with the consumer about the debt. 6(d)(4)(ii) Procedures Based on Communication by the Creditor Paragraph 6(d)(4)(ii)(B) 1. Communications about the account. Section 1006.6(d)(4)(ii)(B) provides that, for purposes of § 1006.6(d)(3)(i), a debt collector may send an email to an email address if, among other things, the creditor used the email address to communicate with the consumer about the account giving rise to the debt. For purposes of § 1006.6(d)(4)(ii)(B), communications about the account include, for example, required disclosures, bills, invoices, periodic statements, payment reminders, and payment confirmations. Communications about the account do not include, for example, marketing or advertising materials unrelated to the consumer’s account. Paragraph 6(d)(4)(ii)(C) 1. Clear and conspicuous. Clear and conspicuous means readily understandable. In the case of written and electronic disclosures, the location and type size also must be readily noticeable and legible to consumers, although no minimum type size is mandated. 2. Sample language. Section 1006.6(d)(4)(ii)(C) provides that, for purposes of § 1006.6(d)(3)(i), a debt collector may send an email to an email address if, among other things, the creditor sent the consumer a written or electronic notice that clearly and conspicuously disclosed that the debt would be transferred to the debt collector; that the debt collector might use the email address to communicate with the consumer about the debt; that, if others have access to this email address, then it is possible they may see the emails; instructions for a reasonable and simple method by which the consumer could E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations opt out of such communications; and the date by which the debt collector or creditor must receive the consumer’s request to opt out. i. When a creditor sends the notice in writing, the creditor may use, but is not required to use, the following language to satisfy § 1006.6(d)(4)(ii)(C): ‘‘We are transferring your account to ABC debt collector, and we are providing ABC debt collector with the following email address for you: [email address]. ABC debt collector may use this email address to communicate with you about the debt. If others have access to this email address, then it is possible they may see the emails. If you would like to opt out of communications by ABC debt collector to [email address], please fill out the enclosed form and return it in the enclosed envelope so that we receive it by [date].’’ ii. When a creditor sends the notice electronically, the creditor may use, but is not required to use, the following language to satisfy § 1006.6(d)(4)(ii)(C): ‘‘We are transferring your account to ABC debt collector, and we are providing ABC debt collector with the following email address for you: [email address]. ABC debt collector may use this email address to communicate with you about the debt. If others have access to this email address, then it is possible they may see the emails. If you would like to opt out of communications by ABC debt collector to [email address], please click here by [date].’’ 3. Combined notice. A notice provided by the creditor under § 1006.6(d)(4)(ii)(C) may be contained in a larger communication that conveys other information, as long as the notice is clear and conspicuous. Paragraph 6(d)(4)(ii)(C)(1) 1. Identification of the debt collector. Under § 1006.6(d)(4)(ii)(C)(1), the notice must clearly and conspicuously disclose, among other things, that the debt has been or will be transferred to the debt collector. To satisfy this requirement, the notice must identify the name of the specific debt collector to which the debt has been or will be transferred. Paragraph 6(d)(4)(ii)(C)(4) 1. Reasonable and simple method to opt out. Under § 1006.6(d)(4)(ii)(C)(4), the notice must clearly and conspicuously disclose instructions for a reasonable and simple method by which the consumer can opt out of the debt collector’s use of the email address to communicate about the debt. The following examples illustrate the rule. i. When the creditor sends the notice in writing, reasonable and simple methods for opting out include providing a reply form and a pre-addressed envelope together with the opt-out notice. Requiring a consumer to call or write to obtain a form for opting out, rather than including the form with the optout notice, does not meet the requirement to provide a reasonable and simple method for opting out. ii. When the creditor sends the notice electronically, reasonable and simple methods for opting out include providing an electronic means to opt out, such as a hyperlink, or allowing the consumer to opt out by replying to the communication with the word ‘‘stop.’’ Requiring a consumer who VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 receives the opt-out notice electronically to opt out by postal mail, telephone, or visiting a website without providing a link does not meet the requirement to provide a reasonable and simple method for opting out. Paragraph 6(d)(4)(ii)(C)(5) 1. Recipient of opt-out request. Under § 1006.6(d)(4)(ii)(C)(5), the notice must clearly and conspicuously disclose the date by which a debt collector or creditor must receive a consumer’s request to opt out, which must be at least 35 days after the date the notice is sent. The notice may instruct the consumer to respond to the debt collector or to the creditor but not to both. Paragraph 6(d)(4)(ii)(D) 1. Effect of opt-out request after expiration of opt-out period. If a consumer requests after the expiration of the opt-out period that the debt collector not communicate using the email address identified in the opt-out notice, such as by returning the notice or opting out under § 1006.6(e), § 1006.14(h)(1) prohibits the debt collector from communicating or attempting to communicate with the consumer using that email address. If the consumer requests after the expiration of the opt-out period that the debt collector not communicate with the consumer by email, § 1006.14(h)(1) prohibits the debt collector from communicating or attempting to communicate with the consumer by email, including by using the specific email address identified in the notice. For more on prohibited communication media and certain exceptions, see § 1006.14(h) and its associated commentary. If after the expiration of the opt-out period the consumer notifies the debt collector in writing or electronically using a medium of electronic communication through which a debt collector accepts electronic communications from consumers that the consumer refuses to pay the debt or wants the debt collector to cease further communication with the consumer, § 1006.6(c)(1) prohibits the debt collector from communicating or attempting to communicate with the consumer with respect to the debt, subject to the exceptions in § 1006.6(c)(2). For more on communications with a consumer after refusal to pay or a cease communication notice, see § 1006.6(c) and its associated commentary. 2. Scope of opt-out request. In the absence of evidence that the consumer refuses to pay the debt or wants the debt collector to cease all communication with the consumer, a consumer’s request under § 1006.6(d)(4)(ii)(D) to opt out of a debt collector’s use of a particular email address to communicate with the consumer by email does not constitute a notification to cease further communication with respect to the debt under § 1006.6(c)(1). Paragraph 6(d)(4)(ii)(E) 1. Domain name available for use by the general public. Under § 1006.6(d)(4)(ii)(E), the domain name of an email address is available for use by the general public when multiple members of the general public are permitted to use the same domain name, whether for free or through a paid PO 00000 Frm 00167 Fmt 4701 Sfmt 4700 76899 subscription. Such a name does not include one that is reserved for use by specific registrants, such as a domain name branded for use by a particular commercial entity (e.g., john.doe@springsidemortgage.com) or reserved for particular types of institutions (e.g., john.doe@agency.gov, john.doe@ university.edu, or john.doe@nonprofit.org). 2. Knowledge of employer-provided email address. For purposes of § 1006.6(d)(4)(ii)(E), a debt collector knows that an email address is provided by the consumer’s employer if any person has informed the debt collector that the address is employer provided. However, § 1006.6(d)(4)(ii)(E) does not require a debt collector to conduct a manual review of consumer accounts to determine whether an email address might be employer provided. 6(d)(4)(iii) Procedures Based on Communication by the Prior Debt Collector 1. Immediately prior debt collector. Section 1006.6(d)(4)(iii) provides that, for purposes of § 1006.6(d)(3)(i), a debt collector may send an email to an email address if, among other things, the immediately prior debt collector used the email address to communicate with the consumer about the debt. For purposes of § 1006.6(d)(4)(iii), the immediately prior debt collector is the debt collector immediately preceding the current debt collector. For example, if ABC debt collector returns a debt to the creditor and the creditor places the debt with XYZ debt collector, ABC debt collector is the immediately prior debt collector for purposes of § 1006.6(d)(4)(iii). 2. Examples. The following examples illustrate the rule. i. After obtaining a consumer’s email address in accordance with the procedures in § 1006.6(d)(4)(i) or (ii), ABC debt collector communicates with the consumer about the debt using that email address and the consumer does not opt out. ABC debt collector returns the debt to the creditor, who places it with XYZ debt collector. XYZ debt collector communicates with the consumer about the debt using the email address obtained by ABC debt collector. Assuming that the requirements of § 1006.6(d)(3)(ii) are satisfied, XYZ debt collector may have a bona fide error defense to civil liability for any unintentional third-party disclosure that occurs during that communication because a prior debt collector (i.e., ABC debt collector) obtained the email address in accordance with the procedures in § 1006.6(d)(4)(i) or (ii), the immediately prior debt collector (i.e., ABC debt collector) used the email address to communicate with the consumer about the debt, and the consumer did not opt out of such communications by ABC debt collector. ii. After obtaining a consumer’s email address in accordance with the procedures in § 1006.6(d)(4)(i) or (ii), ABC debt collector communicates with the consumer about the debt using that email address and the consumer does not opt out. ABC debt collector returns the debt to the creditor, who places it with EFG debt collector. EFG debt collector communicates with the consumer about the debt using the email address obtained by ABC debt collector, and the consumer does not opt out. EFG debt collector returns the debt to the creditor, who places it with XYZ debt collector. XYZ debt E:\FR\FM\30NOR3.SGM 30NOR3 76900 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations collector communicates with the consumer about the debt using the email address obtained by ABC debt collector and used by EFG debt collector. Assuming that the requirements of § 1006.6(d)(3)(ii) are satisfied, XYZ debt collector may have a bona fide error defense to civil liability for any unintentional third-party disclosure that occurs during that communication because a prior debt collector (i.e., ABC debt collector) obtained the email address in accordance with the procedures in § 1006.6(d)(4)(i) or (ii), the immediately prior debt collector (i.e., EFG debt collector) used the email address to communicate with the consumer about the debt, and the consumer did not opt out of such communications by EFG debt collector. iii. After obtaining a consumer’s email address in accordance with the procedures in § 1006.6(d)(4)(i) or (ii), ABC debt collector communicates with the consumer about the debt using that email address and the consumer does not opt out. ABC debt collector returns the debt to the creditor, who places it with EFG debt collector, who chooses not to communicate with the consumer by email. EFG debt collector returns the debt to the creditor, who places it with XYZ debt collector. XYZ debt collector communicates with the consumer about the debt using the email address obtained by ABC debt collector. Section 1006.6(d)(4)(iii) does not provide XYZ debt collector with a bona fide error defense to civil liability for any unintentional thirdparty disclosure that occurs during that communication because the immediately prior debt collector (i.e., EFG debt collector) did not use the email address to communicate with the consumer about the debt. 6(d)(5) Procedures for Telephone Numbers for Text Messages 1. Complete and accurate database. Section 1006.6(d)(5)(i) and (ii) provides that, for purposes of § 1006.6(d)(3)(i), a debt collector may send a text message to a telephone number if, among other things, the debt collector confirms, using a complete and accurate database, that the telephone number has not been reassigned from the consumer to another user. For purposes of § 1006.6(d)(5)(i) and (ii), the database established by the FCC in In re Advanced Methods to Target & Eliminate Unlawful Robocalls (33 FCC Rcd. 12024 (Dec. 12, 2018)) qualifies as a complete and accurate database, as does any commercially available database that is substantially similar in terms of completeness and accuracy to the FCC’s database. TKELLEY on DSKBCP9HB2PROD with RULES3 Paragraph 6(d)(5)(i) 1. Response to telephone call by consumer. Section 1006.6(d)(5)(i) provides that, for purposes of § 1006.6(d)(3)(i), a debt collector may send a text message to a telephone number if, among other things, the consumer used the telephone number to communicate by text message with the debt collector about the debt. Section 1006.6(d)(5)(i) does not apply if the consumer used the telephone number to communicate only by telephone call with the debt collector about the debt. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 Paragraph 6(d)(5)(ii) 1. Prior consent. See comment 6(d)(4)(i)(B)–1 for guidance concerning how a consumer may provide prior consent directly to a debt collector. See comment 6(d)(4)(i)(B)–2 for guidance concerning when a debt collector may treat a consumer who provides a telephone number for text messages as having consented directly to the debt collector. 6(e) Opt-Out Notice for Electronic Communications or Attempts To Communicate 1. In general. Section 1006.6(e) requires a debt collector who communicates or attempts to communicate with a consumer electronically in connection with the collection of a debt using a specific email address, telephone number for text messages, or other electronic-medium address to include in such communication or attempt to communicate a clear and conspicuous statement describing a reasonable and simple method by which the consumer can opt out of further electronic communications or attempts to communicate by the debt collector to that address or telephone number. See comment 6(d)(4)(ii)(C)–1 for guidance on the meaning of clear and conspicuous. See comment 6(d)(4)(ii)(C)(4)–1 for guidance on the meaning of reasonable and simple. The following examples illustrate the rule. i. Assume that a debt collector sends a text message to a consumer’s mobile telephone number. The text message includes the following instruction: ‘‘Reply STOP to stop texts to this telephone number.’’ Assuming that it is readily noticeable and legible to consumers, this instruction constitutes a clear and conspicuous statement describing a reasonable and simple method to opt out of receiving further text messages from the debt collector to that telephone number consistent with § 1006.6(e). No minimum type size is mandated. ii. Assume that a debt collector sends the consumer an email that includes a hyperlink labeled: ‘‘Click here to opt out of further emails to this email address.’’ Assuming that it is readily noticeable and legible to consumers, this instruction constitutes a clear and conspicuous statement describing a reasonable and simple method to opt out of receiving further emails from the debt collector to that email address consistent with § 1006.6(e). No minimum type size is mandated. iii. Assume that a debt collector sends the consumer an email that includes instructions in a textual format explaining that the consumer may opt out of receiving further email communications from the debt collector to that email address by replying with the word ‘‘stop’’ in the subject line. Assuming that it is readily noticeable and legible to consumers, this instruction constitutes a clear and conspicuous statement describing a reasonable and simple method to opt out of receiving further emails from the debt collector to that email address consistent with § 1006.6(e). No minimum type size is mandated. PO 00000 Frm 00168 Fmt 4701 Sfmt 4700 Section 1006.10—Acquisition of Location Information 10(a) Definition 1. Location information about deceased consumers. If a consumer obligated or allegedly obligated to pay any debt is deceased, location information includes the information described in § 1006.10(a) for a person who is authorized to act on behalf of the deceased consumer’s estate, as described in § 1006.6(a)(4) and its associated commentary. 10(b) Form and Content of Location Communications Paragraph 10(b)(2) 1. Executors, administrators, or personal representatives of a deceased consumer’s estate. Section 1006.10(b)(2) prohibits a debt collector who is communicating with any person other than the consumer for the purpose of acquiring location information about the consumer from stating that the consumer owes any debt. If the consumer obligated or allegedly obligated to pay the debt is deceased, and the debt collector is attempting to locate the person who is authorized to act on behalf of the deceased consumer’s estate, the debt collector does not violate § 1006.10(b)(2) by stating that the debt collector is seeking to identify and locate the person who is authorized to act on behalf of the deceased consumer’s estate. The debt collector may also state that the debt collector is seeking to identify and locate the person handling the financial affairs of the deceased consumer. For more on executors, administrators, and personal representatives, see § 1006.6(a)(4) and its associated commentary. Section 1006.14—Harassing, Oppressive, or Abusive Conduct 14(a) In General 1. General prohibition. Section 1006.14(a), which implements FDCPA section 806 (15 U.S.C. 1692d), sets forth a general standard that prohibits a debt collector from engaging in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. The general prohibition covers the specific conduct described in § 1006.14(b) through (h), as well as any conduct by the debt collector that is not specifically prohibited by § 1006.14(b) through (h) but the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Such conduct can occur regardless of the communication media the debt collector uses, including inperson interactions, telephone calls, audio recordings, paper documents, mail, email, text messages, social media, or other electronic media, even if not specifically addressed by § 1006.14(b) through (h). The following example illustrates the rule. i. Assume that, in connection with the collection of a debt, a debt collector sends a consumer numerous, unsolicited text messages per day for several consecutive days. The consumer does not respond. Assume further that the debt collector does not communicate or attempt to communicate with the consumer using any other E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations communication medium and that, by sending the text messages, the debt collector has not violated § 1006.14(b) through (h). Even though the debt collector’s conduct does not violate any specific prohibition under § 1006.14(b) through (h), it is likely that the natural consequence of the debt collector’s text messages is to harass, oppress, or abuse the person receiving the text messages; when such natural consequence occurs, the debt collector has violated § 1006.14(a) and FDCPA section 806. 2. Cumulative effect of conduct. Whether a debt collector’s conduct violates the general standard in § 1006.14(a) may depend on the cumulative effect of the debt collector’s conduct through any communication medium the debt collector uses, including inperson interactions, telephone calls, audio recordings, paper documents, mail, email, text messages, social media, or other electronic media. Depending on the facts and circumstances, conduct that on its own would violate neither the general prohibition in § 1006.14(a), nor any specific prohibition in § 1006.14(b) through (h), nonetheless may violate § 1006.14(a) when such conduct is evaluated cumulatively with other conduct. The following example illustrates the rule as applied to a debt collector who uses multiple communication media to communicate or attempt to communicate with a person. i. Assume that a debt collector places seven unanswered telephone calls within seven consecutive days to a consumer in connection with the collection of a debt. During this same period, the debt collector also sends multiple additional unsolicited emails about the debt to the consumer. The consumer does not respond. The frequency of the debt collector’s telephone calls during the seven-day period does not exceed the telephone call frequencies described in § 1006.14(b)(2)(i), so the debt collector is presumed to comply with § 1006.14(b)(1). Assume further that no evidence is offered to rebut the presumption of compliance, such that the debt collector complies with § 1006.14(b)(1). Also assume that, for purposes of this illustrative example only, the frequency of the debt collector’s emails alone does not violate § 1006.14(a). It nevertheless is likely that the cumulative effect of the debt collector’s telephone calls and emails is harassment; when such natural consequence occurs, the debt collector has violated § 1006.14(a) and FDCPA section 806. 14(b) Repeated or Continuous Telephone Calls or Telephone Conversations 1. Placing telephone calls repeatedly or continuously. Section 1006.14(b) prohibits a debt collector from, in connection with the collection of a debt, placing telephone calls or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number, and it describes when a debt collector is presumed to have complied with or violated that prohibition. For purposes of § 1006.14(b)(1) through (4), ‘‘placing a telephone call’’ includes conveying a ringless voicemail but does not include sending an electronic message (e.g., a text message or an email) that may be received on a mobile telephone. VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 14(b)(1) In General 1. Effect of compliance. A debt collector who complies with § 1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 1692d(5)) complies with § 1006.14(a) and FDCPA section 806 (15 U.S.C. 1692d) solely with respect to the frequency of its telephone calls. The debt collector nevertheless could violate § 1006.14(a) and FDCPA section 806 if the natural consequence of another aspect of the debt collector’s telephone calls, unrelated to frequency, is to harass, oppress, or abuse any person in connection with the collection of a debt. See also comment 14(a)– 2 regarding the cumulative effect of the debt collector’s conduct. 2. Example. Assume that a debt collector communicates or attempts to communicate with a consumer about a particular debt only by telephone. The debt collector does not exceed either of the telephone call frequencies described in § 1006.14(b)(2)(i). Under § 1006.14(b)(2)(i), the debt collector is presumed to comply with § 1006.14(b)(1). Assume, further, that no evidence is offered to rebut that presumption of compliance. Pursuant to § 1006.14(b)(1), the debt collector complies with § 1006.14(a) and FDCPA section 806, but only with respect to the frequency of its telephone calls. Assume, however, that one of the debt collector’s telephone calls results in the debt collector leaving a voicemail that contains obscene language. Even though the debt collector does not violate § 1006.14(a) and FDCPA section 806 based solely on the frequency of the telephone calls, the debt collector’s obscene voicemail would violate § 1006.14(a) and (d) and FDCPA section 806 and 806(2) (15 U.S.C. 1692, 1692d(2)). 14(b)(2) Telephone Call Frequencies; Presumptions of Compliance and Violation Paragraph 14(b)(2)(i) 1. Presumption of compliance; examples. Section 1006.14(b)(2)(i) provides that a debt collector is presumed to comply with § 1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 1692d(5)) if the debt collector places a telephone call to a particular person in connection with the collection of a particular debt neither: More than seven times within seven consecutive days (§ 1006.14(b)(2)(i)(A)); nor within a period of seven consecutive days after having had a telephone conversation with the person in connection with the collection of such debt (§ 1006.14(b)(2)(i)(B)). For the presumption of compliance to apply, the debt collector’s telephone call frequencies must not exceed either prong of § 1006.14(b)(2)(i). The telephone call frequencies are subject to the exclusions in § 1006.14(b)(3). In addition, for purposes of § 1006.14(b)(2)(i)(B), the date of the telephone conversation is the first day of the seven-consecutive-day period. The following examples illustrate the rule. i. On Wednesday, April 1, a debt collector first attempts to communicate with a consumer in connection with the collection of a credit card debt by placing a telephone call and leaving a limited-content message. Between Thursday, April 2, and Tuesday, April 7, the debt collector places six more telephone calls to the consumer about the debt, all of which go unanswered. As of PO 00000 Frm 00169 Fmt 4701 Sfmt 4700 76901 Tuesday, April 7, the debt collector has placed seven telephone calls to the consumer in connection with the collection of the credit card debt within the period of seven consecutive days that started on Wednesday, April 1. Assume the debt collector does not place any additional telephone calls about the debt until Wednesday, April 8. Under § 1006.14(b)(2)(i), the debt collector is presumed to comply with § 1006.14(b)(1) and FDCPA section 806(5). ii. On Thursday, August 13, a consumer places a telephone call to, and initiates a telephone conversation with, a debt collector regarding a particular debt. Assume that the debt collector does not place a telephone call to the consumer in connection with the collection of that debt again prior to Thursday, August 20. The debt collector is presumed to comply with § 1006.14(b)(1) and FDCPA section 806(5). iii. On Tuesday, October 6, a debt collector first attempts to communicate with a particular third party for the purpose of acquiring location information about a consumer by placing a telephone call to that third party. The call is unanswered. The debt collector places up to six more unanswered telephone calls to that third party for the purpose of acquiring location information about the consumer through Monday, October 12. The debt collector is presumed to comply with § 1006.14(b)(1) and FDCPA section 806(5). See § 1006.10(c) for further guidance concerning when a debt collector is prohibited from communicating with a person other than the consumer for the purpose of acquiring location information. 2. Factors to rebut the presumption of compliance. To rebut the presumption of compliance, it must be proven that a debt collector who did not place a telephone call in excess of either of the telephone call frequencies described in § 1006.14(b)(2)(i) nevertheless placed a telephone call or engaged a person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. For purposes of determining whether the presumption of compliance has been rebutted, it is assumed that debt collectors intend the natural consequence of their actions. Comments 14(b)(2)(i)–2.i through .iv provide a non-exhaustive list of factors that may rebut the presumption of compliance. The factors may be considered either individually or in combination with one another (or other non-specified factors). The factors may be viewed in light of any other relevant facts and circumstances and therefore may apply to varying degrees. Factors that may rebut the presumption of compliance include: i. The frequency and pattern of telephone calls the debt collector places to a person, including the intervals between them. The considerations relevant to this factor include whether the debt collector placed telephone calls to a person in rapid succession (e.g., two unanswered telephone calls to the same telephone number within five minutes) or in a highly concentrated manner (e.g., seven telephone calls to the same telephone number within one day). For example, assume the same facts as in comment 14(b)(2)(i)–1.i, except assume that, after the E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76902 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations debt collector placed the first telephone call to the consumer about the credit card debt on Wednesday, April 1, the debt collector placed six additional telephone calls to the consumer about that debt on Friday, April 3. Under § 1006.14(b)(2)(i), the debt collector is presumed to comply with § 1006.14(b)(1) and FDCPA section 806(5), but the high concentration of telephone calls on Friday, April 3, is a factor that may rebut the presumption of compliance. ii. The frequency and pattern of any voicemails that the debt collector leaves for a person, including the intervals between them. The considerations relevant to this factor include whether the debt collector left voicemails for a person in rapid succession (e.g., two voicemails within five minutes left at the same telephone number) or in a highly concentrated manner (e.g., seven voicemails left at the same telephone number within one day). iii. The content of a person’s prior communications with the debt collector. Among the considerations relevant to this factor are whether the person previously informed the debt collector, for example, that the person did not wish to be contacted again about the particular debt, that the person was refusing to pay the particular debt, or that the person did not owe the particular debt. This factor also includes a consumer’s cease communication notification described in § 1006.6(c) and a consumer’s request under § 1006.14(h) that the debt collector not use telephone calls to communicate or attempt to communicate with the consumer. The amount of time elapsed since any such prior communications also may be relevant to this factor. iv. The debt collector’s conduct in prior communications or attempts to communicate with the person. Among the considerations relevant to this factor are whether, during a prior communication or attempt to communicate with a person, the debt collector, for example, used obscene, profane, or otherwise abusive language (see § 1006.14(d)), used or threatened to use violence or other criminal means to harm the person (see § 1006.14(c)), or called at an inconvenient time or place (see § 1006.6(b)(1)). The amount of time elapsed since any such prior communications or attempts to communicate also may be relevant to this factor. 3. Misdirected telephone calls. Section 1006.14(b)(2)(i) provides that a debt collector is presumed to comply with § 1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 1692d(5)) if the debt collector’s telephone call frequencies do not exceed the telephone call frequencies described in § 1006.14(b)(2)(i). If, within a period of seven consecutive days, a debt collector attempts to communicate with a particular person by placing telephone calls to a particular telephone number, and the debt collector then learns that the telephone number is not that person’s number, the telephone calls that the debt collector made to that number are not considered to have been telephone calls placed to that person during that sevenconsecutive-day period for purposes of § 1006.14(b)(2)(i). For example: i. Assume that a debt collector first attempts to communicate with a consumer on VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 Monday, and again on Wednesday, by placing one unanswered telephone call to a particular telephone number on each of those days. On Thursday, the debt collector learns that the telephone number belongs to someone else and that the consumer does not answer telephone calls to that number. For purposes of § 1006.14(b)(2)(i), the debt collector has not yet placed any telephone calls to that consumer during that sevenconsecutive-day period. Paragraph 14(b)(2)(ii) 1. Presumption of a violation; examples. Section 1006.14(b)(2)(ii) provides that a debt collector is presumed to violate § 1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 1692d(5)) if the debt collector places a telephone call to a particular person in connection with the collection of a particular debt in excess of either of the telephone call frequencies described in § 1006.14(b)(2)(i). The telephone call frequencies are subject to the exclusions in § 1006.14(b)(3). The following examples illustrate the rule. i. On Wednesday, April 1, a debt collector first attempts to communicate with a consumer in connection with the collection of a mortgage debt by placing a telephone call and leaving a limited-content message. On each of the next three business days (i.e., on Thursday, April 2, Friday, April 3, and Monday, April 6), the debt collector places two additional telephone calls to the consumer about the debt, all of which go unanswered. On Tuesday, April 7, the debt collector places an additional telephone call to the consumer about the debt. The debt collector has placed a total of eight telephone calls to the consumer about the debt during the seven-day period starting Wednesday, April 1. None of the calls was subject to the exclusions in § 1006.14(b)(3). The debt collector is presumed to violate § 1006.14(b)(1) and FDCPA section 806(5). ii. On Tuesday, August 11, a debt collector first attempts to communicate with a consumer in connection with the collection of a credit card debt by placing a telephone call to the consumer that the consumer does not answer. On Friday, August 14, the debt collector again places a telephone call to the consumer and has a telephone conversation with the consumer in connection with the collection of the debt. Subject to the exclusions in § 1006.14(b)(3), the debt collector is presumed to violate § 1006.14(b)(1) and FDCPA section 806(5) if the debt collector places a telephone call to the consumer in connection with the collection of that debt again prior to Friday, August 21. 2. Factors to rebut the presumption of a violation. To rebut the presumption of a violation, it must be proven that a debt collector who placed telephone calls in excess of either of the frequencies described in § 1006.14(b)(2)(i) nevertheless did not place a telephone call or engage any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. For purposes of determining whether the presumption of a violation has been rebutted, it is assumed that debt collectors intend the natural consequence of their actions. Comments 14(b)(2)(ii)–2.i through .iv provide PO 00000 Frm 00170 Fmt 4701 Sfmt 4700 a non-exhaustive list of factors that may rebut the presumption of a violation. The factors may be considered either individually or in combination with one another (or other nonspecified factors). The factors may be viewed in light of any other relevant facts and circumstances and therefore may apply to varying degrees. Factors that may rebut the presumption of a violation include: i. Whether a debt collector placed a telephone call to comply with, or as required by, applicable law. For example, assume the same facts as in comment 14(b)(2)(ii)–1.i, except assume that the debt collector placed the final telephone call of the sevenconsecutive-day period to inform the consumer of available loss mitigation options in compliance with the Bureau’s mortgage servicing rules under Regulation X, 12 CFR 1024.39(a). The debt collector’s compliance with applicable law is a factor that may rebut the presumption of a violation. ii. Whether a debt collector placed a telephone call that was directly related to active litigation involving the collection of a particular debt. For example, assume the same facts as in comment 14(b)(2)(ii)–1.ii, except assume that, after the debt collector and the consumer had a telephone conversation about the credit card debt on Friday, August 14, the debt collector placed another telephone call to the consumer before Friday, August 21, to complete a court-ordered communication with the consumer about the debt, or as part of negotiations to settle active debt collection litigation regarding the debt. The direct relationship between the additional telephone call and the active debt collection litigation is a factor that may rebut the presumption of a violation. iii. Whether a debt collector placed a telephone call in response to a consumer’s request for additional information when the exclusion in § 1006.14(b)(3)(i) for telephone calls made with the consumer’s prior consent given directly to the debt collector did not apply. For example, assume the same facts as in comment 14(b)(2)(ii)–1.ii, except assume that, during the telephone conversation about the credit card debt on Friday, August 14, the consumer told the debt collector that the consumer would like more information about the amount of the debt but that the consumer could not talk at that moment. The consumer ended the telephone call before the debt collector could seek prior consent under § 1006.14(b)(3)(i) to call back with the requested information. The debt collector placed another telephone call to the consumer prior to Friday, August 21, to provide the requested information. The fact that the debt collector placed the additional telephone call in response to the consumer’s request is a factor that may rebut the presumption of a violation. iv. Whether a debt collector placed a telephone call to convey information to the consumer that, as shown through evidence, would provide the consumer with an opportunity to avoid a demonstrably negative effect relating to the collection of the particular debt, where the negative effect was not in the debt collector’s control, and where time was of the essence. For example, in each of the following three scenarios, assume the E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations TKELLEY on DSKBCP9HB2PROD with RULES3 same facts as in comment 14(b)(2)(ii)–1.ii, and also assume that: A. During the telephone conversation about the credit card debt on Friday, August 14, the debt collector and the consumer engaged in a lengthy conversation regarding settlement terms, and, toward the end of the conversation, the telephone call dropped. The debt collector immediately placed an additional telephone call to the consumer to complete the conversation. The fact that the debt collector placed the telephone call to permit the debt collector and the consumer to complete the conversation about settlement terms, which provided the consumer an opportunity to avoid a demonstrably negative effect that was not in the debt collector’s control (i.e., having to repeat a substantive conversation with a potentially different representative of the debt collector) and where time was of the essence (i.e., to prevent the delay of settlement negotiations by seven days) is a factor that may rebut the presumption of a violation. B. The consumer previously entered into a payment plan with the debt collector regarding the credit card debt. The conditions for the payment plan were set by the creditor, and among those conditions is that only the creditor, in its sole discretion, may approve waivers of late fees. On Monday, August 17, the debt collector learned that the consumer’s payment failed to process, and the applicable grace period was set to expire on Tuesday, August 18. The debt collector placed a telephone call to the consumer on Monday to remind the consumer that a late fee would be applied by the creditor for non-payment unless the consumer made the payment by the next day. The fact that the debt collector placed the telephone call to alert the consumer to the pending penalty, giving the consumer an opportunity to avoid a demonstrably negative effect that was not in the debt collector’s control and where time was of the essence, is a factor that may rebut the presumption of a violation. C. On Monday, August 17, the debt collector placed a telephone call to the consumer to offer the consumer a ‘‘one-time only’’ discount on the payment of the credit card debt. The debt collector stated that the offer would expire the next day when, in fact, the debt collector could have offered the same or a similar discount through the end of August. Because the negative effect on the consumer was in the debt collector’s control, the discount offer is not a factor that may rebut the presumption of a violation. 14(b)(3) Certain Telephone Calls Excluded From Telephone Call Frequencies Paragraph 14(b)(3)(i) 1. Prior consent. Section 1006.14(b)(3)(i) excludes from the telephone call frequencies described in § 1006.14(b)(2) certain telephone calls placed to a person who gives prior consent. See § 1006.6(b)(4)(i) and its associated commentary for guidance about giving prior consent directly to a debt collector. Nothing in § 1006.14(b)(3)(i) regarding prior consent for telephone call frequencies permits a debt collector to communicate, or attempt to communicate, VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 with a consumer as prohibited by §§ 1006.6(b) and 1006.14(h). 2. Duration of prior consent. For purposes of § 1006.14(b)(3)(i), if a person gives prior consent for additional telephone calls about a particular debt directly to a debt collector, any telephone calls that the debt collector thereafter places to the person about that particular debt do not count toward the telephone call frequencies described in § 1006.14(b)(2) for a period of up to seven consecutive days. A person’s prior consent may expire before the conclusion of the seven-consecutive-day period. A person’s prior consent expires when any of the following occurs: (1) The person consented to the additional telephone calls for a shorter time period and such time period has ended; (2) the person revokes such prior consent; or (3) the debt collector has a telephone conversation with the person regarding the particular debt. 3. Examples. The following examples illustrate how § 1006.14(b)(3)(i) applies: i. On Friday, April 3, a debt collector places a telephone call to a consumer. During the ensuing telephone conversation in connection with the collection of a debt, the consumer tells the debt collector to ‘‘call back on Monday.’’ Absent an exception, under § 1006.14(b)(2)(ii), the debt collector would be presumed to violate § 1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 1692d(5)) if the debt collector called the consumer on Monday, April 6, because the additional telephone call would exceed the frequency described in § 1006.14(b)(2)(i)(B). Under § 1006.14(b)(3)(i), however, in the scenario described (and absent any other facts), the debt collector could, pursuant to the consumer’s prior consent, place telephone calls to the consumer on Monday, April 6, and not lose a presumption of compliance with § 1006.14(b)(1) and FDCPA section 806(5). ii. Assume the same facts as in the preceding example, except that the consumer does not specify a particular day the debt collector may call back. Assume further that, on Monday, April 6, the debt collector calls the consumer back and has a telephone conversation with the consumer. The exception in § 1006.14(b)(3)(i) does not apply to subsequent telephone calls placed by the debt collector to the consumer, absent additional prior consent from the consumer. For example, if the debt collector, without additional prior consent, placed a telephone call to the consumer on Wednesday, April 8, that telephone call would count toward the telephone call frequencies described in § 1006.14(b)(2), and, pursuant to § 1006.14(b)(2)(ii), the debt collector would be presumed to violate § 1006.14(b)(1) and FDCPA section 806(5). iii. Between Monday, June 1, and Wednesday, June 3, a debt collector places three unanswered telephone calls to a consumer in connection with the collection of a debt. Also on Wednesday, June 3, the debt collector sends the consumer an email message in connection with the collection of the debt. The consumer responds by email on Thursday, June 4, requesting additional information about available repayment options related to the debt and writes, ‘‘You PO 00000 Frm 00171 Fmt 4701 Sfmt 4700 76903 can call me at 123–456–7891 to discuss the repayment options.’’ The debt collector receives the consumer’s prior consent by email on Thursday, June 4, and thereafter places eight unanswered telephone calls to the consumer between Monday, June 8, and Wednesday, June 10. Because the consumer provided prior consent directly to the debt collector, the exclusion in § 1006.14(b)(3)(i) applies to the eight telephone calls placed by the debt collector during the sevenconsecutive-day period that began with receipt of the consumer’s consent on Thursday, June 4. Those telephone calls therefore do not count toward the telephone call frequencies described in § 1006.14(b)(2)(i). However, any telephone calls placed by the debt collector after the end of the seven-day period (i.e., on or after Thursday, June 11) would count toward the telephone call frequencies described in § 1006.14(b)(2)(i), unless the consumer again gives prior consent directly to the debt collector. Paragraph 14(b)(3)(ii) 1. Unconnected telephone calls. Section 1006.14(b)(3)(ii) provides that telephone calls placed to a person do not count toward the telephone call frequencies described in § 1006.14(b)(2)(i) if they do not connect to the dialed number. A debt collector’s telephone call does not connect to the dialed number if, for example, the debt collector receives a busy signal or an indication that the dialed number is not in service. Conversely, a telephone call placed to a person counts toward the telephone call frequencies described in § 1006.14(b)(2)(i) if it connects to the dialed number, unless an exclusion in § 1006.14(b)(3) applies. A debt collector’s telephone call connects to the dialed number if, for example, the telephone call is answered, even if it subsequently drops; if the telephone call causes a telephone to ring at the dialed number but no one answers it; or if the telephone call is connected to a voicemail or other recorded message, even if it does not cause a telephone to ring and even if the debt collector is unable to leave a voicemail. 14(b)(4) Definition 1. Particular debt. Section 1006.14(b)(2) establishes presumptions of compliance and violation with respect to § 1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 1692d(5)) based on the frequency with which a debt collector places telephone calls to, or engages in telephone conversation with, a person in connection with the collection of a particular debt. Section 1006.14(b)(4) provides that, except in the case of student loan debt, the term particular debt means each of a consumer’s debts in collection. For student loan debt, § 1006.14(b)(4) provides that the term particular debt means all student loan debts that a consumer owes or allegedly owes that were serviced under a single account number at the time the debts were obtained by a debt collector. i. Placing a telephone call in connection with the collection of a particular debt. Under § 1006.14(b)(2)(i)(A), if a debt collector places a telephone call to a person and initiates a conversation or leaves a voicemail about one particular debt, the debt collector E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 76904 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations counts the telephone call as a telephone call in connection with the collection of the particular debt, subject to the exclusions in § 1006.14(b)(3). If a debt collector places a telephone call to a person and initiates a conversation or leaves a voicemail about more than one particular debt, the debt collector counts the telephone call as a telephone call in connection with the collection of each such particular debt, subject to the exclusions in § 1006.14(b)(3). If a debt collector places a telephone call to a person but neither initiates a conversation about a particular debt nor leaves a voicemail that refers to a particular debt, or if the debt collector’s telephone call is unanswered, the debt collector counts the telephone call as a telephone call in connection with the collection of at least one particular debt, unless an exclusion in § 1006.14(b)(3) applies. ii. Engaging in a telephone conversation in connection with the collection of a particular debt. Under § 1006.14(b)(2)(i)(B), if a debt collector and a person discuss one particular debt during a telephone conversation, the debt collector has engaged in a telephone conversation in connection with the collection of the particular debt, regardless of which party initiated the discussion about the particular debt, subject to the exclusions in § 1006.14(b)(3). If a debt collector and a person discuss more than one particular debt during a telephone conversation, the debt collector has engaged in a telephone conversation in connection with the collection of each such particular debt, regardless of which party initiated the discussion about the particular debts, subject to the exclusions in § 1006.14(b)(3). If no particular debt is discussed during a telephone conversation between a debt collector and a person, the debt collector counts the conversation as a telephone conversation in connection with the collection of at least one particular debt, unless an exclusion in § 1006.14(b)(3) applies. 2. Examples. The following examples illustrate the rule. i. A debt collector is attempting to collect a medical debt and two credit card debts (denominated A and B for this example) from the same consumer. Under § 1006.14(b)(2)(i)(A), a debt collector may count an unanswered telephone call as one telephone call placed toward any one particular debt, even if the debt collector intended to discuss more than one particular debt had the telephone call resulted in a telephone conversation. Therefore, if the debt collector, within a period of seven consecutive days, places a total of 21 unanswered telephone calls, seven of which the debt collector counted as unanswered telephone calls to the consumer in connection with the collection of the medical debt, seven of which the debt collector counted as unanswered telephone calls to the consumer in connection with the collection of credit card debt A, and seven of which the debt collector counted as unanswered telephone calls to the consumer in connection with the collection of credit card debt B, the debt collector is presumed to comply with § 1006.14(b)(1) and FDCPA VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 section 806(5), even if, for example, the debt collector intended to discuss both credit card debt A and credit card debt B had any of the telephone calls with respect to the credit card debts resulted in a telephone conversation. ii. A debt collector is attempting to collect a medical debt and a credit card debt from the same consumer. The debt collector places a telephone call to the consumer, intending to discuss both particular debts, but the consumer does not answer, and the telephone call goes to voicemail. The debt collector leaves a limited-content message, as defined in § 1006.2(j). Because the limitedcontent message does not specifically refer to any particular debt, under § 1006.14(b)(2)(i)(A), a debt collector may count the voicemail as one telephone call placed toward either of the particular debts, even though the debt collector intended to discuss both particular debts if the telephone call had resulted in a telephone conversation. iii. A debt collector is attempting to collect a medical debt and a credit card debt from the same consumer. On Monday, November 9, the debt collector places a telephone call to, and engages in a telephone conversation with, the consumer solely in connection with the collection of the medical debt. The debt collector does not place any telephone calls to the consumer in connection with the collection of the credit card debt. Regarding the medical debt, under § 1006.14(b)(2)(i)(A) and (B) respectively, the debt collector has placed a telephone call to, and has and engaged in a telephone conversation with, the consumer in connection with the collection of the particular debt, unless an exclusion in § 1006.14(b)(3) applies. Regarding the credit card debt, under § 1006.14(b)(2)(i)(A) and (B) respectively, the debt collector has neither placed a telephone call to, nor engaged in a telephone conversation with, the consumer in connection with the collection of the particular debt. iv. Assume the same facts as in the preceding example, except that on Monday, November 9, the debt collector engages in a telephone conversation with the consumer in connection with the collection of both the medical debt and the credit card debt. Under § 1006.14(b)(2)(i)(A) and (B) respectively, the debt collector has placed a telephone call to, and has engaged in a telephone conversation with, the consumer in connection with the collection of both the medical debt and the credit card debt, unless an exclusion in § 1006.14(b)(3) applies. v. A debt collector is attempting to collect a medical debt and a credit card debt from the same consumer. Beginning on Monday, November 9, and through Wednesday, November 11, the debt collector places two unanswered telephone calls to the consumer which the debt collector counts as telephone calls in connection with the collection of the medical debt, and four unanswered telephone calls to the consumer which the debt collector counts as telephone calls in connection with the collection of the credit card debt. On Thursday, November 12, the debt collector places a telephone call to, and engages in a general telephone conversation with, the consumer, but the debt collector and the consumer do not discuss either PO 00000 Frm 00172 Fmt 4701 Sfmt 4700 particular debt. Under § 1006.14(b)(2)(i)(A) and (B) respectively, the debt collector may count the November 12 telephone call and ensuing conversation toward either the medical debt or the credit card debt. For example, if the debt collector counts the November 12 telephone call and ensuing conversation toward the collection of only the medical debt, then, during this time period, the debt collector has placed three telephone calls and has had one conversation in connection with the collection of the medical debt, and has placed four telephone calls and has had no conversations in connection with the collection of the credit card debt. vi. A debt collector is attempting to collect a medical debt and a credit card debt from the same consumer. On Monday, November 9, the debt collector places a telephone call to, and initiates a telephone conversation with, the consumer about the collection of the medical debt. The consumer states that the consumer does not want to discuss the medical debt, and instead initiates a discussion about the credit card debt. Under § 1006.14(b)(2)(i)(A) and (B) respectively, the debt collector has both placed a telephone call to, and engaged in a telephone conversation with, the consumer in connection with the collection of the medical debt, even though the consumer was unwilling to engage in the discussion initiated by the debt collector regarding the medical debt. Under § 1006.14(b)(2)(i)(A) and (B) respectively, the debt collector has not placed a telephone call to the consumer in connection with the credit card debt, but the debt collector has engaged in a telephone conversation in connection with the collection of the credit card debt, even though the consumer, not the debt collector, initiated the discussion about the credit card debt. vii. A debt collector is attempting to collect three student loan debts that were serviced under a single account number at the time that they were obtained by a debt collector and that are owed or allegedly owed by the same consumer. All three debts are treated as a single debt for purposes of § 1006.14(b)(2). The debt collector is presumed to comply with § 1006.14(b)(1) and FDCPA section 806(5) if the debt collector places seven or fewer telephone calls within seven consecutive days to the consumer in connection with the collection of the three student loan debts, and the debt collector does not place a telephone call within a period of seven consecutive days after having had a telephone conversation with the consumer in connection with the collection of any one of the three student loan debts, unless an exclusion in § 1006.14(b)(3) applies. 14(h) Prohibited Communication Media 14(h)(1) In General 1. Communication media designations. Section 1006.14(h)(1) prohibits a debt collector from communicating or attempting to communicate with a person in connection with the collection of any debt through a medium of communication if the person has requested that the debt collector not use that medium to communicate with the person. E:\FR\FM\30NOR3.SGM 30NOR3 TKELLEY on DSKBCP9HB2PROD with RULES3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations The debt collector may ask follow-up questions regarding preferred communication media to clarify statements by the person. For examples of communication media, see comment 2(d)–1. 2. Specific address or telephone number. Within a medium of communication, a person may request that a debt collector not use a specific address or telephone number. For example, if a person has two mobile telephone numbers, the person may request that the debt collector not use one or both mobile telephone numbers. 3. Examples. The following examples illustrate the prohibition in § 1006.14(h)(1). i. Assume that a person tells a debt collector to ‘‘stop calling’’ the person. Based on these facts, the person has requested that the debt collector not use telephone calls to communicate with the person and, thereafter, § 1006.14(h)(1) prohibits the debt collector from communicating or attempting to communicate with the person through telephone calls. ii. Assume that, in response to receipt of either the opt-out procedures described in § 1006.6(d)(4)(ii) or the opt-out notice in § 1006.6(e), a consumer requests to opt out of receiving electronic communications from a debt collector at a particular email address or telephone number. Based on these facts, the consumer has requested that the debt collector not use that email address or telephone number to electronically communicate with the consumer for any debt and, thereafter, § 1006.14(h)(1) prohibits the debt collector from electronically communicating or attempting to communicate with the consumer through that email address or telephone number. 14(h)(2) Exceptions 1. Legally required communication media. Under § 1006.14(h)(2)(iii), 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. For example, assume that a debt collector who is also a mortgage servicer subject to the periodic statement requirement for residential mortgage loans under Regulation Z, 12 CFR 1026.41, is engaging in debt collection communications with a person about the person’s residential mortgage loan. The person tells the debt collector to stop mailing letters to the person, and the person has not consented to receive statements electronically in accordance with 12 CFR 1026.41(c). Although the person has requested that the debt collector not use mail to communicate with the person, § 1006.14(h)(2)(iii) permits the debt collector to mail the person periodic statements, because the periodic statements are required by applicable law. Section 1006.18—False, Deceptive, or Misleading Representations or Means 18(d) False Representations or Deceptive Means 1. Social media. Under § 1006.18(d), a debt collector may not use any false VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 representation or deceptive means to collect any debt or to obtain information concerning a consumer. In the social media context, the following examples illustrate the rule: i. Assume that a debt collector sends a private message, in connection with the collection of a debt, requesting to be added as one of the consumer’s contacts on a social media platform marketed for social or professional networking purposes. A debt collector makes a false representation or implication if the debt collector does not disclose his or her identity as a debt collector in the request. ii. Assume that a debt collector communicates privately with a friend or coworker of a consumer on a social media platform, for the purpose of acquiring location information about the consumer. Pursuant to § 1006.10(b)(1), the debt collector must identify himself or herself individually by name when communicating for the purpose of acquiring location information. To avoid violating § 1006.18(d), the debt collector must communicate using a profile that accurately identifies the debt collector’s individual name. (But see § 1006.18(f) and its associated commentary regarding use of assumed names.) The debt collector also must comply with the other applicable requirements for obtaining location information in § 1006.10 (e.g., with respect to stating that the debt collector is confirming or correcting location information concerning the consumer and, only if expressly requested, identifying the name of the debt collector’s employer), for communicating with third parties in § 1006.6(d)(1), and for communicating through social media in § 1006.22(f)(4). 18(e) Disclosures Required 1. Communication. A limited-content message, as defined in § 1006.2(j), is not a communication, as that term is defined in § 1006.2(d). Thus, a debt collector who leaves only a limited-content message for a consumer need not make the disclosures required by § 1006.18(e)(1) and (2). However, if a debt collector leaves a voicemail message for a consumer that includes content in addition to the content described in § 1006.2(j)(1) and (2) and that directly or indirectly conveys any information regarding a debt, the voicemail message is a communication, and the debt collector is required to make the § 1006.18(e) disclosures. See the commentary to § 1006.2(d) and (j) for additional clarification regarding the definitions of communication and limitedcontent message. 18(e)(1) Initial Communications 1. Example. A debt collector must make the disclosure required by § 1006.18(e)(1) in the debt collector’s initial communication with a consumer, regardless of the medium of communication and regardless of whether the debt collector or the consumer initiated the communication. For example, assume that a debt collector who has not previously communicated with a consumer attempts to communicate with the consumer by leaving a limited-content message, as defined in § 1006.2(j). After listening to the debt collector’s limited-content message, the consumer initiates a telephone call to, and PO 00000 Frm 00173 Fmt 4701 Sfmt 4700 76905 communicates with, the debt collector. Pursuant to § 1006.18(e)(1), because the consumer-initiated call is the initial communication between the debt collector and the consumer, the debt collector must disclose to the consumer during that telephone call that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose. 18(e)(4) Translated Disclosures 1. Example. Section 1006.18(e)(4) provides that a debt collector must make the disclosures required by § 1006.18(e)(1) and (2) in the same language or languages used for the rest of the communication in which the disclosures are conveyed. The following example illustrates the rule: i. ABC debt collector is collecting a debt. ABC debt collector’s initial communication with the consumer takes place in Spanish. Section 1006.18(e)(4) requires ABC debt collector to provide in Spanish the disclosure required by § 1006.18(e)(1). Thereafter, ABC debt collector has a communication with the consumer that takes place partly in English and partly in Spanish. During this communication, the debt collector must provide the disclosure required by § 1006.18(e)(2) in both English and Spanish. 18(f) Assumed Names 1. Readily identifiable by the employer. Section 1006.18(f) provides, in part, that § 1006.18 does not prohibit a debt collector’s employee from using an assumed name when communicating or attempting to communicate with a person, provided that the debt collector can readily identify any employee using an assumed name. A debt collector may use any method of managing assumed names that enables the debt collector to determine the true identity of any employee using an assumed name. For example, a debt collector may require an employee to use the same assumed name when communicating or attempting to communicate with any person and may prohibit any other employee from using the same assumed name. Section 1006.22—Unfair or Unconscionable Means 22(f) Restrictions on Use of Certain Media Paragraph 22(f)(2) 1. Language or symbol. Section 1006.22(f)(2) provides, in relevant part, that a debt collector must not use any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by mail. For purposes of § 1006.22(f)(2), the phrase ‘‘language or symbol’’ does not include language and symbols that facilitate communications by mail, such as: The debtor’s name and address; postage; language such as ‘‘forwarding and address correction requested’’; and the United States Postal Service’s Intelligent Mail barcode. Paragraph 22(f)(3) 1. Email addresses described in § 1006.6(d)(4). Section 1006.22(f)(3) generally prohibits a debt collector from communicating or attempting to E:\FR\FM\30NOR3.SGM 30NOR3 76906 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations communicate with a consumer by sending an email to an email address that the debt collector knows is provided to the consumer by the consumer’s employer. The prohibition does not apply if the debt collector sends the email to an email address described in § 1006.6(d)(4)(i) or (iii), which specifically contemplate debt collectors sending emails to any email address—including an email address that a debt collector knows is employer provided—if the consumer has used the email address to communicate with the debt collector about a debt (§ 1006.6(d)(4)(i)(A)), has provided prior consent directly to the debt collector to use the email address (§ 1006.6(d)(4)(i)(B)), or has obtained the email address from a prior debt collector who satisfied either § 1006.6(d)(4)(i) or (ii). A debt collector who sends an email to an email address described in § 1006.6(d)(4)(ii) complies with the prohibition in § 1006.22(f)(3) because the procedures in § 1006.6(d)(4)(ii) do not permit debt collectors to send emails to email addresses that the debt collector knows are employer provided. Paragraph 22(f)(4) 1. Social media. Section 1006.22(f)(4) prohibits a debt collector from communicating or attempting to communicate with a person in connection with the collection of a debt through a social media platform if the communication or attempt to communicate is viewable by the general public or the person’s social media contacts. For example, § 1006.22(f)(4) prohibits a debt collector from posting, in connection with the collection of a debt, any message for a person on a social media web page if that web page is viewable by the general public or the person’s social media contacts. Section 1006.22(f)(4) does not prohibit a debt collector from sending a message to a person if the message is not viewable by the general public or the person’s social media contacts. Section 1006.6(b) or § 1006.14(h) nonetheless may prohibit the debt collector from sending such a message, and a debt collector who communicates by sending such a message about the debt to the wrong person violates § 1006.6(d)(1). See also comment 18(d)–1 with respect to communications and attempts to communicate with consumers and third parties on social media platforms. Section 1006.30—Other Prohibited Practices TKELLEY on DSKBCP9HB2PROD with RULES3 30(b) Prohibition on the Sale, Transfer for Consideration, or Placement for Collection of Certain Debts 30(b)(1) In General 1. Transfer for consideration. Section 1006.30(b)(1) prohibits, among other things, a debt collector from transferring for consideration a debt that has been paid or settled or discharged in bankruptcy. A debt collector transfers a debt for consideration when the debt collector receives or expects to receive compensation for the transfer of the debt. A debt collector does not transfer a debt for consideration when the debt collector sends information about the debt, as opposed to the debt itself, to another party. For example, a debt collector does not transfer a debt for consideration when the VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 debt collector sends a file with data about the debt to another person for analytics, ‘‘scrubbing,’’ or archiving. A debt collector also does not transfer a debt for consideration when the debt collector reports to a credit reporting agency information that a debt has been paid or settled or discharged in bankruptcy. 2. Debt that resulted from identity theft. Section 615(f)(1) of the Fair Credit Reporting Act (15 U.S.C. 1681m(f)(1)) states that no person shall sell, transfer for consideration, or place for collection a debt if such person has been notified under section 605B of the Fair Credit Reporting Act (15 U.S.C. 1681c– 2) that the debt has resulted from identity theft. Nothing in § 1006.30(b)(1) alters a debt collector’s obligation to comply with the prohibition set forth in section 615(f)(1) of the Fair Credit Reporting Act. 30(b)(2) Exceptions 30(b)(2)(i) In General Paragraph 30(b)(2)(i)(A) 1. In general. Under § 1006.30(b)(2)(i)(A), a debt collector who is collecting a debt described in § 1006.30(b)(1) may transfer the debt to the debt’s owner. However, unless another exception under § 1006.30(b)(2) applies, the debt collector may not transfer the debt or the right to collect the debt to another entity on behalf of the debt owner. Section 1006.38—Disputes and Requests for Original-Creditor Information 1. In writing. Section 1006.38 contains requirements related to a dispute or request for the name and address of the original creditor timely submitted in writing by the consumer. A consumer has disputed the debt or requested the name and address of the original creditor in writing for purposes of § 1006.38(c) or (d)(2) if the consumer, for example: i. Mails the written dispute or request to the debt collector; ii. Provides the dispute or request to the debt collector using a medium of electronic communication through which the debt collector accepts electronic communications from consumers, such as an email address or a website portal; or iii. Delivers the written dispute or request in person or by courier to the debt collector. 2. Interpretation of the E-SIGN Act. Comment 38–1.ii constitutes the Bureau’s interpretation of section 101 of the E-SIGN Act as applied to section 809(b) of the FDCPA. Under this interpretation, section 101(a) of the E-SIGN Act enables a consumer to satisfy through an electronic request the requirement in section 809(b) of the FDCPA that the consumer’s notification of the debt collector be ‘‘in writing.’’ Further, because the consumer may only use a medium of electronic communication through which a debt collector accepts electronic communications from consumers, section 101(b) of the E-SIGN Act is not contravened. 38(a) Definitions 38(a)(1) Duplicative Dispute 1. Substantially the same. Section 1006.38(a)(1) provides that a dispute is a duplicative dispute if, among other things, the dispute is substantially the same as a PO 00000 Frm 00174 Fmt 4701 Sfmt 4700 dispute previously submitted by the consumer in writing within the validation period for which the debt collector has already satisfied the requirements of § 1006.38(d)(2)(i). A later dispute can be substantially the same as an earlier dispute even if the later dispute does not repeat verbatim the language of the earlier dispute. 2. New and material information. Section 1006.38(a)(1) provides that a dispute that is substantially the same as a dispute previously submitted by the consumer in writing within the validation period for which the debt collector has already satisfied the requirements of § 1006.38(d)(2)(i) is not a duplicative dispute if the consumer provides new and material information to support the dispute. Information is new if the consumer did not provide the information when submitting an earlier dispute. Information is material if it is reasonably likely to change the verification the debt collector provided or would have provided in response to the earlier dispute. The following example illustrates the rule: i. ABC debt collector is collecting a debt from a consumer and sends the consumer a validation notice. In response, the consumer submits a written dispute to ABC debt collector within the validation period asserting that the consumer does not owe the debt. The consumer does not include any information in support of the dispute. Pursuant to § 1006.38(d)(2)(i), ABC debt collector provides the consumer a copy of verification of the debt. The consumer then sends a cancelled check showing the consumer paid the debt. The cancelled check is new and material information. 38(d) Disputes 38(d)(2) Response to Disputes Paragraph 38(d)(2)(ii) 1. Duplicative dispute notice. Section 1006.38(d)(2)(ii) provides that, in the case of a dispute that a debt collector reasonably determines is a duplicative dispute, the debt collector must cease collection of the debt, or any disputed portion of the debt, until the debt collector either notifies the consumer that the dispute is duplicative (§ 1006.38(d)(2)(ii)(A)) or provides a copy either of verification of the debt or of a judgment to the consumer (§ 1006.38(d)(2)(ii)(B)). If the debt collector notifies the consumer that the dispute is duplicative, § 1006.38(d)(2)(ii)(A) requires that the notice provide a brief statement of the reasons for the debt collector’s determination that the dispute is duplicative and refer the consumer to the debt collector’s response to the earlier dispute. A debt collector complies with the requirement to provide a brief statement of the reasons for its determination if the notice states that the dispute is substantially the same as an earlier dispute submitted by the consumer and the consumer has not included any new and material information in support of the earlier dispute. A debt collector complies with the requirement to refer the consumer to the debt collector’s response to the earlier dispute if the notice states that the debt collector responded to the earlier dispute and provides the date of that response. E:\FR\FM\30NOR3.SGM 30NOR3 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations use that email address or telephone number to send required disclosures. Subpart C—[Reserved] Section 1006.42—Sending Required Disclosures 42(a) Sending Required Disclosures TKELLEY on DSKBCP9HB2PROD with RULES3 42(a)(1) In General 1. Relevant factors. Section 1006.42(a)(1) provides, in part, that a debt collector who sends disclosures required by the Act or this part in writing or electronically must, among other things, do so in a manner that is reasonably expected to provide actual notice. In determining whether a debt collector has complied with this requirement, relevant factors include whether the debt collector: i. Identified the purpose of the communication by including, in the subject line of an electronic communication transmitting the disclosure, the name of the creditor to whom the debt currently is owed or allegedly is owed and one additional piece of information identifying the debt, other than the amount, such as a truncated account number; the name of the original creditor; the name of any store brand associated with the debt; the date of sale of a product or service giving rise to the debt; the physical address of service; and the billing or mailing address on the account; ii. Permitted receipt of notifications of undeliverability from communications providers, monitored for any such notifications, and treated any such notifications as precluding a reasonable expectation of actual notice for that delivery attempt; and iii. Identified itself as the sender of the communication by including a business name that the consumer would be likely to recognize, such as the name included in the notice described in § 1006.6(d)(4)(ii)(C), or the name that the debt collector has used in a prior limited-content message left for the consumer or in an email message sent to the consumer. 2. Notice of undeliverability. A debt collector who sends a required disclosure in writing or electronically and who receives a notice that the disclosure was not delivered has not sent the disclosure in a manner that is reasonably expected to provide actual notice under § 1006.42(a)(1). 3. Safe harbor for notices sent by mail. Subject to comment 42(a)(1)–2, a debt collector satisfies § 1006.42(a)(1) if the debt collector mails a printed copy of a disclosure to the consumer’s last known address, unless the debt collector, at the time of mailing, knows or should know that the consumer does not currently reside at, or receive mail at, that location. 4. Effect of consumer opt out. If a consumer has opted out of debt collection communications to a particular email address or telephone number by, for example, following the instructions provided pursuant to § 1006.6(e), then a debt collector cannot VerDate Sep<11>2014 21:38 Nov 27, 2020 Jkt 253001 Subpart D—Miscellaneous Section 1006.100—Record Retention 1. Three-year retention period. Section 1006.100 requires a debt collector to maintain records that are evidence of compliance or noncompliance with the FDCPA and this part starting on the date that the debt collector begins collection activity on a debt until three years after the debt collector’s last collection activity on the debt or, in the case of telephone call recordings, until three years after the dates of the telephone calls. Nothing in § 1006.100 prohibits a debt collector from retaining records that are evidence of compliance or noncompliance with the FDCPA and this part for more than three years after the applicable date. 100(a) In General 1. Records that evidence compliance. Section 1006.100(a) provides, in part, that a debt collector must retain records that are evidence of compliance or noncompliance with the FDCPA and this part. Thus, under § 1006.100(a), a debt collector must retain records that evidence that the debt collector performed the actions and made the disclosures required by the FDCPA and this part, as well as records that evidence that the debt collector refrained from conduct prohibited by the FDCPA and this part. If a record is of a type that could evidence compliance or noncompliance depending on the conduct of the debt collector that is revealed within the record, then the record is one that is evidence of compliance or noncompliance and the debt collector must retain it. Such records include, but are not limited to, records that evidence that the debt collector’s communications and attempts to communicate in connection with the collection of a debt complied (or did not comply) with the FDCPA and this part. For example, a debt collector must retain: i. Telephone call logs as evidence of compliance or noncompliance with the prohibition against harassing telephone calls in § 1006.14(b)(1); and ii. Copies of documents provided to consumers as evidence that the debt collector provided the information required by FDCPA section 809(a) (15 U.S.C. 1692g(a)), as implemented by Bureau regulation, and § 1006.38 and met the delivery requirements of § 1006.42. 2. No requirement to create additional records. A debt collector need not create and maintain additional records, for the sole purpose of evidencing compliance, that the debt collector would not have created in the ordinary course of its business in the absence PO 00000 Frm 00175 Fmt 4701 Sfmt 9990 76907 of the record retention requirement set forth in § 1006.100(a). For example, § 1006.100(a) does not require a debt collector to create call logs showing that it has not attempted to communicate with any consumers at times that the consumers designated as inconvenient. However, if the debt collector maintains call logs, the call logs are evidence of compliance or noncompliance with the FDCPA and this part and the collector must retain them. 3. Methods of retaining evidence. Section 1006.100(a) does not require a debt collector to retain actual paper copies of documents. Records may be retained by any method that reproduces the records accurately (including computer programs) and that ensures that the debt collector can easily access the records (including a contractual right to access records possessed by another entity). 4. When the three-year record retention clock starts to run. Section 1006.100(a) provides, in part, that a debt collector must retain records that are evidence of compliance or noncompliance until three years after the debt collector’s last collection activity on a debt. An event such as the debt collector transferring the debt for consideration to another party would start the running of the debt collector’s three-year record retention clock with respect to the debt, provided that the transfer of the debt represents the debt collector’s last collection activity on the debt. In contrast, the debt’s discharge in bankruptcy, or the consumer’s curing of default on the debt, would not represent the time at which the three-year record-retention clock starts to run if the debt collector continues collection activity on the debt after that time, which might occur when the debt is secured and an enforceable lien on the collateral that secured the debt survives the bankruptcy discharge (and collection activity pursuant to the lien continues after the discharge). 100(b) Special Rule for Telephone Call Recordings 1. Recorded telephone calls. Nothing in § 1006.100 requires a debt collector to record telephone calls. However, if a debt collector records telephone calls, the recordings are evidence of compliance or noncompliance with the FDCPA and this part, and, under § 1006.100(b), the debt collector must retain the recording of each such telephone call for three years after the date of the call. Dated: October 30, 2020. Laura Galban, Federal Register Liaison, Bureau of Consumer Financial Protection. [FR Doc. 2020–24463 Filed 11–27–20; 8:45 am] BILLING CODE 4810–AM–P E:\FR\FM\30NOR3.SGM 30NOR3

Agencies

BUREAU OF CONSUMER FINANCIAL PROTECTION

[Federal Register Volume 85, Number 230 (Monday, November 30, 2020)]
[Rules and Regulations]
[Pages 76734-76907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24463]



[[Page 76733]]

Vol. 85

Monday,

No. 230

November 30, 2020

Part III





Bureau of Consumer Financial Protection





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12 CFR Part 1006





Debt Collection Practices (Regulation F); Final Rule

Federal Register / Vol. 85 , No. 230 / Monday, November 30, 2020 / 
Rules and Regulations

[[Page 76734]]


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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.

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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 
[email protected].

SUPPLEMENTARY INFORMATION: 

I. Summary of the Final Rule

    The Bureau is finalizing amendments to Regulation F, 12 CFR part 
1006, which implements the FDCPA.\1\ 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.
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    \1\ 15 U.S.C. 1692 et seq.
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    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.\2\ The statute was 
a response to ``abundant evidence of the use of abusive, deceptive, and 
unfair debt collection practices by many debt collectors.'' \3\ 
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.'' \4\
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    \2\ 15 U.S.C. 1692(e).
    \3\ 15 U.S.C. 1692(a).
    \4\ Id.
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    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.\5\ 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.
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    \5\ The record retention requirement in Sec.  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 Sec.  
1006.100.
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    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

[[Page 76735]]

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.\6\
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    \6\ These procedures appear in Sec.  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 Sec.  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 Sec.  1006.6(d)(3)(i) and (ii). In addition, for ease of 
reference, the Bureau sometimes refers to the procedures in Sec.  
1006.6(d)(3) through (5) as ``safe harbor procedures.'' The Bureau's 
use of the term ``safe harbor'' in the context of Sec.  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.
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     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 Sec.  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.\7\ 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.\8\
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    \7\ 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).
    \8\ See id.
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    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.\9\
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    \9\ 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).
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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.\10\ 
Contingency debt collectors compete with one another to secure business 
from creditors based on, among other factors, the debt collectors' 
effectiveness in obtaining recoveries.\11\
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    \10\ Id. at 8.
    \11\ 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.

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[[Page 76736]]

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.\12\ 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.\13\ 
Debt buyers generated about one-third of debt collection revenue, or 
about $3.5 billion, in 2017.\14\ 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.
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    \12\ 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).
    \13\ Id. at 7 (citing Credit Card Debt Sales in 2008, 921 Nilson 
Rep. 10 (Mar. 2009)).
    \14\ 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.
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    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.\15\
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    \15\ FTC Debt Buying Report, supra note 12, at 23-24.
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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.\16\ 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.\17\
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    \16\ Bureau of Consumer Fin. Prot., Consumer Experience with 
Debt Collection: Findings from CFPB's Survey of Consumer Views on 
Debt, at 5 (2017), https://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.
    \17\ Id.
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    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; \18\ many

[[Page 76737]]

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.\19\ 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.
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    \18\ 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.
    \19\ See, e.g., Stipulated Final Judgment and Consent Order, 
Consumer Fin. Prot. Bureau v. 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), https://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), https://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf; Complaint, Consumer Fin. Prot. Bureau 
v. Nat'l Corrective Grp., Inc., 1:15-cv-00899-RDB (D. Md. Mar. 30, 
2015), https://files.consumerfinance.gov/f/201503_cfpb_complaint-national-corrective-group.pdf.
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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.\20\ When Congress enacted the FDCPA in 1977, it found that 
``[e]xisting laws and procedures for redressing . . . injuries [were] 
inadequate to protect consumers.'' \21\ 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.'' \22\
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 45.
    \21\ 15 U.S.C. 1692(b).
    \22\ 15 U.S.C. 1692(a).
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    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.'' \23\ 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.
---------------------------------------------------------------------------

    \23\ 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 Sec.  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.'' \24\
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    \24\ FDCPA section 814(d), 15 U.S.C. 1692l(d).
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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.\25\ 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.\26\ 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.\27\
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    \25\ See 84 FR 23274 (May 21, 2019).
    \26\ 84 FR 37806 (Aug. 2, 2019).
    \27\ 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.
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    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.

[[Page 76738]]

    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).\28\ 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.\29\ 
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.
---------------------------------------------------------------------------

    \28\ See 85 FR 12672 (Mar. 3, 2020).
    \29\ See 85 FR 17299 (Mar. 27, 2020) (first extension) and 85 FR 
30890 (May 21, 2020) (second extension).
---------------------------------------------------------------------------

B. Other Outreach ³⁰
---------------------------------------------------------------------------

    \30\ 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.\31\ 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.
---------------------------------------------------------------------------

    \31\ 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).\32\ 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.\33\
---------------------------------------------------------------------------

    \32\ 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.
    \33\ 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).\34\ 
The Operations Study focused on understanding how debt collection firms 
obtain information about delinquent consumer accounts and attempt to 
collect on those accounts.
---------------------------------------------------------------------------

    \34\ 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).\35\ 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),\36\ 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.\37\ The Bureau considered these findings and recommendations in 
preparing the proposals and this final rule.
---------------------------------------------------------------------------

    \35\ 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)).
    \36\ 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.
    \37\ 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 \38\ and its Request for Information 
Regarding the Bureau's Inherited Regulations and Inherited Rulemaking 
Authorities; \39\ 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.
---------------------------------------------------------------------------

    \38\ 83 FR 12286 (Mar. 21, 2018).
    \39\ 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

[[Page 76739]]

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.\40\ 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.'' \41\ 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.\42\ ``Federal consumer financial 
law'' includes title X of the Dodd-Frank Act and the FDCPA.\43\ No 
provisions in this final rule are based on section 1031 of the Dodd-
Frank Act.
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 1692l(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.
    \41\ 12 U.S.C. 5512(a).
    \42\ 12 U.S.C. 5512(b)(1).
    \43\ 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).\44\
---------------------------------------------------------------------------

    \44\ 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.'' \45\ Then, ``[w]ithout limiting the general application of 
the foregoing,'' it lists six examples of conduct that violate that 
section.\46\ 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.'' \47\ Then, ``[w]ithout limiting the general application of the 
foregoing,'' section 807 lists 16 examples of conduct that violate that 
section.\48\ Finally, FDCPA section 808 prohibits a debt collector from 
``us[ing] unfair or unconscionable means to collect or attempt to 
collect any debt.'' \49\ Then, ``[w]ithout limiting the general 
application of the foregoing,'' FDCPA section 808 lists eight examples 
of conduct that violate that section.\50\ 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.\51\
---------------------------------------------------------------------------

    \45\ 15 U.S.C. 1692d.
    \46\ 15 U.S.C. 1692d(1)-(6).
    \47\ 15 U.S.C. 1692e.
    \48\ 15 U.S.C. 1692e(1)-(16).
    \49\ 15 U.S.C. 1692f.
    \50\ 15 U.S.C. 1692f(1)-(8).
    \51\ 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,\52\ as are 
opinions by courts that have addressed this issue.\53\ 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.
---------------------------------------------------------------------------

    \52\ 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 v. FCI Lender Servs., Inc., 797 F.3d 219, 226 (2d 
Cir. 2015).
    \53\ See, e.g., Stratton v. 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; \54\ (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.\55\ 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.'' \56\ For example, courts have held that violating a 
consumer's privacy interest through public exposure of a debt violates 
the FDCPA, noting that

[[Page 76740]]

violating a consumer's privacy is a type of conduct prohibited by 
several specific examples.\57\ 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.\58\
---------------------------------------------------------------------------

    \54\ 15 U.S.C. 1692d(3).
    \55\ 15 U.S.C. 1692f(7)-(8).
    \56\ Currier v. First Resolution Inv. Corp., 762 F.3d 529, 534 
(6th Cir. 2014) (citing Limited, Inc. v. Comm'r, 286 F.3d 324, 332 
(6th Cir. 2002)).
    \57\ See id. at 535.
    \58\ 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.\59\ 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.\60\ 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.\61\ Similarly, a debt collector could violate 
FDCPA section 807 by, for example, giving ``a false impression of the 
character of the debt,'' \62\ such as by failing to disclose that an 
amount collected includes fees.\63\
---------------------------------------------------------------------------

    \59\ 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 v. 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.
    \60\ See, e.g., Hosseinzadeh v. 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).
    \61\ See, e.g., Ferrell v. 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 v. 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 v. J.J. Mac 
Intyre Co. of Nev., Inc., 969 F. Supp. 609, 612-13 (D. Nev. 1997) 
(denying debt collector's motion to dismiss claims under sections 
807 and 808 where debt collector allegedly attempted to collect 
fully satisfied debt).
    \62\ Fields v. 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'').
    \63\ Id.
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    Several courts have applied an objective standard of an 
``unsophisticated'' or ``least sophisticated'' consumer to FDCPA 
sections 807 \64\ and 808 \65\ and an objective, vulnerable consumer 
standard to FDCPA section 806.\66\ 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.'' \67\
---------------------------------------------------------------------------

    \64\ Jensen v. 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 v. Great Seneca Fin. Corp., 569 F.3d 606, 613 (6th Cir. 
2009) (applying least sophisticated consumer standard to section 807 
claim); Bentley v. Great Lakes Collection Bureau, 6 F.3d 60, 62 (2d 
Cir. 1993) (same); Swanson v. S. Or. Credit Serv., Inc., 869 F.2d 
1222, 1227 (9th Cir. 1988) (per curiam) (same).
    \65\ See, e.g., Crawford v. 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 v. Unifund CCR Partners, 601 F.3d 1185, 1200-01 
(11th Cir. 2010) (per curiam) (applying least sophisticated consumer 
standard to section 808 claim); Turner v. 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 v. Quadramed Corp., 
225 F.3d 350, 353 (3d Cir. 2000).
    \66\ For example, in Jeter v. 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.''
    \67\ See, e.g., Brief for the Consumer Financial Protection 
Bureau in Support of Appellee and Affirmance at 13, DeGroot v. 
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 v. Gillie, 136 S. Ct. 1594 (2016) (No. 15-338), 2016 WL 
836755, at *29 (quoting Gammon v. GC Servs. Ltd. P'ship, 27 F.3d 
1254, 1257 (7th Cir. 1994) (quoting Clomon v. Jackson, 988 F.2d 
1314, 1319 (2d Cir. 1993))).
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    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.\68\ Courts have further reasoned that section 807's 
prohibition on false, deceptive, or misleading representations 
incorporates an objective, ``unsophisticated'' consumer standard.\69\ 
This standard ``protects the consumer who is uninformed, naive, or 
trusting, yet it admits an objective element of reasonableness.'' \70\ 
The Bureau agrees with the reasoning of courts that have applied this 
standard or a ``least sophisticated consumer'' standard.\71\ The Bureau 
uses the term unsophisticated consumer to describe the standard it 
applies when assessing the effect of conduct on consumers.
---------------------------------------------------------------------------

    \68\ 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.'').
    \69\ See Brief for the United States as Amicus Curiae Supporting 
Respondents, supra note 67, at *10, 27-30.
    \70\ Gammon, 27 F.3d at 1257.
    \71\ See, e.g., Rosenau v. 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.'').
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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.\72\ In particular, FDCPA section 802 delineates 
certain specific harms that the general and specific prohibitions in 
sections 806

[[Page 76741]]

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.'' \73\
---------------------------------------------------------------------------

    \72\ 15 U.S.C. 1692(e).
    \73\ 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 Sec. Sec.  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.'' \74\ 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.'' \75\ The Bureau 
is finalizing Sec. Sec.  1006.6(e) and 1006.38 based in part on its 
authority under Dodd-Frank Act section 1032.
---------------------------------------------------------------------------

    \74\ 12 U.S.C. 5532(a).
    \75\ 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.'' \76\ ``Federal consumer financial 
laws'' include the FDCPA and title X of the Dodd-Frank Act.\77\ 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).\78\ See part VII for a 
discussion of the Bureau's standards for rulemaking under Dodd-Frank 
Act section 1022(b)(2).
---------------------------------------------------------------------------

    \76\ 12 U.S.C. 5512(b)(1).
    \77\ 12 U.S.C. 5481(14).
    \78\ 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 Sec.  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 Sec.  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 Sec.  1006.1(a) to 
set forth the Bureau's authority to issue such rules.\79\ Specifically, 
proposed Sec.  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,\80\ title X of the Dodd-Frank Act,\81\ and section 104(b)(1) and 
(d)(1) of the E-SIGN Act.\82\ The Bureau proposed to move the remainder 
of existing Sec.  1006.1(a), regarding State law exemptions from the 
FDCPA, to paragraph I(a) of appendix A of the regulation.
---------------------------------------------------------------------------

    \79\ 84 FR 23274, 23286 (May 21, 2019).
    \80\ 15 U.S.C. 1692l(d), 1692o.
    \81\ 12 U.S.C. 5481 et seq.
    \82\ 15 U.S.C. 7004(b)(1), (d)(1).
---------------------------------------------------------------------------

    The Bureau did not receive comments on proposed Sec.  1006.1(a). 
Pursuant to its authority under FDCPA section 814(d), the Bureau is 
finalizing Sec.  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 Sec.  1006.42, the Bureau is not relying on that 
provision as authority for the final rule.
1(b) Purpose
    Existing Sec.  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 Sec.  1006.1(b) to 
identify the purposes of part 1006 and proposed to move the definitions 
in existing Sec.  1006.1(b) to paragraph 1(b) of appendix A of the 
regulation.\83\ The Bureau did not receive comment on proposed Sec.  
1006.1(b) and is finalizing it

[[Page 76742]]

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

    \83\ 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 Sec.  
1006.1(c) to describe the applicability of proposed part 1006.\84\ 
Proposed Sec.  1006.1(c)(1) stated that, with the exception of proposed 
Sec.  1006.108 and appendix A, proposed part 1006 would apply to debt 
collectors as defined in proposed Sec.  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.\85\ Proposed Sec.  1006.1(c)(2) stated 
that certain provisions that were proposed only under sections 1031 or 
1032 of the Dodd-Frank Act,\86\ specifically proposed Sec. Sec.  
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.\87\ Proposed Sec.  
1006.1(c)(2) did not propose to expand coverage to any party not 
covered by the FDCPA.
---------------------------------------------------------------------------

    \84\ Id. at 23286-87.
    \85\ 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.
    \86\ 12 U.S.C. 5531(b), 5532.
    \87\ Proposed Sec. Sec.  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 Sec.  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 Sec.  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.\88\ 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.
---------------------------------------------------------------------------

    \88\ 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 Sec. Sec.  
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 Sec.  1006.34(c)(2)(iv) and (3)(iv) as part of the Bureau's 
disclosure-focused final rule,\89\ the Bureau is adopting Sec.  
1006.1(c)(1) as proposed and is reserving Sec.  1006.1(c)(2). The 
Bureau is adopting Sec.  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.
---------------------------------------------------------------------------

    \89\ See the section-by-section analysis of Sec.  1006.34.
---------------------------------------------------------------------------

Section 1006.2 Definitions
    Existing Sec.  1006.2 describes how a State may apply for an 
exemption from the FDCPA as provided in FDCPA section 817.\90\ 
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 Sec.  1006.2 to implement and interpret 
FDCPA section 803,\91\ which defines terms used throughout the statute, 
and to define additional terms that would be used in the 
regulation.\92\ The Bureau proposed to move existing Sec.  1006.2 to 
paragraph II of appendix A of the regulation.
---------------------------------------------------------------------------

    \90\ 15 U.S.C. 1692o.
    \91\ 15 U.S.C. 1692a.
    \92\ See 84 FR 23274, 23287-93 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau received no substantive comments on proposed Sec.  
1006.2(a) (defining the term Act or FDCPA) or on proposed Sec.  
1006.2(c), (g), or (l) (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 Sec.  1006.2 
and is finalizing them as discussed in the section-by-section analysis 
of Sec.  1006.2(b), (d) through (f), and (h) through (k) below. As 
proposed, the Bureau is finalizing Sec.  1006.2 to implement and 
interpret FDCPA section 803, pursuant to its authority under FDCPA 
section 814(d).

[[Page 76743]]

2(b) Attempt To Communicate
    The Bureau proposed in Sec.  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.\93\ Proposed Sec.  1006.2(b) further stated that an 
attempt to communicate includes providing a limited-content message, as 
defined in Sec.  1006.2(j). For the reasons discussed below, the Bureau 
is finalizing Sec.  1006.2(b) with a narrower definition of attempt to 
communicate and is adopting new commentary to clarify the definition's 
scope.
---------------------------------------------------------------------------

    \93\ See id. at 23287.
---------------------------------------------------------------------------

    The Bureau received a number of comments on proposed Sec.  
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 Sec. Sec.  
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 Sec.  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 Sec.  1006.6(b)(1)(i).\94\ As 
discussed in the section-by-section analysis of final Sec.  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 Sec.  1006.2(b) so 
that final Sec. Sec.  1006.6(b) and (c) and 1006.14(h) have their 
intended effect.
---------------------------------------------------------------------------

    \94\ 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 Sec.  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 Sec.  1006.2(b)--with the consumer at an 
inconvenient time in violation of Sec.  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 Sec.  1006.2(b) 
with the phrase or other contact ``about a debt.'' \95\
---------------------------------------------------------------------------

    \95\ 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, Sec.  
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, Sec.  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

[[Page 76744]]

section-by-section analyses provide more information about the 
operation of these provisions.\96\
---------------------------------------------------------------------------

    \96\ See the section-by-section analyses of Sec. Sec.  
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 Sec.  
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 Sec.  1006.6(d)(1) and the prohibition on communicating by 
postcard in proposed Sec.  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 Sec.  
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.\97\ The Bureau proposed Sec.  1006.2(d) to 
restate the statutory definition of communication, with only minor 
changes for clarity.\98\ Proposed Sec.  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 Sec.  1006.2(j). For the reasons discussed below, the 
Bureau is finalizing Sec.  1006.2(d) largely as proposed, with minor 
revisions for clarity.
---------------------------------------------------------------------------

    \97\ 15 U.S.C. 1692a(2).
    \98\ See 84 FR 23274, 23287-88 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau received several comments on proposed Sec.  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 Sec.  
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, Sec.  
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, Sec.  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.\99\
---------------------------------------------------------------------------

    \99\ See the section-by-section analyses of Sec. Sec.  
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 Sec.  1006.2(j).
    For the reasons discussed above, the Bureau is finalizing Sec.  
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 Sec.  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 Sec.  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 Sec.  1006.2(e) also provided 
that, for purposes of Sec. Sec.  1006.6 and 1006.14(h), the term 
consumer included the persons described in the special definition of 
consumer in Sec.  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 Sec.  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,

[[Page 76745]]

as part of the Bureau's disclosure-focused final rule.\103\
---------------------------------------------------------------------------

    \103\ See the section-by-section analysis of Sec.  1006.34.
---------------------------------------------------------------------------

    The Bureau's proposed Sec.  1006.2(e) cross-referenced proposed 
Sec.  1006.14(h). The Bureau proposed that the prohibition on 
communication media under Sec.  1006.14(h) apply to ``a consumer'' as 
defined under Sec.  1006.6(a) but, as finalized, Sec.  1006.14(h) 
applies to ``a person.'' \104\ It therefore is not necessary for Sec.  
1006.2(e) to include the proposed cross-reference Sec.  1006.14(h).
---------------------------------------------------------------------------

    \104\ See the section-by-section analysis of Sec.  
1006.14(h)(1).
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.2(e) to provide that the term consumer means any natural person 
obligated or allegedly obligated to pay any debt. Final Sec.  1006.2(e) 
further provides that, for purposes of Sec.  1006.6, the term consumer 
includes the persons described in Sec.  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 Sec.  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\
---------------------------------------------------------------------------

    \105\ 84 FR 23274, 23288-89 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau is not finalizing Sec.  1006.2(f) as proposed. As 
discussed in the section-by-section analysis of Sec.  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 
Sec. Sec.  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 Sec.  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 Sec.  1006.2(h) also would have 
clarified that, for purposes of Sec.  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 Sec.  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 Sec.  1006.2(h) generally as proposed. 
However, the Bureau is not finalizing proposed Sec.  1006.2(h)'s cross-
reference to Sec.  1006.2(f) because, as discussed in the section-by-
section analysis of Sec.  1006.2(f), the Bureau is not finalizing Sec.  
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 Sec.  1006.2(h) defines 
debt to mean, in part, an obligation of a consumer, and that Sec.  
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 Sec.  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 Sec.  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 v. 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 Sec.  
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 v. McCarthy & Holthus 
LLP, 139 S. Ct. 1029 (2019). And the Third Circuit provided in 
Barbato v. 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

[[Page 76746]]

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 Sec.  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 Sec.  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 v. 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 Sec.  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 Sec.  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 Sec.  1006.2(j)(1) 
would have required that limited-content messages include certain 
content, and proposed Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  
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 Sec.  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 Sec.  1006.2(j)(1) and (2), 
respectively.

---------------------------------------------------------------------------

[[Page 76747]]

    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 v. 
J.C. Christensen & Assocs., Inc.\121\
---------------------------------------------------------------------------

    \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 the section-by-section 
analysis of Sec.  1006.18(e).
    \124\ 15 U.S.C. 1692c(b). See also the section-by-section 
analysis of Sec.  1006.6(d).
---------------------------------------------------------------------------

    As explained in the proposal, many debt collectors state that they 
err on the side of caution and make repeated telephone calls instead of 
leaving messages for a consumer or sending text messages.\125\ Such 
repeated telephone calls may frustrate many consumers. Indeed, 
consumers often complain to the Bureau about the number of collection 
calls they receive and, to a lesser degree, about debt collectors' 
reluctance to leave voicemails.\126\ And, as noted in the proposal, the 
FTC and the U.S. Government Accountability Office also have previously 
noted the need to clarify the law regarding debt collectors' ability to 
leave voicemails for consumers.\127\
---------------------------------------------------------------------------

    \125\ See 84 FR 23274, 23290 (May 21, 2019).
    \126\ See id.
    \127\ See id.
---------------------------------------------------------------------------

    The Bureau determines that defining the content of a message that 
debt collectors may leave without engaging in an FDCPA communication 
will decrease uncertainty and benefit both debt collectors and 
consumers by reducing the need for debt collectors to rely on repeated 
telephone calls without leaving messages to establish contact with 
consumers. This, in turn, may benefit consumers by increasing their 
ability to learn whether they are being asked to pay the right debt, in 
the right amount. And debt collectors will benefit from the ability to 
leave certain messages without risking exposure to liability for 
violating the FDCPA while consumers will benefit from receiving 
messages that do not disclose information about a debt. Therefore, the 
Bureau is finalizing a definition of the limited-content message. At 
the same time, having considered commenters' concerns, the Bureau is 
finalizing certain changes to the definition, as discussed below.
Permissible Communication Media
    Proposed Sec.  1006.2(j) would have enabled a debt collector to 
transmit a limited-content message by voicemail, by text message, or 
orally.\128\ However, the proposal would not have allowed a debt 
collector to transmit a limited-content message by email because emails 
typically require additional information (e.g., a sender's email 
address) that may in some circumstances convey information about a 
debt, and consumers may be unlikely to read or respond to an email 
containing solely the information included in a limited-content message 
(e.g., consumers may disregard such an email as spam or a security 
risk).
---------------------------------------------------------------------------

    \128\ Proposed Sec.  1006.2(j) did not directly address social 
media; however, proposed Sec.  1006.22(f) would have prohibited a 
debt collector from sending any message to a consumer, including a 
limited-content message, by publicly viewable social media.
---------------------------------------------------------------------------

    The Bureau received many comments on the communication media 
through which debt collectors could send limited-content messages. The 
majority of these comments concerned email. Most industry commenters 
recommended allowing limited-content messages by email.\129\ These 
commenters made various arguments in support of their recommendation. 
Some commenters asserted that email was more private than other 
communication media because email accounts are password-protected, 
unique to a consumer, and generally not reassigned to other consumers. 
One commenter believed that the sender's email address revealed no more 
information than would be disclosed by caller ID, while other 
commenters stated that debt collectors could configure their email 
services to omit information from the sender's email address and 
signature line that might result in a prohibited third-party 
disclosure. Other commenters claimed that limited-content email 
messages would benefit consumers because consumers might prefer 
communicating by email, could research the debt collector before 
responding, and could decide when and how to respond. One commenter 
stated that limited-content email messages could help compensate for 
what the commenter viewed as barriers to electronic communication under 
proposed Sec.  1006.6(d)(3). Another commenter argued that, although 
the proposed limited-content message would closely resemble a spam or 
scam message if delivered by email, future technology might enable 
consumers to verify the legitimacy of email messages, and for this 
reason, the Bureau should allow limited-content email messages.
---------------------------------------------------------------------------

    \129\ Several industry commenters misunderstood proposed Sec.  
1006.2(j) and claimed that they would use email to send limited-
content messages.
---------------------------------------------------------------------------

    Relatedly, a State government commenter asserted that email and 
text messages were the only appropriate communication media for leaving 
limited-content messages because of the relatively low risk of third-
party disclosure, but only after a consumer had opted in to receiving 
electronic communications from a debt collector.
    A few consumer advocates stated that limited-content messages 
should not be permitted to be sent by email, with one suggesting that 
the Bureau incorporate this restriction into regulation text or 
commentary. Another stated that limited-content email messages may be

[[Page 76748]]

inappropriate because they include other content that might convey 
information about a debt, but argued that the same was true of 
telephone numbers, which a third party could look up using online 
search engines.
    Several commenters also addressed limited-content text messages. 
Industry commenters generally supported allowing limited-content text 
messages. Some of these commenters stated that many consumers prefer to 
use written communication media, such as text messages, that give them 
time to compose their thoughts, and these commenters explained that the 
opt-out notice under proposed Sec.  1006.6(e) would effectively prevent 
debt collectors from sending too many limited-content text messages. 
One industry commenter recommended also allowing limited-content 
messages by mobile communication applications because they are similar 
to text messages.
    One consumer commenter stated that, of all the permissible limited-
content message communication media, text messages have the greatest 
chance of being viewed only by the consumer. But most individual 
consumers and consumer advocates who addressed limited-content text 
messages opposed them. One consumer advocate argued that allowing 
limited-content text messages would subject consumers to unsolicited 
text message scams that could install malware on a consumer's mobile 
telephone or lead to identity theft. Another consumer advocate stated 
that limited-content text messages may be more likely to lead to 
prohibited third-party disclosures than limited-content voicemail 
messages because of the text message preview that often appears 
automatically on a smart phone screen. And one consumer advocate and 
one government commenter noted that, because the proposed frequency 
limits for telephone calls would not apply to text messages, debt 
collectors could send numerous limited-content text messages to 
consumers that, the commenters explained, would increase the chances of 
a prohibited third-party disclosure.
    A few commenters addressed limited-content social media messages. 
One industry commenter recommended allowing limited-content social 
media messages in general, while another industry commenter suggested 
allowing only direct messages sent privately to the consumer. A 
consumer advocate and a group of State Attorneys General, however, 
opposed all limited-content social media messages. The consumer 
advocate stated that any limited-content social media messages would be 
overly invasive and that debt collectors have demonstrated a 
willingness to abuse social media platforms to harass consumers. The 
group of State Attorneys General asserted that limited-content social 
media messages would contain information about the sender similar to 
limited-content email messages. This commenter also suggested that 
advertising algorithms could identify limited-content social media 
messages as debt collection messages, and then target the consumer for 
debt collection advertisements on social media or across the internet.
    Two industry commenters asked the Bureau to clarify that debt 
collectors may send ``ringless voicemail'' limited-content messages, or 
voicemail messages sent directly to a consumer's voicemail service 
provider without interacting with the consumer's mobile telephone.
    Finally, one industry commenter recommended allowing limited-
content mail messages because they would be less costly than validation 
notices. In contrast, consumer advocates believed the proposal would 
allow limited-content postcard messages, which, the commenter asserted, 
would violate FDCPA section 808(7)'s prohibition on communicating with 
a consumer regarding a debt by postcard.
    After considering the comments received, the Bureau is finalizing 
only limited-content voicemail messages. As explained in the proposal, 
uncertainty regarding debt collector's obligations and consumer's 
rights under FDCPA sections 805(b) and 807(11) arose in the context of 
voicemail messages.\130\ With this medium of communication, debt 
collectors face the dilemma of either repeatedly calling a consumer and 
hanging up, or leaving a voicemail message that might convey too much 
information in violation of FDCPA section 805(b) or too little 
information in violation of FDCPA section 807(11). And the Bureau 
understands that voicemail messages have been the subject of most 
litigation surrounding the intersection of these provisions. 
Accordingly, the need to define a specific message that is not a 
communication may be less pressing for other communication media, such 
as text messages, emails, or social media messages.
---------------------------------------------------------------------------

    \130\ See 84 FR 23274, 23290 (May 21, 2019). See also Foti v. 
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 Sec.  
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 Sec.  1006.2(j) limits the definition of 
limited-content messages to voicemail messages for a consumer.\133\
---------------------------------------------------------------------------

    \133\ 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 Sec.  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 Sec.  
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 Sec.  1006.6(d)(3) through (5) provides 
procedures that debt collectors

[[Page 76749]]

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 Sec.  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 Sec.  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 
Sec.  1006.2(j). Regarding voicemail messages left with third parties, 
the section-by-section analysis of final Sec.  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 Sec.  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 Sec.  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 Sec.  1006.2(j) places additional 
restrictions on debt collectors' abilities to communicate or attempt to 
communicate with third parties. Final Sec.  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 Sec.  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 
Sec.  1006.10 or with the prior consent of the consumer given directly 
to the debt collector as provided for under Sec.  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

[[Page 76750]]

disclosure of the caller's identity. The Bureau based this 
interpretation on the fact that proposed Sec.  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 Sec.  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 Sec.  
1006.2(j)(1)(iv). For this reason, and as discussed in the section-by-
section analysis of Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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, Sec.  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 Sec.  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.\134\
---------------------------------------------------------------------------

    \134\ See the section-by-section analysis of Sec.  
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

[[Page 76751]]

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 
Sec.  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 
Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  1006.6(d)(1)'s 
prohibitions regarding communications with third parties, proposed 
Sec.  1006.10's provisions regarding location communications, proposed 
Sec.  1006.18(e)'s disclosures, proposed Sec.  1006.22(f)(1)'s 
prohibition on communicating with consumers by postcard, and proposed 
Sec.  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) \135\ 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 Sec.  1006.2(j) is limited to voicemail messages. The 
Bureau declines to address limited-content text messages.
---------------------------------------------------------------------------

    \135\ 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 Sec.  1006.2(j) provides that a limited-content message is a 
voicemail message for a consumer that includes all of the content 
described in Sec.  1006.2(j)(1), that may include any of the content 
described in Sec.  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 Sec.  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 Sec.  1006.2(j)(1)(i)); a request that the 
consumer reply to the message (proposed Sec.  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 Sec.  
1006.2(j)(1)(iii)); a telephone number that the consumer can use to 
reply to the debt collector (proposed Sec.  1006.2(j)(1)(iv)); and, if 
delivered electronically, a disclosure explaining how the consumer can 
stop receiving messages through that medium (proposed Sec.  
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 Sec.  
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 Sec.  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 Sec.  
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

[[Page 76752]]

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 Sec.  
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 Sec.  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.\136\ 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.\137\ 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 Sec.  
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 Sec.  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; \138\ 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 Sec.  1006.2(j)(1) does not include the consumer's 
name in the limited-content message.
---------------------------------------------------------------------------

    \138\ Like FDCPA section 804, final Sec.  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 Sec.  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 v. 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 v. 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 v. 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 v. 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 v. Green Tree 
Servicing, LLC, No. 12-cv-2933 (DSD/SER), 2013 WL 4504290, at *2 (D. 
Minn. Aug. 23, 2013) (similar). Indeed, Sec.  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 Sec.  1006.2(j). But, as 
explained above, final Sec.  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 Sec.  1006.2(j) neither defines the exclusive means by 
which debt collectors can avoid conveying information about a debt nor

[[Page 76753]]

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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  
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 Sec.  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 Sec.  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 Sec.  1006.2(d).
    For the reasons discussed above, Sec.  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 Sec.  1006.2(j)(2) would have permitted a debt collector 
to include in a limited-content message the following optional 
information: A salutation (proposed Sec.  1006.2(j)(2)(i)), the date 
and time of the message (proposed Sec.  1006.2(j)(2)(ii)), a generic 
statement that the message relates to an account (proposed Sec.  
1006.2(j)(2)(iii)), and suggested dates and times for the consumer to 
reply to the message (proposed Sec.  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 Sec.  
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 Sec.  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 Sec.  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 Sec.  1006.2(j)(1)(i)'s requirement to 
include the debt collector's business name, a third party overhearing a

[[Page 76754]]

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.\141\
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    \141\ 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 Sec.  
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 Sec.  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 
Sec.  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 commenters asserted, would allow 
debt collectors to maintain consistency with other Federal rules that 
provide more flexibility in identifying the individuals with whom a 
consumer might communicate.
    The Bureau finds that the name of a natural person to whom a 
consumer may reply is an important element of the limited-content 
message.\142\ Such information helps efficiently direct the consumer's 
reply call to a person who is able to discuss the consumer's debt. But 
the Bureau agrees with commenters that some flexibility regarding this 
information would benefit consumers and debt collectors. If someone 
other than the natural person identified in the limited-content message 
answered their reply call, consumers likely would not be confused or 
frustrated, and large debt collectors could more easily employ the 
limited-content message. Certain references to a debt collector's 
groups or offices, such as the ``credit card receivables group,'' 
however, might heighten the risk of a prohibited third-party 
disclosure. A general reference to other ``representatives or 
associates,'' on the other hand, would minimize such risk while 
achieving the purposes identified by commenters. Accordingly, final 
Sec.  1006.2(j)(2)(iv) defines the limited-content message to include 
an optional statement that, if the consumer replies, the consumer may 
speak to any of the company's representatives or associates.
---------------------------------------------------------------------------

    \142\ See 84 FR 23274, 23292 (May 21, 2019).
---------------------------------------------------------------------------

    For the reasons discussed above, final Sec.  1006.2(j)(2) permits a 
limited-content message to include the following content: A salutation, 
the date and time of the message, suggested dates and times for the 
consumer to reply to the message, and a statement that, if the consumer 
replies, the consumer may speak to any of the company's representatives 
or associates. Comment 2(j)(2)-1 clarifies that a message that includes 
a more detailed description of a company's representative or associate 
group is not a limited-content message and provides an illustrative 
example. Comment 2(j)(2)-2 provides an example of a limited-content 
message that includes all of the information required under Sec.  
1006.2(j)(1) and all of the content permitted under Sec.  1006.2(j)(2).
2(k) Person
    The FDCPA frequently uses, but does not define, the term person. 
The Bureau proposed Sec.  1006.2(k) to define person, consistent with 
the definition of that term in 1 U.S.C. 1, to include ``corporations, 
companies, associations, firms, partnerships, societies, and joint 
stock companies, as well as individuals.'' \143\
---------------------------------------------------------------------------

    \143\ See 84 FR 23274, 23293 (May 21, 2019). 1 U.S.C. 1 states 
that ``in determining the meaning of any Act of Congress, unless the 
context indicates otherwise,'' the term person includes 
``corporations, companies, associations, firms, partnerships, 
societies, and joint stock companies, as well as individuals.''
---------------------------------------------------------------------------

    Three industry associations stated that the proposed definition was 
overly expansive and would impermissibly expand standing to bring an 
FDCPA claim to artificial entities even though the purpose of the FDCPA 
is to protect consumers. The commenters requested that the proposed 
definition either be deleted or limited to natural persons.
    The Bureau is finalizing the definition of person as proposed. 
Including this definition will clarify who is subject to provisions of 
the regulation that use the term person. The Bureau declines to delete 
the definition of person or to narrow it to include only natural 
persons because the plain language of the FDCPA illustrates that 
Congress did not intend to limit the term person, as used in the FDCPA, 
to natural persons. For example, the definition of debt collector in 
the FDCPA uses the phrase ``any person'' repeatedly, and there is no 
doubt that Congress intended to include non-natural persons in the 
definition of debt collector. Where the statute was intended to be 
limited to natural persons, Congress achieved that intent by using the 
term consumer. For example, FDCPA section 803(5) defines the term debt 
to include obligations of a consumer, and FDCPA section 803(3) limits 
the term consumer to a natural person. As a result, the Bureau 
concludes that the proposed definition of person would not expand the 
scope of the FDCPA beyond the scope that Congress intended. However, 
the Bureau is clarifying in the definition of debt at Sec.  1006.2(h) 
that debt subject to the FDCPA is limited to debt incurred by a natural 
person. See the section-by-section analysis of Sec.  1006.2(h) for 
additional discussion.

Subpart B--Rules for FDCPA Debt Collectors ¹⁴⁴
---------------------------------------------------------------------------

    \144\ As proposed, the final rule moves existing Sec. Sec.  
1006.3 through 1006.8 regarding applications for State exemptions 
from the FDCPA to appendix A of the regulation. See the section-by-
section analysis of Sec.  1006.108 and appendix A.
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Section 1006.6 Communications in Connection With Debt Collection
    FDCPA section 805 generally limits how debt collectors may 
communicate with consumers and third parties when collecting 
debts.\145\ The Bureau proposed Sec.  1006.6 to implement and interpret 
FDCPA section 805, and to

[[Page 76755]]

interpret FDCPA sections 806 and 808 to provide certain additional 
protections regarding debt collection communications. As discussed in 
more detail below, Sec.  1006.6, among other things, specifies and 
clarifies a debt collector's obligation to abide by a consumer's 
preferences when communicating in connection with the collection of any 
debt. Section 1006.6 also interprets FDCPA sections 805, 806, and 808 
with respect to newer communication technologies. And to protect 
consumer privacy, Sec.  1006.6 identifies procedures reasonably adapted 
to avoid a violation of FDCPA section 805(b)'s prohibition on third-
party disclosures when communicating by email or text message. Pursuant 
to its authority under FDCPA section 814(d) to write rules with respect 
to the collection of debts by debt collectors, the Bureau is finalizing 
Sec.  1006.6 with certain changes to address feedback and other 
consumer protection concerns.
---------------------------------------------------------------------------

    \145\ 15 U.S.C. 1692c.
---------------------------------------------------------------------------

Electronic Communications in Debt Collection
    As proposed, Sec.  1006.6 would have clarified how various 
provisions in FDCPA section 805, such as the prohibitions against 
communications at inconvenient times and places and the prohibition 
against communicating about a debt with a third party, would have 
applied to electronic communications such as emails and text messages. 
The proposal would not have prohibited any particular methods of 
electronic communication or established an opt-in framework for such 
communications. The Bureau received a large number of comments in 
response to the particular proposed interventions, and the Bureau 
addresses those comments in the section-by-section analysis below.
    In addition, the Bureau received many comments addressing the risks 
and benefits of electronic communications in debt collection. In 
general, industry commenters supported the use of electronic 
communications, noting that, compared to non-electronic communications 
such as mail and telephone calls, electronic communications are faster 
and more cost effective; enable debt collectors to reach consumers who 
do not answer the telephone or who change addresses frequently; provide 
consumers with more privacy and greater control over the time and place 
of engagement; and create a digital record of a consumer's interactions 
with a debt collector. Many industry commenters asserted that, because 
of these benefits, consumers wish to communicate electronically, and 
several industry commenters reported receiving such requests from 
consumers. But industry commenters also generally stated that they 
refrain from communicating electronically because they fear liability 
under FDCPA section 805(b) for an unintentional third-party disclosure, 
such as if they send an email or a text message to an email address or 
telephone number that does not belong to the consumer.
    A few individual consumers expressed a general interest in 
communicating with debt collectors electronically. But most individual 
consumer and consumer advocate commenters, as well as consumer 
attorney, academic, and government commenters, raised concerns about 
the Bureau's proposals and either opposed electronic communications in 
debt collection, or supported them only if the consumer had first 
explicitly consented, or opted in, to receiving them. These commenters 
argued that an opt-in approach would enable consumers, before agreeing 
to electronic communications, to: (1) Weigh any risks due to irregular 
internet or cellphone access; (2) confirm the addresses and telephone 
numbers to which electronic communications may be directed, ensuring 
that, particularly for consumers who regularly change telephone numbers 
or email addresses, communications are sent to the consumer rather than 
to a third party; (3) weigh the financial cost, if any, of electronic 
communications; (4) familiarize themselves with the sender and weigh 
any security risks, helping to ensure that consumers actually open 
emails and minimizing the chance that such emails are blocked by spam 
filters and other screening devices; \146\ and (5) weigh any privacy-
related risks, including the risk that emails and text messages could 
be viewed by a consumer's telephone or email provider, could appear on 
a publicly visible computer or telephone screen, or could be coming 
from a phony, rather than legitimate, debt collector.\147\
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    \146\ As the Bureau noted in the proposal, several Federal 
agencies advise consumers not to open emails from senders they do 
not recognize. See 84 FR 23274, 23363 n.578 (May 21, 2019).
    \147\ Many commenters raised specific concerns about the 
frequency with which consumers might receive emails and text 
messages from debt collectors. Those comments are addressed in the 
section-by-section analysis of Sec.  1006.14(a).
---------------------------------------------------------------------------

    The Bureau determines that electronic communications can offer 
benefits to consumers and debt collectors. Technologies such as email 
and text messaging allow consumers to exert greater control over the 
timing, frequency, and duration of communications with debt collectors, 
including by choosing when, where, and how much time to spend 
responding to a debt collector's email or text message. For debt 
collectors, these technologies are a more effective and efficient means 
of communicating with some consumers. The Bureau declines to 
categorically prohibit the use of these potentially beneficial 
communication media where Congress has not amended the FDCPA to 
prohibit their use.
    As to commenters' specific concerns regarding privacy and the risks 
of third-party disclosure, Sec.  1006.6(d)(3) through (5) sets forth 
procedures that a debt collector may follow to obtain a safe harbor 
from civil liability for a third-party disclosure when sending an email 
or a text message to a consumer. The Bureau expects that most debt 
collectors will use the procedures, which are designed to protect 
consumers against the risk of third-party disclosure, when 
communicating by email and text message. As to commenters' other 
concerns, the Bureau notes that, as discussed in the section-by-section 
analyses of Sec. Sec.  1006.6(b) and (e) and 1006.14(h), the Bureau is 
finalizing provisions that will require debt collectors to provide 
consumers with a reasonable and simple method of opting out of 
electronic communications and that will permit consumers to control the 
time, place, and media through which debt collectors may communicate. 
In addition, as discussed in the section-by-section analysis of Sec.  
1006.42, the Bureau is finalizing a general standard for electronic 
delivery of required disclosures. The Bureau determines that the final 
rule's overall approach to electronic communications addresses 
commenters' concerns.
    Consumer and consumer advocate commenters, some members of 
Congress, a group of State Attorneys General, and other State and local 
government commenters also expressed specific concern about the costs 
of text messaging.\148\ For consumers who lack unlimited text messaging 
plans, sending and receiving text messages may not be free. Some 
consumers with limited text messaging plans may pay for each text 
message; others may pay for each text message above a cap. Consumer 
advocate commenters noted that many of their clients maintain limited 
text messaging plans. The prevalence of such plans among the general 
public, or among consumers with debts in collection, is not clear, 
although some information suggests that most

[[Page 76756]]

consumers in general have unlimited text messaging plans.\149\
---------------------------------------------------------------------------

    \148\ Although a few commenters noted that, for consumers with 
limited data plans, sending and receiving emails may not be free 
either, most commenters focused on the costs of text messaging.
    \149\ In 2015, a company that develops text message surveys 
estimated that between 83 and 92 percent of U.S. mobile telephones 
had unlimited text messaging plans. See Josh Zagorsky, Almost 90% of 
Americans Have Unlimited Texting, Instant Census (Dec. 8, 2015), 
https://instantcensus.com/blog/almost-90-of-americans-have-unlimited-texting.
---------------------------------------------------------------------------

    Consumer and consumer advocate commenters, some members of 
Congress, a group of State Attorneys General, and other State and local 
government commenters urged the Bureau to address the costs associated 
with text messaging by requiring debt collectors to obtain affirmative 
consent before sending text messages. These commenters argued that an 
opt-in system would enable consumers to weigh the costs of text 
messages before agreeing to receive them from a debt collector. As 
discussed in detail below, Sec.  1006.6(d)(5) specifies procedures 
that, when followed, provide a debt collector with a safe harbor from 
civil liability for an unintentional third-party disclosure when 
sending a text message to a telephone number. These procedures 
effectively create an opt-in system for the use of text messages, and, 
as noted, the Bureau expects that most debt collectors will use them.
    Several consumer advocate commenters, some members of Congress, a 
State Attorney General, and other government commenters suggested that 
the Bureau address the costs associated with text messaging by 
requiring debt collectors to use free-to-end-user (FTEU) text messaging 
or otherwise require debt collectors to pay for text messages. The 
Bureau believes that the limitations in final Sec.  1006.6(d)(5)--
which, as noted, effectively create an opt-in system for text 
messages--offer a more practical solution than requiring debt 
collectors to use FTEU text messaging. Consumers who do not wish to 
incur the cost of text messages are unlikely to opt into a debt 
collector's use of text messages, and, as discussed in the section-by-
section analysis of Sec.  1006.6(e), a consumer who no longer wishes to 
receive text messages from a debt collector must be provided with a 
reasonable and simple way to opt out of such communications. Further, 
as the Bureau noted in the proposal, because FTEU text messaging may 
only be supported by certain wireless platforms, requiring debt 
collectors to use FTEU text messaging may not offer a solution for all 
consumers--a concern that commenters generally did not address.\150\ 
For these reasons, and in light of the other provisions in the final 
rule addressing debt collectors' use of text messages, the Bureau 
declines to finalize a requirement that debt collectors use FTEU 
technology.
---------------------------------------------------------------------------

    \150\ According to one industry website, FTEU is supported by 
six carriers (AT&T, Boost, Sprint, T-Mobile, Verizon Wireless, and 
Virgin Mobile). iVision Mobile, Free to End User (FTEU), https://www.ivisionmobile.com/text-messaging-software/free-to-end-user-fteu.asp (last visited Sept. 23, 2020); Mobile Mktg. Ass'n, U.S. 
Consumer Best Practices for Messaging: Version 7.0, at 43 (Oct. 16, 
2012), https://www.mmaglobal.com/files/bestpractices.pdf (describing 
FTEU ``Cross Carrier Guidelines'' as providing that ``[c]ontent 
providers must obtain opt-in approval from subscribers before 
sending them any SMS or MMS messages or other content from a short 
code'').
---------------------------------------------------------------------------

6(a) Definition
    FDCPA section 805(d) provides that, for purposes of section 805, 
the term consumer includes certain individuals other than the person 
obligated or allegedly obligated to pay the debt. These individuals 
include the consumer's spouse, parent (if the consumer is a minor), 
guardian, executor, or administrator.\151\ Accordingly, the protections 
in FDCPA section 805 apply both to these individuals and to the person 
obligated or allegedly obligated to pay the debt. Also, debt collectors 
may communicate with these individuals in connection with the 
collection of any debt without violating the FDCPA's prohibition on 
third-party disclosures.\152\
---------------------------------------------------------------------------

    \151\ 15 U.S.C. 1692c(d).
    \152\ See 15 U.S.C. 1692b, 1692c(b). A debt collector may 
communicate with third parties to seek location information about 
consumers, but the debt collector may not state that the consumer 
owes any debt. For additional discussion of these provisions, see 
the section-by-section analyses of Sec. Sec.  1006.6(d) and 
1006.10(c).
---------------------------------------------------------------------------

    The Bureau proposed Sec.  1006.6(a) to implement and interpret 
FDCPA section 805(d) and to define consumer for purposes of Sec.  
1006.6. Proposed Sec.  1006.6(a) generally mirrored FDCPA section 
805(d), except that proposed Sec.  1006.6(a)(5) would have interpreted 
the term to include a confirmed successor in interest, and proposed 
comments 6(a)(1)-1, 6(a)(2)-1, and 6(a)(4)-1 would have clarified how 
the term applied when the consumer obligated or allegedly obligated on 
the debt had died. For the reasons discussed below, the Bureau is 
finalizing Sec.  1006.6(a) largely as proposed, but is making minor 
changes for clarity.\153\
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    \153\ The Bureau received no comments regarding proposed Sec.  
1006.6(a)(3), which would have implemented FDCPA section 805(d)'s 
definition regarding a consumer's guardian. The Bureau is finalizing 
Sec.  1006.6(a)(3) as proposed and does not address it further in 
the section-by-section analysis below.
---------------------------------------------------------------------------

6(a)(1) and (2)
    FDCPA section 805(d) defines the term consumer for purposes of 
section 805 to include the consumer's spouse and (if the consumer is a 
minor) parent.\154\ Proposed Sec.  1006.6(a)(1) and (2) would have 
implemented these aspects of the definition.\155\ In addition, the 
Bureau proposed comments 6(a)(1)-1 and 6(a)(2)-1 to clarify that 
deceased consumers' surviving spouses and deceased minor consumers' 
parents, respectively, are consumers for purposes of Sec.  1006.6. This 
interpretation was consistent with the Bureau's proposal to interpret 
the general definition of consumer in Sec.  1006.2(e) to include 
deceased persons.\156\
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    \154\ 15 U.S.C. 1692c(d).
    \155\ See 84 FR 23274, 23293 (May 21, 2019).
    \156\ See the section-by-section analysis of Sec.  1006.2(e).
---------------------------------------------------------------------------

    A group of consumer advocates objected to proposed comments 
6(a)(1)-1 and 6(a)(2)-1. These commenters argued that the language of 
the FDCPA forecloses the proposed interpretation because it includes 
present-tense language in describing the consumer's parent and avoids 
the term surviving spouse, which Congress used elsewhere in the U.S. 
Code. These commenters further argued that no legitimate reason existed 
for a debt collector to communicate with consumers' surviving spouses 
or parents of deceased minor consumers because the FDCPA permits (as 
would a final rule) location communications and communications with 
executors or administrators of a deceased consumer's estate. Finally, 
the commenters urged the Bureau to expressly prohibit debt collectors 
from communicating with anyone in the decedent debt context unless the 
debt collector had determined that the person owed a debt or was the 
executor or administrator of a deceased consumer's estate.
    On several issues related to decedent debt, the Bureau is 
finalizing an approach consistent with the FTC's Policy Statement on 
Decedent Debt.\157\ The FTC stated that it would decline to take 
enforcement actions against debt collectors who communicated with ``the 
decedent's spouse [or] parent (if the decedent was a minor at the time 
of death).'' \158\ The FTC rejected the same legal arguments that the 
commenter raised against proposed comments 6(a)(1)-1 and 6(a)(2)-1 for 
reasons that

[[Page 76757]]

the Bureau finds persuasive here.\159\ In addition, the Bureau finds 
that legitimate reasons exist for communications between debt 
collectors and a deceased consumer's surviving spouse or the parents of 
a deceased minor consumer, especially if they had previously 
communicated with a debt collector while the consumer was alive. For 
example, such individuals may wish to obtain information from, or 
continue conversations with, the debt collector about the consumer's 
financial condition. Accordingly, the Bureau is finalizing comments 
6(a)(1)-1 and 6(a)(2)-1, as proposed, to clarify that surviving spouses 
and parents of deceased minor consumers, respectively, are consumers 
for purposes of Sec.  1006.6.
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    \157\ Fed. Trade Comm'n, Statement of Policy Regarding 
Communications in Connection with the Collection of Decedents' Debts 
(July 27, 2011), https://www.ftc.gov/sites/default/files/documents/federal_register_notices/statement-policy-regarding-communications-connection-collection-decedents-debts-policy-statement/110720fdcpa.pdf (FTC Policy Statement on Decedent Debt).
    \158\ FTC Policy Statement on Decedent Debt, supra note 157, at 
44918.
    \159\ Id. at 44918 n.29 (explaining that Congress created an 
omnibus definition for ``spouse'' to apply in determining the 
meaning of any Act of Congress, and ``[t]he only court to address 
whether a surviving spouse is a `spouse' within the omnibus 
definition held that a surviving spouse remains a `spouse' in 
determining the meaning of any Act of Congress'').
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6(a)(4)
    FDCPA section 805(d) defines the term consumer for purposes of 
section 805 to include executors and administrators.\160\ Proposed 
Sec.  1006.6(a)(4) would have implemented this aspect of the definition 
and, in commentary, interpreted it to include the personal 
representative of the deceased consumer's estate, i.e., any person 
``authorized to act on behalf of the estate.'' \161\
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    \160\ 15 U.S.C. 1692c(d).
    \161\ See 84 FR 23274, 23293-94 (May 21, 2019). The Bureau 
adapted this phrasing from Regulation Z and explained that it 
encompassed the same individuals as those recognized by the FTC's 
Policy Statement on Decedent Debt (i.e., persons with the 
``authority to pay the decedent's debts from the assets of the 
decedent's estate''). See 12 CFR 1026.11(c), comment 11(c)-1; FTC 
Policy Statement on Decedent Debt, supra note 157, at 44918.
---------------------------------------------------------------------------

    Several commenters supported the description of personal 
representative. One trade group commenter stated that the proposal's 
accommodation of informal estate resolution processes would help 
prevent consumers from experiencing frustration when trying to contact 
debt collectors to resolve a deceased consumer's estate. Federal 
government agency staff commented that the proposal largely mirrored 
the FTC's Policy Statement on Decedent Debt and expressed support for 
the goals of the proposal.
    A few commenters suggested modifications to proposed comment 
6(a)(4)-1. Three trade group commenters stated that the interpretation 
regarding personal representative was so important that the Bureau 
should add it to the regulation text rather than describing it in 
commentary. One trade group commenter suggested that the Bureau expand 
the description of personal representative to encompass anyone that a 
debt collector ``has reason to believe'' is authorized to act on behalf 
of the deceased consumer's estate. Another trade group commenter 
recommended incorporating a reference to State law in proposed Sec.  
1006.6(a)(4) because the commenter believed that the term personal 
representative would not accommodate States that use different language 
to describe such individuals. Similarly, an industry commenter 
suggested that the Bureau should expand proposed Sec.  1006.6(a)(4) by 
adding several terms that might refer to individuals handling a 
deceased consumer's estate.
    A group of consumer advocates stated that the description of the 
term personal representative would be overly broad unless the Bureau 
limited it to individuals ``authorized under State probate or estate 
law'' to act on behalf of the deceased consumer's estate. For example, 
these commenters explained that many people might dispose of a deceased 
consumer's assets extrajudicially by selling or donating personal 
possessions and that such people should not be considered personal 
representatives.
    As described in the proposal and in the FTC's Policy Statement on 
Decedent Debt, the ability to resolve the debts of estates outside of 
the formal probate process through informal processes benefits 
consumers and debt collectors.\162\ If a debt collector does not 
communicate with an estate because no executor or administrator exists, 
the debt collector might force the estate into probate, which could 
substantially burden the resources of the estate and the deceased 
consumer's heirs or beneficiaries. These burdens may be particularly 
acute for small estates and for individuals of limited means. Probate 
also adds costs and delays for debt collectors. Accordingly, the Bureau 
is finalizing Sec.  1006.6(a)(4) and its commentary largely as 
proposed.
---------------------------------------------------------------------------

    \162\ See 84 FR 23274, 23294 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau finds that certain changes requested by commenters are 
unnecessary. First, it is unnecessary to incorporate comment 6(a)(4)-1, 
which describes other persons authorized to act on behalf of the 
deceased consumer's estate, into the regulation text. The commentary to 
Regulation F is issued under the same authority as the corresponding 
provisions of the regulation and has been adopted in accordance with 
the notice-and-comment procedures of the Administrative Procedure Act 
(APA).\163\ Second, the Bureau declines to expand the description of 
personal representative to encompass anyone that a debt collector ``has 
reason to believe'' is authorized to act on behalf of the deceased 
consumer's estate. This revision is unnecessary because, as the FTC 
explained, debt collectors have a variety of tools available to locate 
persons authorized to act on behalf of the deceased consumer's estate, 
including public record searches and location communications, which are 
discussed in the section-by-section analysis of final Sec.  
1006.10.\164\ Furthermore, such a standard would be inconsistent with 
the FDCPA's treatment of the other persons included under section 
805(d)'s definition of consumer. Finally, commenters are mistaken in 
asserting that proposed Sec.  1006.6(a)(4) and comment 6(a)(4)-1 failed 
to accommodate State laws that use terms other than personal 
representative. As comment 6(a)(4)-1 explained, the proposal would have 
included anyone who performs the functions of an executor, 
administrator, or personal representative, and does not require that 
such persons be identified by a specific term in State law, such as 
personal representative. Thus, an explicit reference to State law is 
not necessary.
---------------------------------------------------------------------------

    \163\ 5 U.S.C. 551 et seq., 701 et seq.
    \164\ See FTC Policy Statement on Decedent Debt, supra note 157, 
at 44919-20.
---------------------------------------------------------------------------

    In response to consumer advocates' concern that the proposed 
definition of personal representative was too broad, the Bureau revises 
comment 6(a)(4)-1 to clarify the description of persons who dispose of 
the deceased consumer's assets extrajudicially. The Bureau understands 
that, although many individuals might sell or dispose of a deceased 
consumer's property extrajudicially, these individuals would not 
necessarily ``be authorized to act on behalf of the deceased consumer's 
estate,'' as the commentary requires. The Bureau is also unaware of any 
attempts by debt collectors to interpret the FTC's Policy Statement on 
Decedent Debt in such a manner. Nevertheless, to increase clarity, 
final comment 6(a)(4)-1 refers to ``financial assets or other assets of 
monetary value'' in describing such individuals.
    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.6(a)(4), which defines the term consumer for purposes of Sec.  
1006.6 to include executors and administrators. Final comment 6(a)(4)-1 
clarifies that the

[[Page 76758]]

terms executor or administrator include the personal representative of 
the consumer's estate. A personal representative is any person who is 
authorized to act on behalf of the deceased consumer's estate. Persons 
with such authority may include personal representatives under the 
informal probate and summary administration procedures of many States, 
persons appointed as universal successors, persons who sign 
declarations or affidavits to effectuate the transfer of estate assets, 
and persons who dispose of the deceased consumer's financial assets or 
other assets of monetary value extrajudicially.
6(a)(5)
    The Bureau proposed to interpret FDCPA section 805(d)'s definition 
of the term consumer to include confirmed successors in interest, as 
defined in Regulation X, 12 CFR 1024.31, and Regulation Z, 12 CFR 
1026.2(a)(27)(ii).\165\ As the Bureau has previously explained, while 
many mortgage servicers are not subject to the FDCPA, mortgage 
servicers that acquired a mortgage loan at the time that it was in 
default may be subject to the FDCPA with respect to that mortgage 
loan.\166\ As discussed in the proposal,\167\ a successor in interest 
under those regulations is, in general, a person to whom an ownership 
interest either in a property securing a mortgage loan subject to 
subpart C of Regulation X, or in a dwelling securing a closed-end 
consumer credit transaction under Regulation Z is transferred under 
specified circumstances including, for example, after a consumer's 
death or as part of a divorce.\168\ A confirmed successor in interest, 
in turn, means a successor in interest once a mortgage servicer has 
confirmed the successor in interest's identity and ownership interest 
in the property that secures the mortgage loan \169\ or in the 
dwelling.\170\ The Bureau proposed to include such persons in the 
definition of consumer under Sec.  1006.6 because, given their 
relationship to the individual who owes or allegedly owes the debt, 
confirmed successors in interest are--like the narrow categories of 
persons enumerated in FDCPA section 805(d)--the type of individuals 
with whom a debt collector needs to communicate about the debt.\171\
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    \165\ 12 CFR 1024.31, 1026.2(a)(27)(ii).
    \166\ 81 FR 71977, 71978 (Oct. 19, 2016).
    \167\ 84 FR 23274, 23294-95 (May 21, 2019).
    \168\ See 12 CFR 1024.31; 1026.2(a)(27)(i).
    \169\ 12 CFR 1024.31.
    \170\ 12 CFR 1026.2(a)(27)(ii).
    \171\ 84 FR 23274, 23295 (May 21, 2019).
---------------------------------------------------------------------------

    One industry commenter stated that the Bureau cannot include a 
confirmed successor in interest in implementing FDCPA section 805(d)'s 
definition of consumer because the Bureau lacks authority to include 
persons not contemplated by Congress. The commenter also questioned how 
the Bureau expects a debt collector to become aware of the confirmed 
successor in interest. One trade group commenter identified both 
benefits and risks to the proposal, including the risk presented by 
failing to have adequate policies and procedures in place to confirm 
the successor in interest.
    Another industry commenter stated that it identified no risk to 
permitting communications between a debt collector and a confirmed 
successor in interest, and that it supported the Bureau's proposal to 
include a confirmed successor in interest in Sec.  1006.6(a)'s 
definition of consumer on the basis that an individual with an 
ownership interest in a particular asset will desire open communication 
regarding the debt. A group of consumer advocates also supported 
proposed Sec.  1006.6(a)(5) as ensuring consistent communications with 
surviving relatives regarding a mortgage on a home under Regulations X 
and Z. The commenter requested that, to avoid expanding communications 
unnecessarily to include the collection of other unrelated debt that 
the successor in interest may not have authority to manage, the Bureau 
clarify that an individual who qualifies as a confirmed successor in 
interest for one debt (e.g., a home mortgage) is not a confirmed 
successor in interest for other types of debt (e.g., a credit card 
debt) and that communications with such an individual must be limited 
to the mortgage loan that qualified the individual to be confirmed as a 
successor in interest.
    The Bureau disagrees that it lacks authority to include a confirmed 
successor in interest in implementing FDCPA section 805(d)'s definition 
of consumer because, as the Bureau explained in the Amendments to the 
2013 Mortgage Rules under the Real Estate Settlement Procedures Act 
(Regulation X) and the Truth in Lending Act (Regulation Z) (2016 
Servicing Final Rule),\172\ and the concurrently issued FDCPA 
interpretive rule (2016 FDCPA Interpretive Rule),\173\ the word 
``includes'' in FDCPA section 805(d) indicates that section 805(d) is 
an exemplary, rather than an exhaustive, list of the categories of 
persons who are consumers for purposes of FDCPA section 805. The Bureau 
explained that FDCPA section 805 recognizes the importance of 
permitting debt collectors to communicate with a narrow category of 
persons other than the individual who owes or allegedly owes the debt 
who, by virtue of their relationship to that individual, may need to 
communicate with the debt collector in connection with the collection 
of the debt. The Bureau further explained that, given their 
relationship to the person who owes or allegedly owes the debt, 
confirmed successors in interest are--like the narrow categories of 
persons enumerated in FDCPA section 805(d)--the type of persons with 
whom a debt collector needs to communicate about the debt. The Bureau 
therefore interpreted the term consumer for purposes of FDCPA section 
805 to include a confirmed successor in interest as that term is 
defined in Regulation X, 12 CFR 1024.31, and Regulation Z, 12 CFR 
1026.2(a)(27)(ii).\174\
---------------------------------------------------------------------------

    \172\ 81 FR 72160 (Oct. 19, 2016).
    \173\ 81 FR 71977 (Oct. 19, 2016).
    \174\ Id. at 71979; 81 FR 72160, 72181 (Oct. 19, 2016).
---------------------------------------------------------------------------

    In response to the industry commenter's question regarding how the 
Bureau expects a debt collector to become aware of a successor in 
interest, the Bureau notes that Regulation X Sec.  1024.38(b)(1)(vi) 
and comment 38(b)(1)(vi)-1 clarify that a mortgage servicer is not 
required to conduct a search for potential successors in interest if 
the mortgage servicer has not received actual notice of their 
existence.\175\ Comment 38(b)(1)(vi)-1 further explains that a mortgage 
servicer may be notified of the existence of a potential successor in 
interest in a variety of ways. The comment provides a non-exclusive 
list of examples of ways in which a mortgage servicer could be notified 
of the existence of a potential successor in interest, including that a 
person could indicate that there has been a transfer of ownership or of 
an ownership interest in the property or that a borrower has been 
divorced, legally separated, or died, or a person other than a borrower 
could submit a loss mitigation application. The comment also explains 
that a mortgage servicer must maintain policies and procedures 
reasonably designed to ensure that the mortgage servicer can retain 
this information and promptly facilitate communication with potential 
successors in interest when a mortgage servicer is notified of their 
existence.\176\ Nothing in this final rule is intended to

[[Page 76759]]

alter the successor in interest provisions in Regulations X and Z or to 
impose additional requirements.
---------------------------------------------------------------------------

    \175\ 12 CFR 1024.38(b)(1)(vi); comment 38(b)(1)(vi)-1.
    \176\ 81 FR 72160, 72211 (Oct. 19, 2016).
---------------------------------------------------------------------------

    In response to the request from a group of consumer advocates for 
further clarification, the Bureau determines that the text of proposed 
Sec.  1006.6(a)(5) was sufficiently clear that a person who meets the 
definition of a confirmed successor in interest under Sec.  
1006.6(a)(5) is a confirmed successor in interest with respect to a 
property securing a mortgage loan or a dwelling securing a closed-end 
consumer credit transaction as described above, and that such person is 
not also a confirmed successor in interest for other purposes. As 
indicated by Sec.  1006.6(a)(5)'s specific citations to Regulations X 
and Z, a successor in interest is a person to whom an ownership 
interest either in a property securing a mortgage loan subject to 
subpart C of Regulation X, or in a dwelling securing a closed-end 
consumer credit transaction under Regulation Z, is transferred, 
provided that the transfer meets one of several enumerated 
conditions.\177\ The Bureau therefore declines to revise the proposed 
regulation text as requested.
---------------------------------------------------------------------------

    \177\ See 12 CFR 1024.31; 1026.2(a)(27)(i).
---------------------------------------------------------------------------

    For these reasons, and consistent with the 2016 Servicing Final 
Rule and FDCPA Interpretive Rule, the Bureau is finalizing Sec.  
1006.6(a)(5) as proposed with technical revisions as an interpretation 
of FDCPA section 805(d). Final Sec.  1006.6(a)(5) provides that, for 
purposes of Sec.  1006.6, the term consumer includes a confirmed 
successor in interest, as defined in Regulation X, 12 CFR 1024.31, or 
Regulation Z, 12 CFR 1026.2(a)(27)(ii).
6(b) Communications With a Consumer--In General
    FDCPA section 805(a) restricts how a debt collector may communicate 
with a consumer in connection with the collection of any debt and 
provides certain exceptions to these prohibitions.\178\ The Bureau 
proposed Sec.  1006.6(b) to implement and interpret FDCPA section 
805(a) to specify circumstances in which a debt collector is prohibited 
from communicating with a consumer in connection with the collection of 
any debt, and to interpret FDCPA sections 806 and 808 to prohibit a 
debt collector from attempting to communicate with a consumer if FDCPA 
section 805(a) would prohibit the debt collector from communicating 
with the consumer.\179\ For the reasons discussed below, the Bureau is 
adopting Sec.  1006.6(b) generally as proposed but with certain 
revisions designed principally to address commenters' requests for 
clarification in the commentary to proposed Sec.  1006.6(b).\180\
---------------------------------------------------------------------------

    \178\ 15 U.S.C. 1692c(a). Specifically, FDCPA section 805(a)(1) 
prohibits certain communications at unusual or inconvenient times 
and places, section 805(a)(2) prohibits certain communications with 
a consumer represented by an attorney, and section 805(a)(3) 
prohibits certain communications at a consumer's place of 
employment.
    \179\ 84 FR 23274, 23295-98 (May 21, 2019).
    \180\ The Bureau proposed introductory language to Sec.  
1006.6(b). The Bureau received no comments on that language and 
considers it largely repetitive of the provisions that follow in 
Sec.  1006.6(b)(1) through (3). The Bureau therefore is not adopting 
that language in the final rule.
---------------------------------------------------------------------------

Attempts To Communicate
    The Bureau proposed to clarify in Sec.  1006.6(b) that a debt 
collector is prohibited from attempting to communicate with a consumer 
in the same circumstances in which FDCPA section 805(a) prohibits the 
debt collector from communicating with the consumer. The phrase attempt 
to communicate \181\ thus appeared throughout proposed Sec.  
1006.6(b)(1) through (4).\182\ One consumer commenter supported the 
Bureau's proposal to include attempts to communicate within the 
prohibitions proposed in Sec.  1006.6(b) on the basis that the attempt 
to communicate at the inconvenient place and time is, in fact, a 
concrete harm. A group of consumer advocates supported the addition as 
necessary if the Bureau were to finalize proposed Sec.  1006.2(j) to 
allow limited-content messages, and as especially important to prevent 
debt collectors from sending limited-content messages after a cease 
communication request or refusal to pay from a consumer pursuant to 
proposed Sec.  1006.6(c). One industry commenter did not oppose the 
Bureau's proposal to include attempts to communicate within the 
prohibitions under Sec.  1006.6(b) but questioned the Bureau's reliance 
on FDCPA sections 806 and 808 to achieve that result on the basis that 
the Bureau would be adding to the conduct that is a violation of 
section 808. Instead, this commenter suggested the Bureau rely only on 
interpretations of FDCPA sections 805(a) and 806.
---------------------------------------------------------------------------

    \181\ As discussed in the section-by-section analysis of Sec.  
1006.2(b), the final rule defines an attempt to communicate as 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. For example, a debt collector who places a 
telephone call to discuss a consumer's debt that goes unanswered by 
the consumer has attempted to communicate with the consumer.
    \182\ The phrase attempt to communicate also appears in Sec.  
1006.14(h), as discussed below. See the section-by-section analysis 
of Sec.  1006.14(h).
---------------------------------------------------------------------------

    After considering the comments, the Bureau is finalizing Sec.  
1006.6(b) as proposed to limit attempts to communicate as well as 
communications based on interpretations of FDCPA sections 806 and 808. 
FDCPA section 806 prohibits a debt collector from engaging in any 
conduct the natural consequence of which is to harass, oppress, or 
abuse any person in connection with the collection of a debt.\183\ 
Specifically, FDCPA section 806(5) provides that causing a telephone to 
ring repeatedly or continuously with intent to annoy, abuse, or harass 
any person at the called number is an example of conduct the natural 
consequence of which is to harass, oppress, or abuse. FDCPA section 
806(5) thus recognizes that telephone calls may have the natural 
consequence of harassment, oppression, or abuse if the consumer answers 
the telephone call or even if no conversation ensues. 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. For this reason, the 
Bureau adopts its interpretation of FDCPA section 806 as prohibiting a 
debt collector from attempting to communicate at times when and places 
where a communication would be prohibited as inconvenient.
---------------------------------------------------------------------------

    \183\ 15 U.S.C. 1692d.
---------------------------------------------------------------------------

    FDCPA section 808 prohibits a debt collector from using unfair or 
unconscionable means to collect or attempt to collect any debt.\184\ A 
debt collector who places a telephone call without any legitimate 
purpose may injure persons at the called number even if the call goes 
unanswered (and, therefore, is not a communication), and thus may be 
engaging in a prohibited unfair or unconscionable act under FDCPA 
section 808. Additionally, section 808 targets practices that pressure 
a consumer to pay debts the consumer might not otherwise have paid. A 
debt collector's attempts to communicate at a time when or a place 
where a communication would be prohibited could pressure the consumer 
to pay the debt to avoid further intrusions on the consumer's privacy, 
and the Bureau interprets such conduct as unfair or unconscionable 
under FDCPA section 808. In response to the industry commenter's 
suggestion that the Bureau's interpretation to include attempts to 
communicate within the prohibitions under Sec.  1006.6(b) not rely on 
FDCPA section 808, the Bureau

[[Page 76760]]

concludes that its interpretation is wholly consistent with FDCPA 
section 808's prohibition on a debt collector using unfair or 
unconscionable means to collect or attempt to collect a debt. The 
section itself states, ``without limiting the general application of 
the foregoing, the following conduct is a violation of this section,'' 
meaning that the general principles of unfairness and unconscionability 
under the FDCPA are not limited by the specific examples listed in 
FDCPA section 808(1) through (8). Consistent with that interpretation, 
and pursuant to its authority under FDCPA section 814(d) to write rules 
with respect to the collection of debts by debt collectors, the Bureau 
adopts its interpretation of FDCPA section 808 as prohibiting a debt 
collector from attempting to communicate at times when and places where 
a communication would be prohibited as inconvenient.
---------------------------------------------------------------------------

    \184\ 15 U.S.C. 1692f.
---------------------------------------------------------------------------

6(b)(1) Prohibitions Regarding Unusual or Inconvenient Times or Places
    FDCPA section 805(a)(1) prohibits a debt collector from, among 
other things, communicating with a consumer in connection with the 
collection of any debt at any unusual time or place, or at a time or 
place that the debt collector knows or should know is inconvenient to 
the consumer, subject to certain exceptions. And, as discussed further 
in the section-by-section analysis of Sec.  1006.6(b)(1)(i), FDCPA 
section 805(a)(1) establishes certain times that, in the absence of 
knowledge to the contrary, a debt collector shall assume are convenient 
for debt collection communications. The Bureau proposed Sec.  
1006.6(b)(1) and comment 6(b)(1)-1 to generally implement and interpret 
FDCPA section 805(a)(1)'s time and place restrictions, with proposed 
comment 6(b)(1)-1 clarifying how a debt collector knows or should know 
that a time or place is inconvenient based on information received from 
the consumer, i.e., based on a consumer's designation of that time or 
place as inconvenient. Proposed Sec.  1006.6(b)(1)(i) and its 
commentary specifically addressed time restrictions. Proposed Sec.  
1006.6(b)(1)(ii) specifically addressed place restrictions.\185\
---------------------------------------------------------------------------

    \185\ In this section-by-section analysis, the Bureau addresses 
feedback regarding inconvenience and the ``know or should know'' 
standard generally, or that focused on proposed comment 6(b)(1)-1 
regarding a consumer's designation of time or place as inconvenient. 
To the extent that comments focused on specific aspects of either 
the proposed time restrictions or the proposed place restrictions, 
those comments are addressed in the section-by-section analysis of 
Sec.  1006.6(b)(1)(i) or (ii), respectively.
---------------------------------------------------------------------------

    A number of industry commenters supported the proposed prohibitions 
on contacting a consumer at an inconvenient time or place as consistent 
with the statutory prohibitions under FDCPA section 805(a), and one 
industry commenter stated that consumer requests must be respected when 
it comes to inconvenient times to communicate. Some industry commenters 
requested that the Bureau generally provide further clarity regarding 
inconvenience. For example, one industry commenter stated that FDCPA 
section 805(a) and proposed Sec.  1006.6(b)(1) are very broad and leave 
too much room for interpretation and requested that the Bureau make 
Sec.  1006.6(b)(1) more specific.
    Other industry commenters went further to suggest that the Bureau 
not incorporate certain language from FDCPA section 805(a) in Sec.  
1006.6(b)(1) regarding inconvenient time and place. Some such 
commenters took issue with the Bureau's incorporation of the statutory 
language in FDCPA section 805(a) regarding a time or place ``which 
should be known to be inconvenient to the consumer,'' \186\ with some 
commenters stating that ``should be known'' is too high a standard, 
creates unreasonable expectations, is unnecessary, and should be 
removed from the rule. One trade group commented specifically on the 
``should know'' standard for times and suggested that the rule should 
omit any reference to consumer-designated inconvenient times and rely 
only on statutorily presumptive convenient times. Similarly, one 
industry commenter suggested that, because FDCPA section 805(a)(1) 
provides presumptively convenient hours of contact (i.e., after 8:00 
a.m. and before 9:00 p.m.), further limiting this timeframe by adopting 
a rule that would permit a consumer to also designate inconvenient 
times that a debt collector ``should know'' are inconvenient would 
unduly limit the ability of a debt collector to reach a consumer to 
discuss the account. Another industry commenter stated that the 
requirement to keep track of what times are inconvenient to a consumer 
will increase costs to debt collectors. With respect to place, one 
industry commenter stated that, given the difficulties presented by 
mobile technology, the Bureau should remove the reference to 
inconvenient place from the rule altogether.\187\
---------------------------------------------------------------------------

    \186\ 15 U.S.C. 1692c(a)(1).
    \187\ For further discussion of communications or attempts to 
communicate at unusual or inconvenient places, see the section-by-
section analysis of Sec.  1006.6(b)(1)(ii).
---------------------------------------------------------------------------

    The Bureau recognizes that the statutory language under FDCPA 
section 805(a) is broad and, to implement the flexibility afforded 
under the statute, proposed to incorporate various examples through 
commentary to facilitate debt collector compliance. FDCPA section 
805(a) specifically states that a debt collector may not communicate 
with a consumer in connection with the collection of any debt at any 
unusual time or place or a time or place ``known or which should be 
known'' to be inconvenient to the consumer.\188\ Given this statutory 
provision, the Bureau declines commenters' requests to omit the 
``should be known'' standard from Sec.  1006.6(b)(1). The Bureau also 
notes that any costs of coming into compliance to record and respect a 
consumer's designations of inconvenient times (or places) are not a 
result of the Bureau's adopting Sec.  1006.6(b)(1), but rather arise 
from compliance with FDCPA section 805(a). For the same reason, the 
Bureau declines to rely only on the statutorily prescribed 
presumptively convenient times, as suggested by one commenter. Just as 
the presumptively convenient times are statutorily prescribed, so is 
the ability for a consumer to designate additional convenient (or 
inconvenient) times for debt collection communications.\189\ 
Nevertheless, as explained in detail below, the Bureau is finalizing 
comments 6(b)(1)-1 and -2 to include various additional illustrations 
in response to commenters' requests for clarity. Accordingly, the 
Bureau adopts a flexible approach while clarifying the contours of 
permissible and prohibited debt collector communications with a 
consumer to assist debt collectors in complying with the final rule.
---------------------------------------------------------------------------

    \188\ 15 U.S.C. 1692c(a)(1).
    \189\ Therefore, unless an exception in FDCPA section 805(a) or 
final Sec.  1006.6(b)(4) applies, a debt collector is required to 
abide by a consumer's designation of inconvenient times, even if 
those times are presumptively convenient according to the statute.
---------------------------------------------------------------------------

    One trade group commenter suggested that the statutory prohibition 
against communicating during inconvenient times and places shift 
altogether from a one-size-fits-all paradigm suited for 1977 when the 
FDCPA was enacted to a presumption that consumers can control when they 
would like to be contacted. And another trade group commenter 
encouraged the Bureau to adopt a reasonableness standard to prevent 
consumers from designating all, or almost all, times as inconvenient, 
or to require consumers to answer certain questions to trigger the 
protections on

[[Page 76761]]

communications at inconvenient times or places.
    The statutory standard under FDCPA section 805(a)(1) is one of 
inconvenience. Additionally, the statute does not limit a consumer's 
ability to invoke the protections afforded under FDCPA section 
805(a)(1) based on a reasonableness standard, and therefore it would 
not be appropriate for this rule to do so. Nor would such a limitation 
comport with the protections afforded a consumer under FDCPA section 
805(c), which requires a debt collector to cease further communications 
with the consumer upon the consumer's written notification, or under 
FDCPA section 806, which prohibits a debt collector from engaging in 
conduct the natural consequence of which is to harass, oppress, or 
abuse any person in connection with the collection of a debt.
    For all of these reasons, the Bureau is finalizing the general 
standard in Sec.  1006.6(b)(1) as proposed to implement and interpret 
FDCPA section 805(a)(1).
Consumer Designation of Inconvenient Times or Places
    The Bureau proposed comment 6(b)(1)-1 to provide general 
interpretations and illustrations of the time and place restrictions in 
Sec.  1006.6(b)(1), including how a debt collector knows or should know 
that a time or place is inconvenient to a consumer. The Bureau proposed 
this comment to clarify one aspect of the knowledge standard for time 
and place, that is, that a debt collector knows or should know that a 
time or place is inconvenient if the consumer designates it as such. 
Proposed comment 6(b)(1)-1 provided general interpretations and 
illustrations regarding consumer designation, including that a debt 
collector knows or should know that a time or place is inconvenient 
even if the consumer does not use the word ``inconvenient.'' For the 
reasons discussed below, the Bureau is finalizing comment 6(b)(1)-1 
with revisions to address feedback.\190\
---------------------------------------------------------------------------

    \190\ While proposed comments 6(b)(1)-1.ii and .iv also 
addressed consumer-initiated communications at times previously 
designated as inconvenient, for organizational purposes, the Bureau 
is finalizing those examples under new comment 6(b)(1)-2.i and .ii 
and accordingly discusses feedback about those comments in the 
section-by-section analysis of comment 6(b)(1)-2 below.
---------------------------------------------------------------------------

    Information transfer. One trade group commenter read the proposal 
as imposing a substantial information transfer requirement on a debt 
collector and worried that it would require debt collectors to rely 
upon the previous holder of the debt for details that can be 
excessively subjective. Some industry commenters expressed concerns 
regarding the difficulty associated with a creditor transferring 
information about a consumer's inconvenience designations to a debt 
collector. Another industry commenter stated that proposed comment 
6(b)(1)-1 neglected to account for the significant amounts of 
information that may be available to a debt collector and whether the 
debt collector is bound to some duty of inquiry with respect to such 
information.
    The proposal would not have required any transfer of information 
regarding a consumer's inconvenience designations from a creditor or 
previous debt collector to the current debt collector, and nor does 
this final rule. However, to illustrate a situation in which a debt 
collector knows or should know that specific times are inconvenient to 
a consumer based on recent notes in a file from the creditor placing 
the debt for collection, the Bureau includes a new example in final 
comment 6(b)(1)-1.i.
    Specificity of designation. As noted above, the Bureau proposed 
that, even if a consumer does not use the word ``inconvenient'' to 
notify the debt collector, the debt collector may nevertheless know, or 
should know, based on the facts and circumstances, that a time or place 
is inconvenient to the consumer. Some industry commenters suggested 
shifting the onus to the consumer to utter specific words or undertake 
certain actions to trigger the FDCPA's communication protections. Two 
industry commenters suggested that it would be reasonable to require a 
consumer to use some specific language to put a debt collector on 
notice that contact at a certain time or place is inconvenient. One 
trade group commenter stated that the rule should require, as a trigger 
to compliance, consumers to use words that reasonably identify for a 
debt collector the inconvenient times during which the debt collector 
should refrain from contact.
    One consumer commenter supported the proposal not to require that 
the consumer utter specific words to invoke the protections under FDCPA 
section 805(a) on the basis that how a consumer expresses what is 
convenient or inconvenient should not be restricted to approved words 
as an excuse for a debt collector's noncompliance.
    The Bureau declines to restrict how a consumer may designate a time 
or place as inconvenient. The statute does not prescribe any specific 
actions or require precise responses or utterances on behalf of the 
consumer to invoke these communications protections, and nor does this 
final rule impose such requirements. The Bureau determines that a 
flexible approach is necessary when it comes to communications, which 
by their very nature are dynamic, depend upon the specific 
circumstances, and differ from consumer to consumer. Such fluid 
communications cannot be scripted, nor can every permutation be 
anticipated. The Bureau therefore is finalizing its proposed 
interpretation of FDCPA section 805(a)(1), which refers to what is 
``inconvenient to the consumer,'' without specifying that a consumer 
must designate communications as inconvenient using the word 
``inconvenient.''
    One industry commenter stated the word ``inconvenient'' should not 
be a tool for a consumer to prevent communication with a debt 
collector. However, FDCPA section 805(a)(1) explicitly recognizes that 
communications must not occur at a time or place known or which should 
be known to be inconvenient to the consumer. The Bureau notes that a 
consumer also has the option under FDCPA section 805(c) to notify a 
debt collector to cease communications with the consumer altogether. 
Therefore, it serves not only consumers but also debt collectors for 
communications to occur at times and places that are convenient to the 
consumer, and to avoid requiring consumers to perform specific actions 
or require precise responses or utterances to achieve the protections 
under FDCPA section 805(a), lest consumers more simply resort to 
notifying debt collectors under FDCPA section 805(c) to cease further 
communication.
    Some industry commenters asked the Bureau to clarify how debt 
collectors may appropriately determine a time or place is inconvenient 
if a consumer gives unclear, vague, or ambiguous instructions, or 
insufficient information for the debt collector to identify when or 
where the consumer does not want to be contacted. Some trade group 
commenters suggested that a debt collector be permitted to ask a 
consumer follow-up questions to obtain more specific information to 
honor the consumer's request. Two trade group commenters suggested 
that, unless a consumer provides readily understandable instructions as 
to the scope of any identified inconvenient time or place, a debt 
collector should be permitted to continue contacting the consumer as if 
no designation had been made.
    The Bureau understands that a consumer's articulation of 
inconvenience sometimes may require further clarification. Because the 
standard in FDCPA section 805(a)(1) is

[[Page 76762]]

based on what is ``inconvenient to the consumer,'' \191\ the consumer 
is the best source of information for the debt collector to learn when 
is an inconvenient time or where is an inconvenient place. To clarify 
this point and to provide debt collectors guidance in circumstances in 
which the debt collector needs additional clarity or information from 
the consumer, the Bureau is revising comment 6(b)(1)-1 to specifically 
state that the debt collector may ask follow-up questions regarding 
whether a time or place is convenient to clarify statements by the 
consumer. The Bureau determines that this approach will allow consumers 
to exercise their right to limit communications at inconvenient times 
and places while decreasing uncertainty for debt collectors. 
Accordingly, the Bureau revises the example proposed as comment 
6(b)(1)-1.i, now finalized as comment 6(b)(1)-1.ii, to illustrate such 
an exchange between a debt collector and a consumer.
---------------------------------------------------------------------------

    \191\ 15 U.S.C. 1692c(a)(1).
---------------------------------------------------------------------------

    Other industry commenters requested that the Bureau clarify how the 
rule applies if a consumer answers a telephone call from a debt 
collector, states that the consumer is ``busy right now'' or ``cannot 
talk right now,'' and immediately hangs up the telephone. If a debt 
collector does not have an opportunity to ask a consumer follow-up 
questions because the consumer has, for example, abruptly ended a 
telephone call, the standards regarding telephone call frequencies in 
Sec.  1006.14(b)(2) may be instructive in assisting a debt collector in 
determining when the debt collector may call the consumer again.\192\ 
Although Sec.  1006.6(b)(1) would not require a debt collector to 
construe a consumer's statement that the consumer is ``busy right now'' 
or ``cannot talk right now'' without anything further to mean that the 
consumer is generally designating that time or place as inconvenient 
for future communications, the statement does indicate that the time or 
place is inconvenient for current communications.
---------------------------------------------------------------------------

    \192\ See the section-by-section analysis of Sec.  1006.14(b)(2) 
presuming compliance with Sec.  1006.14(b)(1) if a debt collector 
places a telephone call to a particular person in connection with 
the collection of a particular debt not within a period of seven 
consecutive days after having had a telephone conversation with the 
person in connection with the collection of such debt.
---------------------------------------------------------------------------

    Inconvenient places. As part of proposed comment 6(b)(1)-1, the 
Bureau included an example in proposed comment 6(b)(1)-1.iii to 
illustrate when a debt collector knows or should know that a place is 
inconvenient to a consumer. Proposed comment 6(b)(1)-1.iii assumed that 
a consumer tells a debt collector not to communicate with the consumer 
at school. Based on these facts, proposed comment 6(b)(1)-1.iii 
explained, the debt collector knows or should know that communications 
to the consumer at school are inconvenient and, thereafter, the debt 
collector must not communicate or attempt to communicate with the 
consumer at that place. The Bureau received many comments from industry 
asking how, in light of technology such as mobile telephones, which 
consumers can take with them everywhere, a debt collector could be sure 
to avoid contacting a consumer at an inconvenient place. Industry 
commenters requested that the Bureau either remove the example or 
revise it to include specific times or other information from the 
consumer that would enable the debt collector to know when the consumer 
is at the inconvenient place, suggesting that, without such 
information, the debt collector would have to make assumptions about 
the consumer's whereabouts.
    To address these concerns, the Bureau is revising the example in 
comment 6(b)(1)-1.iii. Final comment 6(b)(1)-1.iii illustrates that 
once a debt collector knows or should know that communications to a 
place are inconvenient to a consumer, unless the consumer otherwise 
informs the debt collector that the place is no longer inconvenient, 
Sec.  1006.6(b)(1)(ii) prohibits the debt collector from communicating 
or attempting to communicate with the consumer at that place, including 
by sending mail to the address associated with that place and by 
placing calls to the landline telephone number at that place. And in 
response to commenters' request for further clarification regarding 
when a consumer is at an inconvenient place, consistent with the 
addition to comment 6(b)(1)-1 discussed above that a debt collector may 
ask follow-up questions regarding whether a time or place is convenient 
to clarify statements by a consumer, a debt collector may ask a 
consumer to identify times associated with an inconvenient place. For 
further discussion regarding communications or attempts to communicate 
at an inconvenient place, see the section-by-section analysis of Sec.  
1006.6(b)(1)(ii).
Duty To Inquire
    The Bureau did not propose to require, but requested comment on 
whether to require, a debt collector to ask a consumer at the outset of 
all debt collection communications whether the time or place is 
convenient to the consumer. An academic commenter as well as a group of 
consumer advocates supported such a requirement, with the group of 
consumer advocates stating that asking a consumer whether the time or 
place is convenient is a best practice for telephone calls or in-person 
communications and requesting the Bureau adopt that approach. A number 
of industry commenters disagreed, stating that such a requirement would 
be impractical and cumbersome as part of a lengthy telephone call 
introduction that already requires verifying the consumer's identity 
and providing various disclosures. One trade group commenter suggested 
that such a long introduction would annoy the consumer, and another 
stated that the natural reaction to receiving a call from an unknown 
individual who inquires whether the call is convenient would be to 
respond that the call is inconvenient.
    The Bureau agrees that it would be impractical to require debt 
collectors to ask consumers at the outset of every debt collection 
communication whether the time or place is convenient. A debt 
collector, of course, is free to ask this question and may find that it 
is a natural question that arises as part of a communication with a 
consumer. However, the Bureau does not believe that such a requirement 
is necessary or warranted to implement FDCPA section 805(a)(1).
    For the reasons discussed above, the Bureau is finalizing comment 
6(b)(1)-1 regarding a consumer's designation of an inconvenient time or 
place to provide that a debt collector knows or should know that a time 
or place is inconvenient to a consumer if the consumer uses the word 
``inconvenient'' to notify the debt collector. In addition, depending 
on the facts and circumstances, the debt collector knows or should know 
that a time or place is inconvenient even if the consumer does not 
specifically state to the debt collector that a time or place is 
``inconvenient.'' Final comment 6(b)(1)-1 also provides that a debt 
collector may ask follow-up questions regarding whether a time or place 
is convenient to clarify statements by the consumer and, as discussed 
above, includes three illustrative examples.
Consumer-Initiated Communications at Previously Designated Inconvenient 
Times or Places
    As part of proposed comment 6(b)(1)-1, the Bureau proposed to 
clarify that, if a consumer initiates a communication with a debt 
collector at a time or from a place that the consumer previously 
designated as inconvenient, the debt

[[Page 76763]]

collector may respond once; but thereafter, the debt collector must not 
communicate or attempt to communicate further with the consumer at that 
time or place until the consumer conveys that the time or place is no 
longer inconvenient. The Bureau also proposed two illustrative 
examples. The Bureau is finalizing this aspect of proposed comment 
6(b)(1)-1 as comment 6(b)(1)-2, with revisions and additional examples 
in response to feedback as discussed below.
    One consumer commenter supported the proposal's approach to permit 
one reply as protective of consumers and a fair compromise to debt 
collectors. A number of industry commenters requested clarification 
regarding the scope of a debt collector's one permitted reply if a 
consumer initiates a communication with a debt collector at a time or 
from a place that the consumer previously designated as inconvenient. 
Industry commenters suggested that, if a consumer contacts a debt 
collector during a time that the consumer previously designated as 
inconvenient, the debt collector either should be able to ask if the 
consumer has revoked the inconvenience designation or should be able to 
assume that the consumer has done so. One trade group commenter 
requested that the Bureau clarify whether a debt collector's unanswered 
call to a consumer would constitute the debt collector's one reply.
    In response to commenters' suggestions, the Bureau notes that a 
debt collector is not prohibited from inquiring in the one permitted 
reply whether the consumer is revoking the inconvenient time or place 
designation. However, the consumer's act of simply initiating a 
communication does not revoke the inconvenient time or place 
designation. As comment 6(b)(1)-2 explains, after a debt collector's 
one permitted response, Sec.  1006.6(b)(1) prohibits the debt collector 
from communicating or attempting to communicate further with the 
consumer at that time or place until the consumer conveys that the time 
or place is no longer inconvenient, unless an exception in Sec.  
1006.6(b)(4) applies. Additionally, in response to the trade group 
commenter's request for further clarity, the Bureau determines that a 
debt collector's unanswered call does constitute the debt collector's 
one permitted reply as described under comment 6(b)(1)-1. However, 
nothing prohibits the debt collector from communicating or attempting 
to communicate at times or places that are not inconvenient to the 
consumer, including to ask the consumer if the time or place previously 
designated by the consumer remains inconvenient.
    The final rule further clarifies the scope of a debt collector's 
one permitted reply by specifying in final comment 6(b)(1)-2 that the 
debt collector's one reply must be through the same medium of 
communication used by the consumer to initiate the communication. For 
example, if a consumer sends a debt collector a text message at a time 
the consumer previously designated as inconvenient, the debt collector 
may reply once by text message; but unless the consumer provided prior 
consent to receive a telephone call, for example, the debt collector 
may not reply once by placing a telephone call to the consumer. The 
Bureau finds that a consumer-initiated communication is, by its nature, 
not inconvenient to the consumer, and that includes the medium of 
communication used by the consumer to initiate that communication. 
Because the consumer initiated the communication, the debt collector 
neither knows nor should know that responding to that communication 
through the same medium of communication is inconvenient to the 
consumer.\193\ Additionally, if a consumer designates a period of time 
as inconvenient and subsequently initiates a communication with a debt 
collector during that time, although the debt collector may wait for 
the inconvenient time period to expire before contacting the consumer, 
final comment 6(b)(1)-2.i and .ii, discussed below, illustrate that the 
debt collector may respond once during the inconvenient time period on 
that day.
---------------------------------------------------------------------------

    \193\ The Bureau notes, however, that some automated processes 
that would occur through different communication media, such as two-
factor authentication, may be permissible because they are not 
attempts to communicate or communications if they are not about the 
debt. Alternatively, a consumer may provide prior consent to receive 
such communications, including, for example, providing prior consent 
to receive confirmation of payment by email or text message when 
making a payment on a debt collector's website at a time or from a 
place that the consumer previously designated as inconvenient.
---------------------------------------------------------------------------

    Accordingly, final comment 6(b)(1)-2 states that, if a consumer 
initiates a communication with a debt collector at a time or from a 
place that the consumer previously designated as inconvenient, the debt 
collector may respond once at that time or place through the same 
medium of communication used by the consumer.\194\ After that response, 
Sec.  1006.6(b)(1) prohibits the debt collector from communicating or 
attempting to communicate further with the consumer at that time or 
place until the consumer conveys that the time or place is no longer 
inconvenient, unless an exception in Sec.  1006.6(b)(4) applies. 
Comment 6(b)(1)-2 also includes four examples illustrating how a debt 
collector may comply with Sec.  1006.6(b)(1) if a consumer initiates a 
communication with a debt collector at a time or from a place that the 
consumer previously designated as inconvenient, with the third example 
focused on websites and mobile applications, and the fourth example 
focused on automated replies.
---------------------------------------------------------------------------

    \194\ For more on medium of communication, see Sec.  1006.14(h) 
and its associated commentary.
---------------------------------------------------------------------------

    The first two examples under comment 6(b)(1)-2 were proposed as 
comments 6(b)(1)-1.ii and .iv, respectively. The Bureau is revising 
these examples consistent with the discussion above that a debt 
collector's one permitted reply must be through the same medium of 
communication used by the consumer in initiating the communication, and 
is finalizing them as comments 6(b)(1)-2.i and .ii. These two examples 
illustrate a debt collector responding once through the same medium of 
communication used by the consumer before the expiration of the 
consumer's otherwise inconvenient time or place designation.
    The third example under comment 6(b)(1)-2.iii relates to websites 
and mobile applications. As discussed in the section-by-section 
analysis of final Sec.  1006.2(b) and (d), some industry commenters 
asserted that the proposed definitions of attempt to communicate and 
communicate or communication would include information provided to 
consumers who visit or navigate a debt collector's website or online 
portal.\195\ Such information may constitute an attempt to communicate 
or a communication depending on its content. However, as the example in 
comment 6(b)(1)-2.iii illustrates, when a consumer initiates a 
communication by navigating a debt collector's website or using a debt 
collector's mobile application at a time or from a place that the 
consumer previously designated as inconvenient, Sec.  1006.6(b)(1) does 
not prohibit the debt collector from conveying information to the 
consumer about the debt through the website or mobile application. 
Accordingly, comment 6(b)(1)-2.iii provides clarity regarding websites 
and mobile applications.
---------------------------------------------------------------------------

    \195\ Those comments are summarized in the section-by-section 
analyses of Sec.  1006.2(b) and (d).
---------------------------------------------------------------------------

    The final example under comment 6(b)(1)-2.iv is focused on 
automated replies. The Bureau received a number of comments requesting 
that the Bureau clarify how Sec.  1006.6(b)(1) applies to such replies. 
Specifically, several

[[Page 76764]]

industry commenters expressed concern regarding the circumstance in 
which a consumer initiates an electronic communication, such as an 
email or text message, with a debt collector at a time or from a place 
that the consumer previously designated as inconvenient, and the debt 
collector's system generates an automated reply to confirm receipt of 
the consumer's message and inform the consumer when a response from the 
debt collector might be expected. Some industry commenters also 
expressed concern over an automated reply generated in response to a 
consumer-initiated communication received during the presumptively 
inconvenient times between 9:00 p.m. and 8:00 a.m., local time at the 
consumer's location. One trade group commenter suggested model language 
for an automated reply that would not meet the definitions of attempt 
to communicate or communication under Sec.  1006.2(b) and (d).\196\
---------------------------------------------------------------------------

    \196\ As discussed in the section-by-section analyses of Sec.  
1006.2(b) and (d), other commenters suggested that the Bureau 
exclude automated replies from the definitions of attempt to 
communicate and communication. Those comments are addressed in the 
section-by-section analyses of Sec.  1006.2(b) and (d).
---------------------------------------------------------------------------

    As discussed above, the Bureau finds that a consumer-initiated 
communication is, by its nature, not inconvenient to the consumer and 
that the debt collector may respond once, including by automated reply, 
through the same medium of communication used by the consumer. The 
Bureau is adopting comment 6(b)(1)-2.iv to clarify that, if a consumer 
initiates a communication by sending an email message at a time or from 
a place that the consumer previously designated as inconvenient or that 
is presumptively inconvenient, the debt collector is not prohibited 
from responding once, such as by sending a system-generated automated 
email reply.\197\
---------------------------------------------------------------------------

    \197\ In response to comments concerned with an automated reply 
generated in response to a consumer-initiated communication received 
during the presumptively inconvenient times between 9:00 p.m. and 
8:00 a.m., local time at the consumer's location, the Bureau 
believes that the consumer initiating a communication between those 
times may constitute the debt collector's ``knowledge of 
circumstances to the contrary'' under Sec.  1006.6(b)(1)(i). See the 
section-by-section analysis of Sec.  1006.6(b)(1)(i).
---------------------------------------------------------------------------

6(b)(1)(i)
    FDCPA section 805(a)(1) provides, in relevant part, that a debt 
collector may not communicate with a consumer in connection with the 
collection of any debt at any unusual time, or at a time that the debt 
collector knows or should know is inconvenient to the consumer.\198\ 
FDCPA section 805(a)(1) specifies that, in the absence of knowledge of 
circumstances to the contrary, a debt collector shall assume that the 
convenient time for communicating with a consumer is after 8:00 a.m. 
and before 9:00 p.m., local time at the consumer's location.
---------------------------------------------------------------------------

    \198\ 15 U.S.C. 1692c(a)(1).
---------------------------------------------------------------------------

    The Bureau proposed Sec.  1006.6(b)(1)(i) to implement and 
interpret FDCPA section 805(a)(1)'s prohibition regarding unusual or 
inconvenient times.\199\ The Bureau interpreted the language in FDCPA 
section 805(a)(1) that a debt collector shall assume that the 
convenient time for communicating with a consumer is after 8:00 a.m. 
and before 9:00 p.m. to mean that a time before 8:00 a.m. and after 
9:00 p.m. local time at the consumer's location is inconvenient, unless 
the debt collector has knowledge of circumstances to the contrary. 
Comments regarding proposed Sec.  1006.6(b)(1)(i) fell into three main 
categories, as discussed below.
---------------------------------------------------------------------------

    \199\ As discussed in the section-by-section analysis of Sec.  
1006.6(b), Sec.  1006.6(b)(1)(i) also interprets FDCPA sections 806 
and 808 to prohibit a debt collector from attempting to communicate 
with a consumer at a time when FDCPA section 805(a)(1) would 
prohibit the debt collector from communicating with the consumer.
---------------------------------------------------------------------------

Existing Violations of FDCPA Section 805(a)(1)
    Several individual consumers noted that, notwithstanding the 
prohibition in FDCPA section 805(a)(1), they have received hateful and 
threatening debt collection calls before 8:00 a.m., after 9:00 p.m., 
and during all hours of the night. The Bureau notes that the FDCPA 
imposes a specific presumption against communicating with a consumer 
before 8:00 a.m. and after 9:00 p.m., local time at the consumer's 
location regardless of the content of the communication.\200\ In the 
absence of knowledge of circumstances to the contrary, a debt 
collector's communications with a consumer before 8:00 a.m. and after 
9:00 p.m. are inconvenient to the consumer and are prohibited under 
FDCPA section 805(a)(1) and final Sec.  1006.6(b)(1)(i). Depending on 
the facts and circumstances, communications made at prohibited times in 
violation of Sec.  1006.6(b)(1)(i) may also violate other provisions of 
the FDCPA or this final rule.
---------------------------------------------------------------------------

    \200\ See 15 U.S.C. 1692c(a)(1).
---------------------------------------------------------------------------

Inconvenient Times and Electronic Communications
    The Bureau received several comments on the general application of 
Sec.  1006.6(b)(1)(i)'s inconvenient time prohibition to electronic 
communications. A group of State Attorneys General supported applying 
Sec.  1006.6(b)(1)(i) to electronic communications and agreed with the 
proposal to extend the FDCPA's limitation on permissible hours of 
communications to newer communication media including, but not limited 
to, email, text messaging, and social media. Many industry commenters, 
in contrast, expressed concern about the proposed approach. One 
industry commenter supported permitting debt collector communications 
by telephone call or text message during the presumptively convenient 
hours between 8:00 a.m. and 9:00 p.m., local time, as fair and 
reasonable, but requested that the Bureau exempt email and text 
messages from consumer-designated inconvenient time and place 
restrictions. Several industry commenters stated that, although a debt 
collector's telephone calls to a consumer should adhere to the 
inconvenient time restrictions, the Bureau should except email or text 
messages or both from any time restrictions, thereby permitting 
electronic messages to be sent by a debt collector to a consumer at any 
time. A number of these commenters suggested that electronic 
communications such as email messages are distinct in nature from other 
media of communication, as are the ways in which a consumer may 
determine whether to engage with such communications. One industry 
commenter suggested that requiring electronic messages to adhere to 
inconvenient time restrictions puts debt collectors at a competitive 
disadvantage because no other industry has such a restriction, while 
another industry commenter suggested that, because internet service 
providers limit the frequency of outgoing email messages, such 
communications should not be subject to any further restrictions, 
including the inconvenient time restrictions under proposed Sec.  
1006.6(b)(1)(i). This same industry commenter also suggested that the 
Bureau exclude email messages from the definition of ``communication'' 
in proposed Sec.  1006.6(b)(1)(i). One trade group commenter suggested 
that the unsubscribe instructions in proposed Sec.  1006.6(e) would 
sufficiently protect consumers, such that subjecting electronic 
communications to inconvenient time restrictions was unnecessary. Some 
industry commenters stated that the difficulty lies with technology and 
the inability of their software to time-stamp and track electronic 
communications, and with the associated costs of having to do so.

[[Page 76765]]

    The statutory requirement under FDCPA section 805(a)(1) broadly 
applies to all debt collection communications with a consumer, without 
distinguishing between communication media.\201\ Consistent with the 
statute, the Bureau interprets FDCPA section 805(a)(1) to apply Sec.  
1006.6(b)(1)(i)'s inconvenient time prohibition to electronic 
communications and not just to telephone calls, for example, with the 
consumer.
---------------------------------------------------------------------------

    \201\ While commenters raised questions regarding new 
communication media and Sec.  1006.6(b)(1)(i)'s prohibition on 
communicating or attempting to communicate with a consumer at an 
inconvenient time, none requested clarification regarding mailed 
communications. The Bureau understands that a consumer's designation 
of a time as inconvenient under FDCPA section 805(a)(1) has not 
prevented debt collectors from sending communications by mail 
through the United States Postal Service. Unlike mail, the time at 
which an electronic communication, such as an email or text message, 
is sent generally correlates with the time of receipt. Therefore, 
Sec.  1006.6(b)(1)(i)'s prohibition on communicating or attempting 
to communicate with a consumer at an inconvenient time generally 
does not apply to mail in the same manner as it does to electronic 
communications.
---------------------------------------------------------------------------

    In response to industry comments suggesting that the costs 
associated with compliance will be burdensome, although this final rule 
does not require electronic communications by debt collectors, it 
provides clarity for a debt collector who elects to send electronic 
communications to a consumer.
Decedent Debt Waiting Period
    Although the Bureau did not propose to define a period after a 
consumer's death as an inconvenient time for communicating about the 
deceased consumer's debt with surviving spouses or parents (in the case 
of deceased minor consumers) or persons acting as executors, 
administrators, or personal representatives of a deceased consumer's 
estate, the Bureau requested comment on this topic.\202\ The FTC 
declined to adopt such a waiting period in its Policy Statement on 
Decedent Debt because it did not have a sufficient record to establish 
the necessity of a waiting period or the optimal length of such a 
period. While the Bureau received some comments on this issue, it 
likewise does not have a sufficient basis to determine whether to 
impose such a waiting period or the proper duration of such a waiting 
period. Therefore, the Bureau declines to include a waiting period in 
the final rule.
---------------------------------------------------------------------------

    \202\ See 84 FR 23274, 23296 (May 21, 2019).
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.6(b)(1)(i) as proposed to provide that, except as provided in 
Sec.  1006.6(b)(4), a debt collector must not communicate or attempt to 
communicate with a consumer in connection with the collection of any 
debt at any unusual time, or at a time that the debt collector knows or 
should know is inconvenient to the consumer. In the absence of the debt 
collector's knowledge of circumstances to the contrary, a time before 
8:00 a.m. and after 9:00 p.m. local time at the consumer's location is 
inconvenient.
    The Bureau proposed comment 6(b)(1)(i)-1 to clarify that, for 
purposes of determining the time of an electronic communication under 
Sec.  1006.6(b)(1)(i), an electronic communication occurs when the debt 
collector sends it, not, for example, when the consumer receives or 
views it. Two trade group commenters agreed with the proposed 
interpretation. One consumer commenter also supported it but suggested 
that the time of receipt by the consumer should control instead. And a 
group of consumer advocates supported the proposed interpretation but 
requested that the Bureau further clarify that ``sending'' does not 
include scheduling a message for later delivery.
    The Bureau proposed the clarification in comment 6(b)(1)(i)-1 to 
assist debt collectors who elect to send consumers electronic 
communications in complying with Sec.  1006.6(b)(1)(i). As the Bureau 
stated in the proposal, ambiguity exists about whether, for purposes of 
FDCPA section 805(a)(1), an electronic communication occurs at the time 
of sending by the debt collector or at the time of receipt or viewing 
by the consumer. A debt collector can control the time at which it 
chooses to send communications, whereas it often would be impossible 
for a debt collector to determine when a consumer receives or views an 
electronic communication. The Bureau determines that a bright-line rule 
that clarifies that an electronic communication occurs when the debt 
collector sends it makes it possible for a debt collector to comply 
with the final rule. The Bureau also clarifies that sending for 
purposes of comment 6(b)(1)(i)-1 does not include scheduling a message 
at one time for delivery at a later time. For these reasons, the Bureau 
is finalizing comment 6(b)(1)(i)-1 as proposed, with minor revisions.
    The Bureau also proposed comment 6(b)(1)(i)-2 to provide a safe 
harbor and illustrate how a debt collector could comply with proposed 
Sec.  1006.6(b)(1)(i) and FDCPA section 805(a)(1) if the debt collector 
has conflicting or ambiguous information regarding a consumer's 
location, such as telephone numbers with area codes located in 
different time zones or a telephone number with an area code and a 
physical address that are inconsistent. The Bureau is finalizing 
comment 6(b)(1)(i)-2 largely as proposed, with certain clarifications 
in response to comments, as discussed below.
    A group of consumer advocates supported proposed comment 
6(b)(1)(i)-2 as a commonsense interpretation that will protect 
consumers and give helpful guidance to debt collectors. One consumer 
advocate suggested that the better course is to require debt collectors 
to determine whether a telephone number is a cellular or landline 
telephone. One trade group commenter supported the idea of a safe 
harbor but suggested revising it to protect debt collectors when they 
use the time period during which communications would be convenient in 
both locations as indicated by the zip code of the residence and the 
area code of the telephone.
    One industry commenter stated that debt collectors have no 
practical way of knowing the local time for a consumer at any 
particular point in time, and that a debt collector would be required 
to keep track of the consumer's whereabouts to avoid communicating at 
inconvenient times. One industry commenter suggested that the Bureau 
amend the proposed commentary to permit a debt collector to communicate 
with a consumer at times that are convenient in any location in which 
the consumer might be located, or alternatively, that the debt 
collector should be responsible only for the area code, address of 
record, and locations explicitly communicated by the consumer. Several 
industry commenters stated that a debt collector should be permitted to 
rely on the address of record or last known physical address because, 
as one commenter explained, telephones are portable and the area code 
is no longer a reliable source of the consumer's location. 
Specifically, one trade group commenter requested that mortgage 
servicers be allowed to determine call times based on the single, 
established billing address.
    The Bureau is adopting this safe harbor to facilitate a debt 
collector's compliance with Sec.  1006.6(b)(1)(i) when the debt 
collector has conflicting or ambiguous information regarding a 
consumer's location. As proposed, comment 6(b)(1)(i)-2 stated that the 
safe harbor would apply if the debt collector is unable to determine 
the consumer's location. In response to the commenter that a debt 
collector would be required to keep track of a consumer's whereabouts, 
the Bureau revises this language to clarify that the safe harbor would 
apply if the debt collector has conflicting or ambiguous information

[[Page 76766]]

regarding the consumer's location. A debt collector is not required to 
determine where the consumer actually is located when communicating or 
attempting to communicate with the consumer and knowledge that a 
telephone number is associated with a mobile telephone does not, 
without more, create conflicting or ambiguous information. A debt 
collector with conflicting information may know or should know that it 
is inconvenient to communicate or attempt to communicate with a 
consumer at a time outside of the presumptively convenient times (8:00 
a.m. to 9:00 p.m.) in any of the time zones in which the consumer might 
be located. As the Bureau explained in the proposal, some debt 
collectors already have adopted this approach for determining 
convenient times to contact a consumer if the debt collector has 
conflicting location information for the consumer.
    This safe harbor would apply in circumstances in which the debt 
collector does not have knowledge of the consumer's location and can 
rely only on information indicating where the consumer might be 
located. For example, this may arise in a debt collector's initial 
communication with a consumer. One consumer commenter reported 
continually receiving calls as early as 5:00 a.m. (local time at the 
consumer's location) because the debt collector relied only on the 
consumer's telephone number area code, while ignoring information from 
the consumer that the consumer was in fact in a different time zone. 
However, once the debt collector has information about the consumer's 
location, for example by asking the consumer in an initial 
communication or being told by the consumer in a subsequent 
communication, the debt collector would no longer have conflicting or 
ambiguous information regarding the consumer's location and would not 
need to rely on the safe harbor provided in comment 6(b)(1)(i)-2.
    As finalized, comment 6(b)(1)(i)-2 states that, under Sec.  
1006.6(b)(1)(i), in the absence of a debt collector's knowledge of 
circumstances to the contrary, an inconvenient time for communicating 
with a consumer is before 8:00 a.m. and after 9:00 p.m. local time at 
the consumer's location. If a debt collector has conflicting or 
ambiguous information regarding a consumer's location, then, in the 
absence of knowledge of circumstances to the contrary, the debt 
collector complies with Sec.  1006.6(b)(1)(i) if the debt collector 
communicates or attempts to communicate with the consumer at a time 
that would be convenient in all of the locations at which the debt 
collector's information indicates the consumer might be located. 
Comment 6(b)(1)(i)-2 also provides two examples of how a debt collector 
complies with Sec.  1006.6(b)(1)(i).
6(b)(1)(ii)
    FDCPA section 805(a)(1) provides, in relevant part, that a debt 
collector may not communicate with a consumer in connection with the 
collection of any debt at any unusual place, or at a place that the 
debt collector knows or should know is inconvenient to the 
consumer.\203\ As proposed, Sec.  1006.6(b)(1)(ii) would have 
implemented this prohibition and generally restated the statute, with 
only minor changes for clarity. The Bureau is finalizing Sec.  
1006.6(b)(1)(ii) as proposed.\204\ Accordingly, Sec.  1006.6(b)(1)(ii) 
states that except as provided in Sec.  1006.6(b)(4), a debt collector 
must not communicate or attempt to communicate with a consumer in 
connection with the collection of any debt at any unusual place, or at 
a place that the debt collector knows or should know is inconvenient to 
the consumer.
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    \203\ 15 U.S.C. 1692c(a)(1).
    \204\ As discussed in the section-by-section analysis of Sec.  
1006.6(b), Sec.  1006.6(b)(1)(ii) also interprets FDCPA sections 806 
and 808 to prohibit a debt collector from attempting to communicate 
with a consumer at a place at which FDCPA section 805(a)(1) 
prohibits the debt collector from communicating with the consumer.
---------------------------------------------------------------------------

Communications or Attempts To Communicate at Unusual and Inconvenient 
Places
    The Bureau received many comments discussing the proposed approach 
to inconvenient places in response to proposed comment 6(b)(1)-1.iii 
asking how, in light of technology such as mobile telephones, which are 
not affixed to a particular place, a debt collector could be sure to 
avoid contacting a consumer at an inconvenient place.\205\ With respect 
to unusual place, one industry commenter noted that, while the Bureau's 
proposal provided examples illustrating what may be considered 
``inconvenient'' under the rule, the proposal did not provide examples 
illustrating what would constitute an ``unusual'' time or place under 
FDCPA section 805(a)(1). The commenter therefore requested the Bureau 
clarify what would be considered ``unusual,'' considering the extensive 
consumer use of mobile telephones and the mobile nature of consumers 
themselves. Another industry commenter suggested that the statutory 
language ``at any unusual . . . place'' be removed from Sec.  
1006.6(b)(1) based on the difficulties presented when a consumer could 
be at an ``unusual place'' (e.g., a funeral), but without knowing where 
the consumer is, the debt collector calls the consumer's mobile 
telephone.
---------------------------------------------------------------------------

    \205\ For a discussion of and response to those comments, see 
the section-by-section analysis of final comment 6(b)(1)-1.iii 
above.
---------------------------------------------------------------------------

    The Bureau recognizes that mobile technology has shifted how and 
where communications occur and may make it more difficult for a debt 
collector to know where a consumer is at the precise moment when the 
debt collector is communicating or attempting to communicate with the 
consumer. In this regard, the Bureau notes that the FDCPA does not 
require a debt collector to track a consumer's whereabouts; it 
prohibits communications with a consumer at any unusual place, or a 
place that the debt collector knows or should know is inconvenient to 
the consumer.
    To further clarify how the FDCPA's prohibition regarding unusual 
and inconvenient places applies in the context of mobile technology, 
the Bureau is adopting new comment 6(b)(1)(ii)-1 to explain that some 
communication media, such as mailing addresses and landline telephone 
numbers, are associated with a place, whereas other communication 
media, such as email addresses and mobile telephone numbers, are not. 
Comment 6(b)(1)(ii)-1 provides that pursuant to Sec.  1006.6(b)(1)(ii), 
a debt collector must not communicate or attempt to communicate with a 
consumer through media associated with an unusual place, or with a 
place that the debt collector knows or should know is inconvenient to 
the consumer. Unless the debt collector knows that the consumer is at 
an unusual place, or a place that the debt collector knows or should 
know is inconvenient to the consumer, comment 6(b)(1)(ii)-1 continues, 
Sec.  1006.6(b)(1)(ii) does not prohibit a debt collector from 
communicating or attempting to communicate with a consumer through 
communication media not associated with the unusual or inconvenient 
place. The Bureau is also adopting an example in new comment 
6(b)(1)(ii)-1.i. The Bureau believes this approach addresses the 
complexities presented by mobile technology, clarifies how debt 
collectors may comply with FDCPA section 805(a)(1)'s prohibitions on 
communications with a consumer at unusual and inconvenient places, and 
maintains the consumer protections under FDCPA section 805(a)(1). The 
Bureau also reiterates that, in addition to an inconvenient place 
designation under Sec.  1006.6(b)(1)(ii), a consumer may invoke an 
inconvenient time

[[Page 76767]]

designation under Sec.  1006.6(b)(1)(i) or a medium of communication 
restriction under Sec.  1006.14(h)(1) to further control when or 
whether a debt collector can communicate or attempt to communicate with 
the consumer using mobile technology.
    Additionally, as the Bureau noted in the proposal, in response to 
feedback received during the SBREFA process, the Bureau declined to 
propose an intervention under consideration that would have designated 
four categories of places as presumptively inconvenient.\206\ 
Accordingly, this final rule does not designate categories of places as 
presumptively inconvenient. The Bureau is also not aware of confusion 
or concerns regarding places that are considered unusual under FDCPA 
section 805(a)(1). This final rule therefore implements the statutory 
language ``at any unusual time or place'' as part of final Sec.  
1006.6(b)(1) consistent with the statute and without further commentary 
or interpretation. To address commenter concerns, however, the Bureau 
is adding new comment 6(b)(1)(ii)-1 as discussed above to clarify how a 
debt collector may communicate through media that rely on mobile 
technology when a consumer may be at an unusual or inconvenient place.
---------------------------------------------------------------------------

    \206\ 84 FR 23274, 23297 n.211 (May 21, 2019).
---------------------------------------------------------------------------

6(b)(2) Prohibitions Regarding Consumer Represented by an Attorney
    FDCPA section 805(a)(2) prohibits a debt collector from 
communicating with a consumer in connection with the collection of any 
debt if the debt collector knows the consumer is represented by an 
attorney with respect to the debt and has knowledge of, or can readily 
ascertain, the attorney's name and address, unless the attorney fails 
to respond within a reasonable period of time to a communication from 
the debt collector or unless the attorney consents to direct 
communication with the consumer.\207\ The Bureau proposed Sec.  
1006.6(b)(2) to implement this prohibition and generally restate the 
statute.\208\ For the reasons discussed below, the Bureau is finalizing 
Sec.  1006.6(b)(2) as proposed, with minor revisions and with one 
clarification in response to comments, as discussed below.
---------------------------------------------------------------------------

    \207\ 15 U.S.C. 1692c(a)(2).
    \208\ 84 FR 23274, 23297 (May 21, 2019). As discussed in the 
section-by-section analysis of Sec.  1006.6(b), Sec.  1006.6(b)(2) 
also interprets FDCPA sections 806 and 808 to prohibit a debt 
collector from attempting to communicate with a consumer who is 
represented by an attorney if FDCPA section 805(a)(2) prohibits the 
debt collector from communicating with that consumer.
---------------------------------------------------------------------------

    The Bureau received comments requesting four specific 
clarifications. First, several industry commenters requested the Bureau 
define what constitutes ``a reasonable period of time'' by, for 
example, specifying a certain number of days. A number of industry 
commenters suggested the Bureau adopt 10, 21, or 30 days as a 
reasonable period of time, and some commenters drew parallels to 
existing State debt collection laws. One such industry commenter 
suggested the Bureau go further and clarify that, upon expiration of a 
30-day period, a debt collector may assume the attorney is not 
representing the consumer. Two trade group commenters suggested that 
attempts to contact a consumer's attorney often go unanswered by the 
attorney to create an FDCPA violation.
    One consumer advocate suggested that the reasonable period of time 
depends on the circumstances and on whether the communication from the 
debt collector is the type of communication that requires a response 
from the consumer's attorney, such as a settlement offer or a request 
for clarification pursuant to a verification request. However, the 
commenter suggested that, for debt collection communications seeking 
simply to persuade the consumer to pay the alleged debt, the attorney 
would not be obliged to respond and therefore no corresponding 
reasonable time exists.
    The Bureau declines to adopt a specific time period under Sec.  
1006.6(b)(2). As explained in the section-by-section analysis of Sec.  
1006.10, the Bureau concludes that reasonableness generally depends 
upon the facts and circumstances surrounding a debt collector's 
communications with a consumer's attorney. Accordingly, the Bureau 
declines to specify a period of time in which a consumer's attorney 
must respond before a debt collector is permitted to communicate or 
attempt to communicate with a consumer.
    Second, some trade group commenters suggested the Bureau adopt a 
requirement that the consumer's attorney, the consumer, or both, 
undertake specific steps to confirm the attorney's representation of 
the consumer. These suggestions included that the consumer's attorney 
respond to a debt collector's request for confirmation of 
representation, with one trade group commenter specifying that the 
attorney's response must be between five and seven days of the request 
and that the attorney must enter an appearance on behalf of the 
consumer. Additionally, this commenter suggested the consumer also be 
required to provide the attorney's full contact information, name, 
address, telephone number and, if applicable, email address, in order 
to confirm the consumer is in fact represented by an attorney. 
Similarly, another trade group commenter suggested the Bureau adopt an 
approach similar under the laws of one State where a notice of attorney 
representation must contain certain information to be effective,\209\ 
and that the Bureau further require that the notice list the account(s) 
for which the attorney is representing the consumer.
---------------------------------------------------------------------------

    \209\ See W. Va. Code 46A-2-128(e).
---------------------------------------------------------------------------

    In response to these comments, the Bureau notes that FDCPA section 
805(a)(2) requires only that a debt collector knows the consumer is 
represented by an attorney with respect to such debt and has knowledge 
of, or can readily ascertain, such attorney's name and address. This 
statutory provision does not require any further action on behalf of 
either the consumer's attorney or the consumer to confirm the 
representation and trigger the statutory protections afforded, namely 
that the debt collector may not communicate with the consumer in 
connection with the collection of any debt. The Bureau therefore 
declines to adopt the commenters' suggested approaches.
    Third, some industry commenters requested that the Bureau clarify 
the effect of a consumer-initiated communication once the debt 
collector knows the consumer is represented by an attorney. One such 
commenter stated that, under such circumstances, the debt collector 
should be permitted to answer the consumer's questions and return the 
consumer's telephone call for the sole purpose of responding to that 
consumer-initiated communication and to also clarify whether the 
consumer is still represented by counsel. One industry commenter 
requested the Bureau clarify that a consumer can inform a debt 
collector that the consumer is no longer being represented by an 
attorney, while another industry commenter suggested that the debt 
collector must await a response from the attorney before communicating 
with the consumer.
    The introductory paragraph of FDCPA section 805(a) contains 
exceptions for the prior consent of the consumer given directly to the 
debt collector and the express permission of a court of competent 
jurisdiction, which are implemented by the Bureau in Sec.  1006.6(b)(4) 
and further discussed in that section's analysis below. In addition to 
the exceptions specific to FDCPA section 805(a)(2) (e.g., unless the 
attorney fails to respond within a reasonable period of time to a

[[Page 76768]]

communication from the debt collector or unless the attorney consents 
to direct communication with the consumer), the general exceptions 
contained in FDCPA section 805(b) also function as exceptions to FDCPA 
section 805(a)(2). Therefore, under the FDCPA, a consumer's prior 
consent given directly to a debt collector permits a debt collector to 
communicate with a consumer that the debt collector knows is 
represented by an attorney. Accordingly, the Bureau is adopting new 
comment 6(b)(2)-1 to clarify that a consumer-initiated communication 
from a represented consumer constitutes the consumer's prior consent to 
that communication under Sec.  1006.6(b)(4)(i), and that therefore the 
debt collector may respond to that consumer-initiated communication. A 
debt collector is not prohibited from inquiring in that response 
whether the consumer is still represented by an attorney; however, as 
comment 6(b)(2)-1 explains, the consumer's act of initiating a 
communication does not negate the debt collector's knowledge that the 
consumer is represented by an attorney and does not revoke the 
protections afforded the consumer under Sec.  1006.6(b)(2). Comment 
6(b)(2)-1 further provides that after the debt collector's response, 
the debt collector must not communicate or attempt to communicate 
further with the consumer unless the debt collector knows the consumer 
is not represented by an attorney with respect to the debt, either 
based on information from the consumer or the consumer's attorney, or 
an exception under Sec.  1006.6(b)(2)(i) or (ii) or Sec.  1006.6(b)(4) 
applies.
    Fourth, one industry commenter requested that the Bureau clarify 
whether a debt collector should assume that, if an attorney represents 
a consumer with respect to one debt, the attorney represents the 
consumer with respect to future debts; in particular, the commenter 
expressed concern about privacy and medical debts. FDCPA section 
805(a)(2) states in relevant part that ``if the debt collector knows 
the consumer is represented by an attorney with respect to such debt.'' 
\210\ The Bureau interprets the protections afforded a consumer under 
FDCPA section 805(a)(2) to apply to a particular debt allegedly owed by 
the consumer, but not to future or other debts allegedly owed by the 
consumer, unless the debt collector knows that an attorney represents 
the consumer with respect to those debts and has knowledge of, or can 
readily ascertain, the attorney's name and address. Accordingly, the 
Bureau revises Sec.  1006.6(b)(2) to more closely mirror the statutory 
language and clarify that the protections under FDCPA section 805(a)(2) 
apply ``with respect to such debt.''
---------------------------------------------------------------------------

    \210\ 15 U.S.C. 1692c(a)(2).
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.6(b)(2) as proposed, with one revision to clarify that Sec.  
1006.6(b)(2) applies per debt. Accordingly, Sec.  1006.6(b)(2) states 
that, except as provided in Sec.  1006.6(b)(4), a debt collector must 
not communicate or attempt to communicate with a consumer in connection 
with the collection of any debt if the debt collector knows the 
consumer is represented by an attorney with respect to such debt and 
knows, or can readily ascertain, the attorney's name and address, 
unless the attorney: (i) Fails to respond within a reasonable period of 
time to a communication from the debt collector; or (ii) consents to 
the debt collector's direct communication with the consumer.
6(b)(3) Prohibitions Regarding Consumer's Place of Employment
    FDCPA section 805(a)(3) prohibits a debt collector from 
communicating with a consumer in connection with the collection of any 
debt at the consumer's place of employment if the debt collector knows 
or has reason to know that the consumer's employer prohibits the 
consumer from receiving such communication.\211\ The Bureau proposed 
Sec.  1006.6(b)(3) to implement this prohibition and generally restate 
the statute.\212\ For the reasons discussed below, the Bureau is 
finalizing Sec.  1006.6(b)(3) as proposed.
---------------------------------------------------------------------------

    \211\ 15 U.S.C. 1692c(a)(3).
    \212\ 84 FR 23274, 23297 (May 21, 2019). As discussed in the 
section-by-section analysis of Sec.  1006.6(b), Sec.  1006.6(b)(3) 
also interprets FDCPA sections 806 and 808 to prohibit a debt 
collector from attempting to communicate with a consumer at the 
consumer's place of employment if FDCPA section 805(a)(3) prohibits 
the debt collector from communicating with the consumer there.
---------------------------------------------------------------------------

    Many consumers commented on the disruptive effects of debt 
collection calls to the workplace. Many commenters described these 
calls as harassing and disruptive, while many more consumers stated 
that frequent debt collection calls to the workplace have threatened 
their employment or led to them being fired, thus making repayment of 
the allegedly owed debt more unlikely. Some consumer and consumer 
advocate commenters explained that these calls are an unwelcome 
distraction that could jeopardize a consumer's ability to pay the debt 
and that interrupt the work not only of the consumer who allegedly owes 
the debt, but of others, including co-workers who may be responsible 
for answering incoming telephone calls to the workplace and employers. 
Other consumer commenters particularly objected to debt collectors 
calling and leaving messages with employers as placing undue pressure 
on employees because of the risk of being penalized by the 
employer.\213\
---------------------------------------------------------------------------

    \213\ As explained in the section-by-section analysis of final 
Sec.  1006.2(j), the definition of limited-content message adopted 
under this final rule does not include third-party limited-content 
messages, either in live conversations or as voicemail messages 
knowingly left for a third party.
---------------------------------------------------------------------------

    Consistent with these consumer comments, many consumer advocate 
commenters requested that the Bureau ban debt collectors from 
communicating or attempting to communicate with consumers at the 
workplace altogether. Alternatively, they recommended that the Bureau 
prohibit debt collectors from calling or leaving messages with 
employers at the workplace. One group of consumer advocates requested 
that the Bureau clarify that, under FDCPA section 805(a)(3) and Sec.  
1006.6(b)(3), a debt collector knows or has reason to know that an 
employer prohibits a consumer from receiving communications in 
connection with the collection of any debt at the workplace if the 
consumer asks the debt collector not to contact the consumer at work. 
And a group of State Attorneys General recommended that the Bureau 
prohibit a debt collector from calling a consumer's place of employment 
if the debt collector reliably learns, in any way, that the consumer's 
employer prohibits debt collection calls.
    A number of industry commenters agreed that a debt collector should 
be expected to honor a consumer's request to stop contacting the 
consumer at the workplace, while generally requesting that the Bureau 
further clarify when a debt collector knows or has reason to know that 
a consumer's employer prohibits the consumer from receiving debt 
collection communications at the workplace. Many industry commenters 
suggested that a debt collector should not be responsible for having to 
proactively track and record, for all present and future consumers, 
which employers do or do not prohibit such communications, and that 
such a requirement for debt collectors to cross-reference their files 
would be unreasonable. One industry commenter explained that a 
communication from one consumer suggesting that the employer prohibits 
communication at work does not necessarily apply to all employees, as 
certain managers or supervisors may restrict such calls while the 
employer, as a matter of policy, may not. Accordingly, one industry 
commenter requested the

[[Page 76769]]

Bureau to clarify that an instruction from a consumer or employer to a 
debt collector to cease contacting a consumer through an employer-
provided email address or telephone number is effective only as to that 
specific consumer and would not be imputed to the entirety of the 
employer's workforce.
    Recognizing that a debt collection communication may cause problems 
for a consumer in the workplace, two industry commenters suggested that 
it would be reasonable to require a consumer to use specific language 
to put a debt collector on notice. One industry commenter explained 
that, because FDCPA section 805(a)(3)'s knowledge standard is difficult 
to fulfill, all a consumer needs to do is give notice to a debt 
collector that the consumer does not want telephone calls or email 
messages at a physical place of work or on a physical telephone owned 
and managed by the company.
    In addition to the unusual and inconvenient time and place 
protections delineated under FDCPA section 805(a)(1), Congress 
separately provided consumers with the workplace protections afforded 
under FDCPA section 805(a)(3). Accordingly, the Bureau implements this 
prohibition and generally restates the statute in final Sec.  
1006.6(b)(3). This provision states that, except as provided in Sec.  
1006.6(b)(4), a debt collector must not communicate or attempt to 
communicate with a consumer in connection with the collection of any 
debt at the consumer's place of employment, if the debt collector knows 
or has reason to know that the consumer's employer prohibits the 
consumer from receiving such communication.
    As described by many consumer commenters, the Bureau recognizes the 
unique consumer harm presented by debt collection communications at a 
consumer's place of employment, including possible or actual 
termination of employment. Although some consumer group commenters 
requested that the Bureau ban all workplace telephone calls or all 
workplace communications generally, the Bureau declines to do so 
because FDCPA section 805(a)(3) prohibits a debt collector from 
communicating with a consumer at the consumer's place of employment 
only if the debt collector knows or has reason to know that the 
consumer's employer prohibits the consumer from receiving such 
communication.\214\
---------------------------------------------------------------------------

    \214\ Recognizing that the risk of third-party disclosure is 
particularly high for communications sent to employer-provided email 
addresses, the Bureau is finalizing Sec.  1006.22(f)(3) to prohibit 
debt collectors from communicating or attempting to communicate 
using an email address that the debt collector knows is provided by 
the consumer's employer. See the section-by-section analysis of 
Sec.  1006.22(f)(3). For clarity, the Bureau is finalizing comment 
6(b)(3)-2 to cross-reference this prohibition regarding employer-
provided email addresses.
---------------------------------------------------------------------------

    In addition, consistent with the Bureau's interpretation regarding 
a consumer's designation of a time or place as inconvenient, as 
explained above,\215\ the Bureau concludes that a consumer need not 
undertake specific actions or utter specific words to be afforded the 
statutory protections provided under FDCPA section 805(a)(3). The 
statute does not prescribe any specific actions or require precise 
responses or utterances on behalf of the consumer to invoke the 
workplace communications protections, and nor does this final rule 
impose such requirements. Even if a consumer does not precisely state 
that the employer prohibits the consumer from receiving debt collection 
communications at the workplace, the debt collector nevertheless may 
know or have reason to know, based on the facts and circumstances, that 
the employer prohibits such communications. Accordingly, the Bureau is 
finalizing revised comment 6(b)(3)-1 to provide that a debt collector 
knows or has reason to know that a consumer's employer prohibits the 
consumer from receiving such communication if, for example, the 
consumer tells the debt collector that the consumer cannot take 
personal calls at work. The debt collector may ask follow-up questions 
regarding the employer's prohibitions or limitations on contacting the 
consumer at the place of employment to clarify statements by the 
consumer.\216\
---------------------------------------------------------------------------

    \215\ See the section-by-section analysis of Sec.  1006.6(b)(1).
    \216\ The Bureau nevertheless notes that a debt collector who 
does not know or have reason to know that the consumer's employer 
prohibits the consumer from receiving such communication and who 
elects to communicate or attempt to communicate with a consumer in 
connection with the collection of any debt at the consumer's place 
of employment should carefully manage any such communications or 
attempts so as to not risk a third-party disclosure as prohibited 
under FDCPA section 805(b) and implemented under final Sec.  
1006.6(d). For additional discussion of prohibited third-party 
communications and exceptions, respectively, see the section-by-
section analysis of Sec.  1006.d(1) and (2).
---------------------------------------------------------------------------

    Once the debt collector knows or has reason to know of this 
limitation, the debt collector is prohibited from communicating or 
attempting to communicate with the consumer at the workplace by, for 
example, by mailing a letter to the consumer's workplace address or 
calling the consumer's work landline.
    In response to those commenters suggesting that a debt collector 
would be required to track which employers prohibit their employees 
from receiving debt collection communications at the workplace, this 
final rule imposes no such requirement. The Bureau is adopting Sec.  
1006.6(b)(3) to implement the prohibition contained in FDCPA section 
805(a)(3) and to restate the statute.
    The Bureau also requested comment on whether additional 
clarification would be useful with respect to a debt collector's 
communications or attempts to communicate with a consumer while at 
work, for example, on a consumer's personal mobile telephone or 
portable electronic device. One consumer commented that, because many 
people use their mobile telephones for work and personal use, it would 
be extremely disruptive for a debt collector to send text messages 
during work hours while a consumer is using that mobile telephone for 
work purposes. Another consumer commented that the Bureau should 
clarify under Sec.  1006.6(b)(3) that communications at the workplace 
include communications through a device or channel owned by an employer 
and through a personal device during a consumer's known work hours. A 
consumer advocate that suggested the Bureau adopt a bright-line rule 
against all debt collection communications through any medium with a 
consumer at the workplace also suggested that such a rule should extend 
to the use of mobile telephones, as long as the debt collector knows or 
has reason to know that the consumer is at work. The commenter 
explained that the debt collector may ask the consumer to inform the 
debt collector which hours the consumer is at work so the debt 
collector may avoid those times, and if the consumer states specific 
hours and times, the debt collector must respect those instructions. A 
group of consumer advocates suggested that the prohibition under 
proposed Sec.  1006.6(b)(3) should also prohibit a debt collector from 
directing communications, including by voice or text message, to any 
personal mobile device during any known working hours. One local 
government commenter suggested that, consistent with proposed Sec.  
1006.22(f)(3), a debt collector should not be permitted to send mail to 
a consumer's place of employment or call, text, or leave voicemails on 
a consumer's work telephone without the consumer's prior consent.
    Industry commenters generally requested clarity regarding debt 
collection communications with a consumer to a personal mobile

[[Page 76770]]

telephone or device while the consumer is at work. One industry 
commenter suggested that, because it is within the consumer's 
discretion whether to answer the call, telephone calls to a consumer's 
personal mobile telephone number should not be considered a 
communication at the consumer's place of employment. One trade group 
commenter suggested that the Bureau adopt a safe harbor to exempt from 
liability, absent a consumer's designation of a specified time as 
inconvenient or medium of communication restriction, a debt collector 
who unknowingly reaches a consumer at the place of employment if 
attempting to communicate with the consumer through a mobile telephone 
or other permissible communication media, for example, an email message 
to the consumer's personal email account. Alternatively, one trade 
group commenter suggested that a consumer may prefer to communicate 
privately during work hours through a personal device instead of during 
non-work hours when the consumer may prefer to focus on family or other 
pursuits.
    As discussed above with respect to unusual and inconvenient places 
under FDCPA section 805(a)(1) and final comment 6(b)(1)(ii)-1,\217\ the 
Bureau similarly recognizes here the complexities presented by mobile 
technology while debt collectors aim to comply with the statutory 
requirement under FDCPA section 805(a)(3) that a debt collector not 
communicate with a consumer at the consumer's place of employment if 
the debt collector knows or has reason to know that the consumer's 
employer prohibits the consumer from receiving such communication.
---------------------------------------------------------------------------

    \217\ See the section-by-section analysis of Sec.  
1006.6(b)(1)(ii).
---------------------------------------------------------------------------

    Final comment 6(b)(3)-1, discussed above, provides that a debt 
collector may ask follow-up questions regarding the employer's 
prohibitions or limitations on contacting the consumer at the place of 
employment to clarify statements by the consumer. For example, a debt 
collector may ask a consumer to identify times when the consumer is at 
the place of employment. As explained in the section-by-section 
analysis of Sec.  1006.6(b)(1)(ii), some communication media are 
associated with a place.\218\ At the consumer's place of employment, 
such media may include, for example, mail to the consumer's place of 
employment and calls to the consumer's work landline or employer-
provided mobile telephone number. Consistent with the Bureau's approach 
in comment 6(b)(1)(ii)-1, a debt collector must not communicate or 
attempt to communicate with a consumer through media associated with 
the consumer's place of employment if, pursuant to Sec.  1006.6(b)(3), 
the debt collector knows or has reason to know that the consumer's 
employer prohibits the consumer from receiving such communication. For 
other communication media not associated with the consumer's place of 
employment, such as a personal email address or personal mobile 
telephone number, Sec.  1006.6(b)(3) does not prohibit a debt collector 
from communicating or attempting to communicate with a consumer through 
such media unless the debt collector knows that the consumer is at the 
place of employment. Therefore, absent information regarding when the 
consumer is at the place of employment or other communication 
restriction,\219\ the debt collector does not violate Sec.  
1006.6(b)(3) by placing a telephone call or sending an electronic 
communication to the consumer's personal mobile telephone number or 
portable electronic device, even if the consumer receives or views the 
communication while at the place of employment.
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    \218\ See id.
    \219\ Such a restriction could include, for example, an 
inconvenient time designation under Sec.  1006.6(b)(1)(i) or a 
medium of communication restriction under Sec.  1006.14(h)(1).
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6(b)(4) Exceptions
    FDCPA section 805(a) provides certain exceptions to its limitations 
on a debt collector's communications with a consumer. The Bureau 
proposed Sec.  1006.6(b)(4) to implement and interpret the exceptions 
in FDCPA section 805(a).\220\ For the reasons discussed below, the 
Bureau is finalizing Sec.  1006.6(b)(4) as proposed.
---------------------------------------------------------------------------

    \220\ 84 FR 23274, 23297-98 (May 21, 2019).
---------------------------------------------------------------------------

6(b)(4)(i)
    The Bureau proposed Sec.  1006.6(b)(4)(i) to implement the 
introductory language in FDCPA section 805(a) that, in relevant part, 
sets forth the exception for the prior consent of the consumer given 
directly to the debt collector. Proposed Sec.  1006.6(b)(4)(i) 
generally mirrored the statute, except that proposed Sec.  
1006.6(b)(4)(i) interpreted FDCPA section 805(a) to require that the 
consumer's prior consent must be given during a communication that 
would not violate proposed Sec.  1006.6(b)(1) through (3), i.e., the 
prohibitions on communications with a consumer at unusual or 
inconvenient times or places, communications with a consumer 
represented by an attorney, and communications at the consumer's place 
of employment. For the reasons discussed below, the Bureau is 
finalizing Sec.  1006.6(b)(4)(i) as proposed.
    A group of consumer advocates supported the Bureau's proposed 
interpretation of FDCPA section 805(a) to require that a consumer's 
prior consent must be given during a communication that would not 
violate proposed Sec.  1006.6(b)(1) through (3) as an important 
additional protection for consumers.
    The Bureau is adopting its interpretation of FDCPA section 805(a) 
to require that the consumer's prior consent must be given during a 
communication that would not violate Sec.  1006.6(b)(1) through (3). 
For example, ordinarily a debt collector could not place a telephone 
call to a consumer at midnight and obtain the consumer's prior consent 
for future debt collection communications at that time. The Bureau 
interprets a consumer's prior consent to be consent obtained in the 
absence of conduct that would compromise or eliminate a consumer's 
ability to freely choose whether to consent. A communication that would 
violate Sec.  1006.6(b)(1) through (3) (e.g., consent obtained from a 
consumer at an unusual or inconvenient time or place) is likely to 
compromise or eliminate a consumer's ability to freely choose whether 
to consent. By prohibiting prior consent purported to be obtained 
during a communication that would violate Sec.  1006.6(b)(1) through 
(3), the Bureau does not intend to suggest that prior consent obtained 
in other unlawful ways would comply with FDCPA section 805(a). 
Accordingly, the Bureau is adopting Sec.  1006.6(b)(4)(i) as proposed 
to provide that the prohibitions in Sec.  1006.6(b)(1) through (3) do 
not apply when a debt collector communicates or attempts to communicate 
with a consumer in connection with the collection of any debt with the 
prior consent of the consumer, given directly to the debt collector 
during a communication that does not violate Sec.  1006.6(b)(1) through 
(3).
    The Bureau also proposed comment 6(b)(4)(i)-1 to clarify the 
meaning of prior consent. Proposed comment 6(b)(4)(i)-1 explained that, 
if a debt collector learns during a communication that the debt 
collector is communicating with a consumer at an inconvenient time or 
place, the debt collector cannot during that communication ask the 
consumer to consent to the continuation of that debt collection 
communication. The Bureau proposed this comment as an interpretation of 
the language in FDCPA section 805(a) that consent must be ``prior'' and 
therefore given in

[[Page 76771]]

advance of a communication that otherwise would violate proposed Sec.  
1006.6(b)(1) through (3). For the reasons stated below, the Bureau is 
finalizing comment 6(b)(4)(i)-1 largely as proposed, with minor 
revisions.
    One industry commenter opposed this proposed interpretation on the 
basis that it takes away a consumer's ability to freely choose to 
continue the communication and requested that the Bureau instead 
prohibit a debt collector from continuing or forcing the consumer to 
communicate if the time or place is considered inconvenient. Another 
industry commenter requested that the Bureau clarify whether a debt 
collector could ask the consumer whether the time or communication 
medium is inconvenient, and if so, whether the consumer prefers another 
time or communication medium.
    The Bureau is finalizing comment 6(b)(4)(i)-1 largely as proposed, 
with minor revisions. The Bureau is adopting its proposed 
interpretation that prior consent must be given in advance of a 
communication that otherwise would violate Sec.  1006.6(b)(1) through 
(3), because consent that satisfies FDCPA section 805(a) must be 
``prior.'' Additionally, permitting a debt collector to ask a consumer 
to consent to a communication once the debt collector knows or should 
know the communication is occurring, for example, at an inconvenient 
time or place, would undermine the very protection guaranteed to the 
consumer under FDCPA section 805(a)(1). Therefore, final comment 
6(b)(4)(i)-1 clarifies that the debt collector would be prohibited from 
asking the consumer to consent to the continuation of that inconvenient 
communication. The comment clarifies, however, that a debt collector 
may ask the consumer during that communication what time or place would 
be convenient. Accordingly, final comment 6(b)(4)(i)-1 states that 
Sec.  1006.6(b)(4)(i) provides, in part, that the prohibitions in Sec.  
1006.6(b)(1) through (3) on a debt collector communicating or 
attempting to communicate with a consumer in connection with the 
collection of any debt do not apply if the debt collector communicates 
or attempts to communicate with the prior consent of the consumer. If 
the debt collector learns during a communication that the debt 
collector is communicating with the consumer at an inconvenient time or 
place, for example, the debt collector may ask the consumer during that 
communication what time or place would be convenient. However, Sec.  
1006.6(b)(4)(i) prohibits the debt collector from asking the consumer 
to consent to the continuation of that inconvenient communication.
    Additionally, consistent with the introductory language in FDCPA 
section 805(a), the Bureau proposed comment 6(b)(4)(i)-2 to restate the 
rule that the prior consent of the consumer must be given directly to 
the debt collector, and to explain that a debt collector cannot rely on 
the prior consent of the consumer given to the original creditor or to 
a previous debt collector. The Bureau proposed this comment to 
implement the statutory requirement in FDCPA section 805(a) that the 
prior consent of the consumer be given directly to the debt collector. 
For the reasons discussed below, the Bureau is finalizing comment 
6(b)(4)(i)-2 largely as proposed.
    A consumer commenter supported the proposal and stated that prior 
consent should not be transferred along with an account, while one 
trade group commenter suggested that consumer consent given to the 
creditor should be passed to a debt collector hired by that creditor.
    The Bureau is adopting comment 6(b)(4)(i)-2 as proposed, with minor 
revisions. A debt collector cannot rely on the prior consent of the 
consumer given to a creditor or to a previous debt collector because 
such prior consent is not given ``directly'' to the debt collector, as 
FDCPA section 805(a) expressly requires. This interpretation is also 
consistent with the FDCPA's legislative history.\221\ Accordingly, 
comment 6(b)(4)(i)-2 states that Sec.  1006.6(b)(4)(i) requires the 
prior consent of the consumer to be given directly to the debt 
collector. For example, a debt collector cannot rely on the prior 
consent of the consumer given to a creditor or to a previous debt 
collector.
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    \221\ See H. Rep. No. 95-131, at 5 (1977) (``The committee 
intends that in section [805] the `prior consent' be meaningful, 
i.e., that any prior consent by a consumer is to be a voluntary 
consent and shall be expressed by the consumer directly to the debt 
collector. Consequently, the committee intends that any term in a 
contract which requires a consumer to consent in advance to debt 
collection communication would not constitute `prior consent' by 
such consumer.'').
---------------------------------------------------------------------------

6(b)(4)(ii)
    The Bureau proposed Sec.  1006.6(b)(4)(ii) to implement the 
introductory language in FDCPA section 805(a) that, in relevant part, 
sets forth the exception for the express permission of a court of 
competent jurisdiction. As proposed, Sec.  1006.6(b)(4)(ii) generally 
restated the statute, with only minor wording and organizational 
changes for clarity. The Bureau received no comments on proposed Sec.  
1006.6(b)(4)(ii) and is finalizing it as proposed. Accordingly, final 
Sec.  1006.6(b)(4)(ii) provides that the prohibitions in Sec.  
1006.6(b)(1) through (3) do not apply when a debt collector 
communicates or attempts to communicate with a consumer in connection 
with the collection of any debt with the express permission of a court 
of competent jurisdiction.
6(c) Communications With a Consumer--After Refusal To Pay or Cease 
Communication Notice
    FDCPA section 805(c) provides that, subject to certain exceptions, 
if a consumer notifies a debt collector in writing that the consumer 
refuses to pay a debt or that the consumer wishes the debt collector to 
cease further communication with the consumer, the debt collector shall 
not communicate further with the consumer with respect to such 
debt.\222\ The Bureau proposed Sec.  1006.6(c) to implement and 
interpret FDCPA section 805(c) and pursuant to the Bureau's authority 
under FDCPA section 814(d) to prescribe rules with respect to the 
collection of debts by debt collectors. For the reasons discussed 
below, the Bureau is finalizing Sec.  1006.6(c) largely as proposed.
---------------------------------------------------------------------------

    \222\ 15 U.S.C. 1692c(c). For ease of reference, through this 
section-by-section analysis, the Bureau refers to this as the 
FDCPA's ``cease communication'' provision, and to a consumer's 
notification that the consumer refuses to pay a debt or wishes the 
debt collector to cease further communication with the consumer as a 
consumer's ``cease communication request.''
---------------------------------------------------------------------------

6(c)(1) Prohibition
    The Bureau proposed Sec.  1006.6(c)(1) to implement FDCPA section 
805(c)'s cease communication provision and generally restate the 
statute, with only minor changes for clarity. Proposed Sec.  
1006.6(c)(1) stated that, except as provided in proposed Sec.  
1006.6(c)(2), a debt collector must not communicate or attempt to 
communicate further with a consumer with respect to a debt if the 
consumer notifies the debt collector in writing that: (i) The consumer 
refuses to pay the debt; or (ii) the consumer wants the debt collector 
to cease further communication with the consumer.\223\ For the reasons 
discussed below, the Bureau is finalizing Sec.  1006.6(c)(1) largely as 
proposed, with non-

[[Page 76772]]

substantive revisions to more closely mirror the statutory language.
---------------------------------------------------------------------------

    \223\ 84 FR 23274, 23298 (May 21, 2019). For the same reasons 
that Sec.  1006.6(b) prohibits debt collectors from attempting to 
communicate with consumers if FDCPA section 805(a) prohibits 
communications with consumers, Sec.  1006.6(c) interprets FDCPA 
sections 806 and 808 to prohibit a debt collector from attempting to 
communicate with a consumer if FDCPA section 805(c) prohibits the 
debt collector from communicating with the consumer.
---------------------------------------------------------------------------

    Many consumers commented that a debt collector should be required 
to obey a consumer's oral request that the debt collector stop calling. 
Consistent with these consumer comments, one commenter that represents 
consumers cited a survey by a consumer advocate suggesting that the 
majority of consumers that asked a debt collector to stop calling were 
subsequently contacted by the debt collector. This commenter also 
suggested that the Bureau should require debt collectors to obey 
consumers' oral requests to stop calling.
    A group of consumer advocates generally agreed that a debt 
collector should be required to stop contacting a consumer upon the 
consumer's oral request at any time. Other groups of consumer advocates 
requested that the Bureau clarify that ``stop calling'' requests can be 
made orally and should apply to all calls from a debt collector, unless 
a consumer asks to stop calls to one telephone number only. Some 
consumer advocates suggested that a consumer's oral request that the 
debt collector simply ``stop calling'' or a text message to the debt 
collector to ``stop'' should require the debt collector to discontinue 
contact with the consumer. One consumer advocate explained that, 
particularly for vulnerable consumers who may have limited literacy or 
language proficiency, making a request in writing can be burdensome.
    FDCPA section 805(c) states that, if a consumer notifies a debt 
collector in writing that the consumer refuses to pay a debt or that 
the consumer wishes the debt collector to cease further communication 
with the consumer, the debt collector shall not communicate further 
with the consumer with respect to such debt unless certain exceptions 
apply. Because the writing requirement proposed in Sec.  1006.6(c)(1) 
was intended to implement the language in FDCPA section 805(c) that a 
consumer notify a debt collector in writing, the Bureau is finalizing 
it as proposed.
    As part of this final rule, however, the Bureau also is finalizing 
Sec.  1006.14(h)(1), which prohibits a debt collector from 
communicating or attempting to communicate with a person through a 
medium of communication if the person has requested that the debt 
collector not use that medium to communicate with the person.\224\ 
Therefore, even if a consumer does not notify a debt collector in 
writing that the consumer refuses to pay a debt or wishes the debt 
collector to cease further communication with the consumer as required 
under Sec.  1006.6(c)(1), the consumer's oral request that the debt 
collector ``stop calling,'' for example, would constitute a request 
that the debt collector not use that medium of communication (e.g., 
telephone calls) to communicate with the consumer, and, consistent with 
Sec.  1006.14(h)(1), the debt collector would thereafter be prohibited 
from placing telephone calls to the consumer.
---------------------------------------------------------------------------

    \224\ This prohibition and its exceptions are explained in 
detail in the section-by-section analysis of Sec.  1006.14(h).
---------------------------------------------------------------------------

    The Bureau proposed comment 6(c)(1)-1 to implement FDCPA section 
805(c)'s provision that, if the consumer's cease communication request 
is made by mail, the notification is complete upon receipt by the debt 
collector.\225\ The Bureau proposed to apply this standard to all 
written or electronic forms of a consumer's cease communication 
request. Proposed comment 6(c)(1)-1 thus provided that if, pursuant to 
Sec.  1006.6(c)(1), a consumer notifies a debt collector in writing or 
electronically using a medium of electronic communication through which 
a debt collector accepts electronic communications from consumers that 
the consumer either refuses to pay a debt or wants the debt collector 
to cease further communication with the consumer, notification is 
complete upon the debt collector's receipt of that information.\226\
---------------------------------------------------------------------------

    \225\ 15 U.S.C. 1692c(c).
    \226\ The Bureau proposed this clarification on the basis that 
FDCPA section 805(c) does not state that only mail notifications are 
complete upon receipt, but rather leaves ambiguous when other forms 
of notification are complete and, regardless of the medium, it may 
not be reasonable to consider a debt collector to have been notified 
before the debt collector has received a consumer's cease 
communication request. 84 FR 23274, 23298 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau requested comment on whether a debt collector should be 
afforded a certain period of time to update its systems to reflect a 
consumer's cease communication request even after the notification is 
received, and, if so, how long. One academic commenter opposed, without 
explanation, the creation of any grace period for a debt collector to 
update records when a consumer sends a cease communication request.
    Industry commenters generally supported affording a debt collector 
a certain period of time to update its systems to reflect a consumer's 
cease communication request, though they differed in their specific 
recommendations. One trade group commenter suggested no less than two 
business days, because the immediacy of electronic communications makes 
it commercially impractical for debt collectors to update their records 
and comply with a consumer's cease communication request in real time. 
One industry commenter suggested that, for notification by letter, 
email, or text message, a timeframe of 72 hours from the next business 
day that the notification was received should be given, while another 
industry commenter suggested three business days from the date of 
receipt. Similarly, one trade group commenter suggested that a debt 
collector is deemed to have notice three days after receipt of the 
request. One trade group commenter suggested that, because electronic 
communications may be filtered and quarantined before actually being 
released into the debt collector's virtual environment, a certain 
amount of time, for example, a three-to-five-day grace period, should 
be afforded a debt collector to ``receive'' the electronic cease 
communication request and update its internal reporting systems to 
reflect it. Two industry commenters suggested that debt collectors 
should be required to send an acknowledgement and acceptance 
correspondence to the consumer within five days of receipt of a cease 
communication request. Another industry commenter suggested that, 
consistent with the CAN-SPAM Act of 2003,\227\ the Bureau should adopt 
a ten-business day safe harbor given debt collectors' legitimate 
business and operational reasons. One industry commenter suggested that 
cease communication requests should be treated as received upon 
processing, as long as the debt collector has reasonable procedures for 
processing them.
---------------------------------------------------------------------------

    \227\ 15 U.S.C. 7701 et seq.
---------------------------------------------------------------------------

    The Bureau recognizes that any maximum period of time afforded a 
debt collector to update its systems to reflect a cease communication 
request must be short enough to protect consumers from unwanted 
communications, but long enough for compliance to be practical. Given 
the disparate periods of time suggested by commenters and the different 
methods by which a written or electronic cease communication request 
may be made by a consumer, this final rule does not specify the period 
of time afforded a debt collector to update its systems to reflect a 
cease communication request. However, depending upon the circumstances, 
FDCPA section 813(c)'s bona fide error defense to civil liability may 
apply if, notwithstanding the maintenance of procedures reasonably 
adapted to avoid any such error, a debt collector communicates or 
attempts to communicate with a consumer after

[[Page 76773]]

receiving, but before processing, a cease communication request. For 
example, if a debt collector who schedules an email message to be sent 
to a consumer subsequently receives a cease communication request by 
email but sends the previously scheduled email message to the consumer 
before the request can be processed (notwithstanding the maintenance of 
procedures to avoid such an error), the debt collector may be entitled 
to a bona fide error defense to civil liability under FDCPA section 
813(c).\228\
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    \228\ A number of courts have considered a debt collector's 
assertion of a bona fide error defense under such circumstances. 
See, e.g., Webster v. ACB Receivables Mgmt., Inc., 15 F. Supp. 3d 
619, 629 (D. Md. 2014) (holding debt collector not entitled to bona 
fide error defense where employees' communications with consumer 
after cease communication notification constituted good-faith human 
errors, but where debt collector failed to present any evidence of 
redundancy or safeguards in its policies and procedures to prevent 
such human errors); Smith v. Transworld Sys., Inc., 953 F.2d 1025, 
1036 (6th Cir. 1992) (holding debt collector's letter mailed shortly 
after receiving consumer's cease communication notification 
constituted bona fide error given debt collector's procedures, 
including a five-page instruction manual describing collection 
procedures, were reasonably adapted to avoid any such error); 
Carrigan v. Cent. Adjustment Bureau, Inc., 494 F. Supp. 824, 827 
(N.D. Ga. 1980) (assuming debt collector's violation of FDCPA 
section 805(c) was unintentional, denying debt collector bona fide 
error defense where debt collector failed to provide any evidence it 
maintained proper procedures governing handling mail and where error 
of being unaware of consumer's cease communication letter led to 
calling consumer).
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing comment 
6(c)(1)-1 as proposed, and including a new example in comment 6(c)(1)-
1.i to illustrate a consumer's cease communication request made by mail 
being complete upon receipt by a debt collector.
    The Bureau proposed comment 6(c)(1)-2 to codify its interpretation 
of the E-SIGN Act enabling a consumer to satisfy, through an electronic 
request, FDCPA section 805(c)'s requirement that the consumer's 
notification be in writing. The Bureau proposed to interpret the 
applicability of the E-SIGN Act to a consumer electronically notifying 
a debt collector that the consumer refuses to pay a debt or wants the 
debt collector to cease further communication with the consumer.\229\ 
For the reasons stated below, the Bureau is finalizing comment 6(c)(1)-
2 as proposed.
---------------------------------------------------------------------------

    \229\ Section 104(b)(1)(A) of the E-SIGN Act provides authority 
for a Federal regulatory agency with rulemaking authority under a 
statute to interpret section 101 of the E-SIGN Act with respect to 
that statute by regulation. 15 U.S.C. 7004(b)(1)(A).
---------------------------------------------------------------------------

    A group of consumer advocates supported proposed comment 6(c)(1)-2 
as entirely consistent with the E-SIGN Act and stated that the Bureau's 
interpretation will make it easier for consumers to access the 
protections of Sec.  1006.6(c). One local government commenter 
supported the Bureau's proposal to interpret the writing requirement in 
FDCPA section 805(c) to include email messages but expressed concern 
with the proposed approach that a debt collector would be required to 
give legal effect to a consumer's notification submitted electronically 
only if the debt collector generally chose to accept electronic 
communications from consumers. The commenter suggested that the Bureau 
require a debt collector to accept email communications from a consumer 
regarding communication preferences. Another local government commenter 
requested that the Bureau mandate that consumers be permitted to make 
cease communication requests using any communication medium that the 
debt collector either has used to communicate with the consumer or has 
invited the consumer to use to communicate with the debt collector. 
This commenter stated that a cease communication request submitted by 
email, text message, or through a debt collector's website should be 
treated as a written communication for purposes of Sec.  1006.6(c)(1).
    The E-SIGN Act could affect whether a consumer satisfies the 
requirement in FDCPA section 805(c) that a cease communication request 
be ``in writing.'' Section 101(a)(1) of the E-SIGN Act generally 
provides that a record relating to a transaction in or affecting 
interstate or foreign commerce may not be denied legal effect, 
validity, or enforceability solely because it is in electronic 
form.\230\ However, section 101(b)(2) of the E-SIGN Act does not 
require any person to agree to use or accept electronic records or 
electronic signatures, other than a governmental agency with respect to 
a record other than a contract to which it is a party.\231\ Section 
104(b)(1)(A) of the E-SIGN Act provides authority for a Federal agency 
with rulemaking authority under a statute to interpret by regulation 
the application of E-SIGN Act section 101 to that statute.\232\
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    \230\ 15 U.S.C. 7001(a)(1).
    \231\ 15 U.S.C. 7001(b)(2).
    \232\ 15 U.S.C. 7004(b)(1)(A).
---------------------------------------------------------------------------

    The Bureau interprets the applicability of the E-SIGN Act as it 
relates to FDCPA section 805(c)'s requirement that a cease 
communication request be in writing. Specifically, the Bureau 
interprets FDCPA section 805(c)'s writing requirement as being 
satisfied when a consumer makes a cease communication request using a 
medium of electronic communication through which a debt collector 
accepts electronic communications from consumers, such as email 
messages or a website portal.\233\ Thus, consistent with the Bureau's 
interpretation of the E-SIGN Act, pursuant to Sec.  1006.6(c)(1), a 
debt collector is required to give legal effect to a consumer's 
electronic cease communication request if the debt collector generally 
accepts electronic communications from consumers. The Bureau adopts 
this interpretation to harmonize FDCPA section 805(c)'s writing 
requirement with the E-SIGN Act. Additionally, because the consumer may 
only use a medium of electronic communication through which a debt 
collector accepts electronic communications from consumers, section 
101(b) of the E-SIGN Act is not contravened.
---------------------------------------------------------------------------

    \233\ This interpretation is responsive to comments recommending 
that, if a debt collector makes an electronic means of communication 
available to consumers, electronic communications received from 
consumers through that channel should trigger the debt collector's 
obligations under FDCPA section 809(b).
---------------------------------------------------------------------------

    One trade group commenter suggested that the Bureau permit a debt 
collector to require a consumer to send an electronic cease 
communication request only to portals and email addresses designated by 
the debt collector. A group of consumer advocates requested the Bureau 
to clarify that a debt collector should be deemed to accept electronic 
cease communication requests from consumers through any non-public-
facing medium listed on the debt collector's website or listed in any 
of the debt collector's outgoing communications to consumers.
    Nothing in Sec.  1006.6(c)(1) prohibits a debt collector from 
requesting a consumer to send an electronic cease communication request 
through online portals or to email addresses designated by the debt 
collector. As debt collectors likely already do for cease communication 
requests received by mail, debt collectors should maintain procedures 
reasonably adapted to avoid any errors in receiving such requests 
electronically. The final rule's prohibitions on harassing, deceptive, 
and unfair practices in Sec. Sec.  1006.14, 1006.18, and 1006.22 may 
address many of the harms that commenters may have been concerned with, 
such as a debt collector intentionally ignoring a consumer's cease 
communication request received through an online portal or to an email 
address not designated by the debt collector for receiving such 
notifications.

[[Page 76774]]

    One commenter asked what a debt collector should do if the debt 
collector receives a cease communication request after communicating 
with a consumer but before providing the consumer a validation notice 
pursuant to FDCPA section 809(a).\234\ As the commenter explained, 
FDCPA section 809(a) generally requires a debt collector to send a 
consumer a validation notice within five days after the initial 
communication with the consumer (unless the validation was provided in 
the initial communication), and it is unclear what the debt collector 
should do if the consumer asks to cease communication before the 
validation notice is sent. To the extent any conflict exists between 
FDCPA sections 805(c) and 809(a), the Bureau notes that the conflict is 
statutory and not a result of this final rule. Nevertheless, the Bureau 
believes that such circumstances may be rare in practice because many 
debt collectors provide the validation notice in the initial 
communication as permitted under FDCPA section 809(a). And, to the 
extent that the validation notice is not provided in the initial 
communication, many validation notices will have been prepared for 
sending or sent before a debt collector receives and processes any such 
cease communication request.\235\ The Bureau is not aware of any such 
conflict causing significant issues or consumer harms at this time. 
Accordingly, the Bureau will monitor this issue for any potential 
consumer harm or compliance concerns and revisit at a later time if 
needed.
---------------------------------------------------------------------------

    \234\ The Bureau proposed to implement FDCPA section 809(a) in 
Sec.  1006.34. As discussed in the section-by-section analysis of 
Sec.  1006.34, the Bureau intends to finalize that section in a 
disclosure-focused final rule addressing the validation notice.
    \235\ As discussed above, a debt collector who, notwithstanding 
the maintenance of procedures reasonably adapted to avoid any such 
error, communicates or attempts to communicate with a consumer after 
receiving, but before processing, a consumer's cease communication 
request pursuant to Sec.  1006.6(c)(1) may have a bona fide error 
defense to civil liability under FDCPA section 813(c).
---------------------------------------------------------------------------

6(c)(2) Exceptions
    FDCPA section 805(c) provides exceptions to the cease communication 
provision. The exceptions allow a debt collector to communicate with a 
consumer even after a cease communication request: (1) To advise the 
consumer that the debt collector's further efforts are being 
terminated; (2) to notify the consumer that the debt collector or 
creditor may invoke specified remedies which are ordinarily invoked by 
such debt collector or creditor; or (3) where applicable, to notify the 
consumer that the debt collector or creditor intends to invoke a 
specified remedy.\236\ The Bureau proposed Sec.  1006.6(c)(2) to 
implement these exceptions and generally restate the statute, with only 
minor changes for clarity. The Bureau proposed comment 6(c)(2)-1 to 
clarify that, consistent with the 2016 Servicing Final Rule \237\ and 
the concurrently issued 2016 FDCPA Interpretive Rule,\238\ the Bureau 
interprets the written early intervention notice required under 
Regulation X \239\ as falling within the cease communication exceptions 
in FDCPA section 805(c)(2) and (3) (proposed as Sec.  1006.6(c)(2)(ii) 
and (iii)).\240\
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    \236\ 15 U.S.C. 1692c(c)(1)-(3).
    \237\ 81 FR 72160 (Oct. 19, 2016).
    \238\ 81 FR 71977, 72233-38 (Oct. 19, 2016).
    \239\ 12 CFR 1024.39(d)(3).
    \240\ 84 FR 23274, 23298-99 (May 21, 2019).
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    The Bureau received no comments on proposed Sec.  1006.6(c)(2) or 
on proposed comment 6(c)(2)-1 and therefore is finalizing them as 
proposed, with minor non-substantive edits. Relatedly, one industry 
commenter requested that the Bureau clarify whether periodic statements 
for residential mortgage loans required under Regulation Z, 12 CFR 
1026.41(a) are exempt under FDCPA section 805(c)(2) and (3). The Bureau 
previously addressed this question in its 2013 bulletin providing 
implementation guidance for certain mortgage servicing rules,\241\ in 
which the Bureau determined that, notwithstanding a consumer's cease 
communication request, a mortgage servicer who is subject to the FDCPA 
with respect to a mortgage loan would not be liable under the FDCPA for 
complying with certain servicing rule provisions, including 
requirements to provide a borrower with disclosures regarding the 
forced placement of hazard insurance,\242\ a disclosure regarding an 
adjustable-rate mortgage's initial interest rate adjustment,\243\ and a 
periodic statement for each billing cycle.\244\ The Bureau explained 
that these disclosures are specifically mandated by the Dodd-Frank 
Act,\245\ which makes no mention of their potential cessation under the 
FDCPA and presents a more recent and specific statement of legislative 
intent regarding these disclosures than does the FDCPA. The Bureau also 
explained that these notices provide useful information to consumers 
regardless of their collection status. The Bureau is adopting this 
relevant guidance in new comment 6(c)(2)-2 for mortgage servicers 
subject to the FDCPA with respect to a mortgage loan.
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    \241\ CFPB Bulletin 2013-12, at 7 (Oct. 15, 2013), https://files.consumerfinance.gov/f/201310_cfpb_mortgage-servicing_bulletin.pdf.
    \242\ 12 CFR 1024.37.
    \243\ 12 CFR 1026.20(d).
    \244\ 12 CFR 1026.41.
    \245\ Dodd-Frank Act sections 1418 (ARM initial interest rate 
adjustment), 1420 (periodic statements), and 1463 (force-placed 
insurance).
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6(d) Communications With Third Parties
    FDCPA section 805(b) prohibits a debt collector from communicating, 
in connection with the collection of any debt, with any person other 
than the consumer \246\ or certain other persons.\247\ FDCPA section 
805(b) also identifies certain exceptions to this prohibition. The 
Bureau proposed Sec.  1006.6(d)(1) and (2), respectively, to implement 
FDCPA section 805(b)'s general prohibition against communicating with 
third parties and the exceptions to that prohibition. Additionally, the 
Bureau proposed Sec.  1006.6(d)(3) to specify, for purposes of FDCPA 
section 813(c), procedures that are reasonably adapted to avoid an 
error in sending an email or text message that would result in a 
violation of FDCPA section 805(b). The Bureau proposed Sec.  1006.6(d) 
pursuant to its authority under FDCPA section 814(d) to write rules 
with respect to the collection of debts by debt collectors.
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    \246\ The Bureau implements the term consumer as used in section 
805(b) in Sec.  1006.6(a).
    \247\ 15 U.S.C. 1692c(b). Specifically, FDCPA section 805(b) 
prohibits communicating with any person other than the consumer, the 
consumer's attorney, a consumer reporting agency if otherwise 
permitted by law, the creditor, the creditor's attorney, or the debt 
collector's attorney.
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6(d)(1) Prohibitions
    With limited exceptions, FDCPA section 805(b) prohibits a debt 
collector from communicating, in connection with the collection of any 
debt, with any person other than the consumer (as defined in FDCPA 
section 805(d)) or certain other persons. The Bureau proposed Sec.  
1006.6(d)(1) to implement FDCPA section 805(b) and generally restate 
the statute, with minor wording and organizational changes for 
clarity.\248\ For the reasons discussed below, the Bureau is finalizing 
Sec.  1006.6(d)(1) as proposed.
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    \248\ 84 FR 23274, 23299 (May 21, 2019).
---------------------------------------------------------------------------

    One consumer advocate requested that, to protect consumers' privacy 
across all forms of communication, the Bureau ban debt collectors from 
communicating with third parties without the consumer's written 
consent. The Bureau declines to adopt such an approach. FDCPA section 
805(b) contemplates a debt collector communicating with third parties 
subject to the prior consent of the consumer given directly to the debt

[[Page 76775]]

collector but does not require that the consumer effectuate that prior 
consent in writing.
    One industry commenter requested the Bureau clarify what 
constitutes a third party. This commenter explained that a debt 
collector frequently must speak with a consumer's insurance company or 
a State victim assistance program to verify enrollment, and that such a 
third-party communication is intended to benefit the consumer and 
should therefore be considered permissible by the Bureau.
    FDCPA section 805(b) specifically delineates the following persons 
with whom a debt collector may communicate without violating the 
prohibition on communication with third parties: The consumer, the 
consumer's attorney, a consumer reporting agency if otherwise permitted 
by law, the creditor, the attorney of the creditor, or the attorney of 
the debt collector. If a debt collector needs to communicate with any 
other person in connection with the collection of any debt, FDCPA 
section 805(b) provides an exception, as discussed below,\249\ 
permitting the debt collector to do so with the prior consent of the 
consumer given directly to the debt collector. Therefore, to the extent 
a debt collector needs to speak with persons other than those listed in 
FDCPA section 805(b) and implemented in Sec.  1006.6(d)(1) of this 
final rule, certain exceptions may apply permitting the debt collector 
to do so.
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    \249\ This exception is implemented in Sec.  1006.6(d)(2) as 
discussed further in the section-by-section analysis below. See the 
section-by-section analysis of Sec.  1006.6(d)(2).
---------------------------------------------------------------------------

    One industry commenter suggested that the Bureau adopt a safe 
harbor for inadvertent communications with a third party, such as if a 
third party hears a debt collector's voicemail message left on an 
answering machine. This commenter suggested that, if the debt collector 
discloses the third-party communication to the consumer and stops 
future communications with that third party, the debt collector should 
not be liable for the disclosure.
    Federal government agency staff and some courts have found that 
debt collectors do not violate the FDCPA's prohibition on third-party 
disclosures unless they have reason to anticipate that the 
communication may be heard or read by third parties.\250\ As the FTC 
previously explained, ``[a] debt collector does not violate [FDCPA 
section 805(b)] when an eavesdropper overhears a conversation with the 
consumer, unless the debt collector has reason to anticipate the 
conversation will be overheard.'' \251\ As discussed in detail below, 
the Bureau is finalizing procedures in Sec.  1006.6(d)(3) through (5) 
that are designed to ensure that a debt collector who uses a specific 
email address or telephone number to communicate with a consumer by 
email or text message does not have a reason to anticipate that an 
unauthorized third-party disclosure may occur.\252\ In other 
situations, unless the debt collector has reason to anticipate that the 
communication may be heard or read by third parties, a debt collector 
who unintentionally communicates with a third party may be able to 
raise a bona fide error defense to civil liability under FDCPA section 
813.
---------------------------------------------------------------------------

    \250\ See, e.g., Berg v. Merchants Ass'n Collection Div., Inc., 
586 F. Supp. 2d 1336, 1342, 1345 (S.D. Fla. 2008); Peak v. Prof'l 
Credit Serv., No. 6:14-cv-01856-AA, 2015 WL 7862774, at *5-6 (D. Or. 
Dec. 2, 2015); Chlanda v. Wymard, No. C-3-93-321, 1995 WL 17917574, 
at *2 (S.D. Ohio Sept. 5, 1995).
    \251\ Statements of General Policy or Interpretation: Staff 
Commentary on the FDCPA, 53 FR 50097, 50104 (Dec. 13, 1988).
    \252\ See the section-by-section analysis of Sec.  1006.6(d)(3).
---------------------------------------------------------------------------

    One State government commenter suggested that, for active service 
members, debt collectors often call the member's commanding officer to 
inform the supervisor about the outstanding debt. The commenter 
requested that the rule be revised to prohibit such violations of 
consumer privacy and job security. Unless the consumer has provided 
consent for such communications directly to the debt collector or 
another exception in Sec.  1006.6(d)(2) applies, such conduct already 
is prohibited by FDCPA section 805(b) and will be prohibited by Sec.  
1006.6(d)(1).
    For the reasons stated above, the Bureau is finalizing Sec.  
1006.6(d)(1) as proposed to provide that, except as provided in Sec.  
1006.6(d)(2), a debt collector must not communicate, in connection with 
the collection of any debt, with any person other than: The consumer 
(as defined in Sec.  1006.6(a)); the consumer's attorney; a consumer 
reporting agency, if otherwise permitted by law; the creditor; the 
creditor's attorney; or the debt collector's attorney.
    Proposed comment 6(d)(1)-1 explained that, because a limited-
content message is not a communication, a debt collector does not 
violate Sec.  1006.6(d)(1) if the debt collector leaves a limited-
content message for a consumer orally with a third party who answers 
the consumer's home or mobile telephone. As discussed in the section-
by-section analysis of Sec.  1006.2(j), the Bureau is declining to 
finalize a definition of limited-content message that allows for such 
third-party limited-content messages. Accordingly, the Bureau is not 
adopting proposed comment 6(d)(1)-1.
6(d)(2) Exceptions
    FDCPA section 805(b) specifies exceptions to the general 
prohibition against a debt collector communicating with third parties, 
including that a debt collector may engage in an otherwise prohibited 
communication with the prior consent of the consumer given directly to 
the debt collector. The Bureau proposed Sec.  1006.6(d)(2) to implement 
the exceptions in FDCPA section 805(b) and generally restate the 
statute, with minor wording and organizational changes for 
clarity.\253\ In relevant part, proposed Sec.  1006.6(d)(2)(ii) would 
have implemented the statutory exception permitting third-party 
communications with a person when the debt collector has received prior 
consent directly from the consumer for such communications.
---------------------------------------------------------------------------

    \253\ 84 FR 23274, 23299 (May 21, 2019).
---------------------------------------------------------------------------

    One industry commenter suggested that the Bureau clarify that prior 
consent under proposed Sec.  1006.6(d)(2)(ii) includes consent the 
consumer gives to a third party to discuss debts with a debt collector. 
This commenter explained that, in some cases, a debt collector may 
receive from a debt settlement company an authorization signed by a 
consumer permitting the debt collector to communicate about a debt with 
the debt settlement company.
    The Bureau declines to clarify the prior consent exception as 
requested because the scenario posed by the commenter will depend upon 
the specific facts and circumstances as to whether the consent provided 
satisfies Sec.  1006.6(d)(2)(ii). The Bureau therefore is finalizing 
Sec.  1006.6(d)(2) as proposed to provide that the prohibition in Sec.  
1006.6(d)(1) does not apply when a debt collector communicates, in 
connection with the collection of any debt, with a person: (i) For the 
purpose of acquiring location information, as provided in Sec.  
1006.10; (ii) with the prior consent of the consumer given directly to 
the debt collector; (iii) with the express permission of a court of 
competent jurisdiction; or (iv) as reasonably necessary to effectuate a 
postjudgment judicial remedy.
    The Bureau proposed comment 6(d)(2)-1 to refer to the commentary to 
proposed Sec.  1006.6(b)(4)(i) for guidance concerning a consumer 
giving prior consent directly to a debt collector. The Bureau received 
no comments on

[[Page 76776]]

comment 6(d)(2)-1 and is finalizing it as proposed.
6(d)(3) Reasonable Procedures for Email and Text Message Communications
    Proposed Sec.  1006.6(d)(3) identified procedures reasonably 
adapted to avoid a violation of FDCPA section 805(b)'s prohibition on 
third-party disclosures when communicating by email or text 
message.\254\ A debt collector who sent an email or text message in 
accordance with the proposed procedures would have been entitled to a 
bona fide error defense to civil liability under FDCPA section 813(c) 
in the event of an unintentional third-party disclosure.\255\
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    \254\ See 15 U.S.C. 1692c(b); 84 FR 23274, 23299-04 (May 21, 
2019).
    \255\ 15 U.S.C. 1692k(c) (providing that a debt collector may 
not be held liable in any action brought under the FDCPA if the debt 
collector shows by a preponderance of the evidence that the 
violation was not intentional, that it resulted from a bona fide 
error, and that it occurred even though the debt collector 
maintained procedures reasonably adapted to avoid the error). As 
explained in the proposal, the Bureau reasoned that a debt collector 
who communicated by email or text message in compliance with the 
proposed procedures would not have reason to anticipate a prohibited 
third-party disclosure. See 84 FR 23274, 23300 (May 21, 2019).
---------------------------------------------------------------------------

    Specifically, the Bureau proposed Sec.  1006.6(d)(3) to provide a 
debt collector with a safe harbor from civil liability \256\ for an 
unintentional third-party disclosure if, when communicating with a 
consumer using an email address or, in the case of a text message, a 
telephone number, the debt collector's procedures included steps to 
reasonably confirm and document that the debt collector: (1) Obtained 
and used the email address or telephone number in accordance with one 
of the methods described in proposed Sec.  1006.6(d)(3)(i); and (2) 
took additional steps, in accordance with proposed Sec.  
1006.6(d)(3)(ii), to prevent communications using an email address or 
telephone number that the debt collector knew had led to an 
unauthorized third-party disclosure. Proposed Sec.  1006.6(d)(3)(i)(A) 
through (C) described three methods of obtaining and using an email 
address or telephone number for text messages, none of which would have 
required a debt collector to obtain a consumer's direct prior consent 
(or ``opt in'') before communicating by email or text message. As 
discussed throughout the section-by-section analysis of Sec.  
1006.6(d)(3) through (5), and pursuant to its authority under FDCPA 
section 814(d) to implement and interpret FDCPA sections 805(b) and 
813(c), the Bureau is finalizing some portions of proposed Sec.  
1006.6(d)(3), and reorganizing and modifying others, as final Sec.  
1006.6(d)(3) through (5).
---------------------------------------------------------------------------

    \256\ See note 6, supra, explaining the Bureau's use of the 
phrase ``safe harbor from civil liability'' throughout this Notice 
when discussing the effect of following the procedures in Sec.  
1006.6(d)(3) through (5).
---------------------------------------------------------------------------

    The Bureau received a large number of comments in response to 
proposed Sec.  1006.6(d)(3), including thousands of comments from 
individual consumers, as well as comments from consumer advocates, 
creditors, debt collectors, trade associations, some members of 
Congress, State Attorneys General, local governments, and academics. 
Many commenters addressed specific aspects of proposed Sec.  
1006.6(d)(3); these comments are addressed where relevant in the 
section-by-section analysis of final Sec.  1006.6(d)(3) through (5). 
Immediately below, the Bureau addresses the large number of comments 
that it received regarding the general operation of proposed Sec.  
1006.6(d)(3).
Risk of Consumer Harm Posed by Third-Party Disclosures
    The Bureau received multiple comments regarding the general risks 
to consumers of third-party disclosures from electronic communications. 
Consumer and consumer advocate commenters argued that the reassignment 
of telephone numbers,\257\ and the sharing of email accounts and 
telephone numbers between family members, increase the risk that a debt 
collector who sends an email or text message will disclose sensitive 
debt collection information to a third party not authorized to receive 
it. Moreover, some commenters noted, emails and text messages may be 
viewable by a consumer's email or telephone provider or appear on a 
publicly visible screen, such as when a consumer accesses email at the 
library. Several consumer advocate commenters stated that third-party 
disclosures could cause consumers to suffer reputational damage; 
increased risk of identity theft; and shame and other emotional pain, 
particularly when the third party to whom the disclosure is made is an 
employer, family member, or friend.
---------------------------------------------------------------------------

    \257\ According to a 2018 FCC notice of proposed rulemaking, 
nearly 35 million telephone numbers are disconnected and made 
available for reassignment each year. Advanced Methods to Target and 
Eliminate Unlawful Robocalls, 83 FR 17631, 17632 (Apr. 23, 2018) 
(``Consumers disconnect their old numbers and change to new 
telephone numbers for a variety of reasons, including switching 
wireless providers without porting numbers and getting new wireline 
telephone numbers when they move.'').
---------------------------------------------------------------------------

    One industry commenter characterized email and text message 
communications as posing no more third-party disclosure risk than 
traditional mail and telephone communications. This commenter asserted 
that there is little third-party disclosure risk when a debt collector 
emails a consumer's current or former personal email address because, 
unlike telephone numbers, email addresses are rarely reassigned. 
Although the commenter conceded that the reassignment of telephone 
numbers increases the risk of third-party disclosure when debt 
collectors send text messages, the commenter asserted that, because 
consumers regularly change home addresses, the same degree of risk is 
present when a debt collector mails information to a consumer's last 
known address. Further, the commenter argued, any third-party 
disclosure risk that exists when a third party accesses a consumer's 
email account or sees an email or text message on a publicly visible 
screen is entirely within the consumer's control.
    The Bureau recognizes that electronic communications in debt 
collection offer benefits to consumers and debt collectors. The Bureau 
also recognizes that electronic communications pose a risk of third-
party disclosure, such as when a debt collector sends a text message to 
a telephone number that no longer belongs to the consumer, and, for 
some consumers, such a disclosure may cause harm. However, the Bureau 
emphasizes that there is no empirical data in the rulemaking record 
demonstrating whether and to what extent the privacy risks from 
electronic communications in debt collection are greater than, the same 
as, or less than those associated with non-electronic communications in 
debt collection. In finalizing the procedures in Sec.  1006.6(d)(3) 
through (5), the Bureau has considered the benefits and risks of 
electronic communications based on the information in the rulemaking 
record.\258\
---------------------------------------------------------------------------

    \258\ Section 1006.6(d)(3) through (5) addresses the risk of 
third-party disclosure posed by electronic communications. Other 
risks posed by electronic communications, such as the potential that 
debt collectors may use them in harassing ways, are addressed in 
other provisions of the final rule, including Sec.  1006.6(e) and 
Sec.  1006.14(a).
---------------------------------------------------------------------------

Reason-To-Anticipate Standard
    A few commenters addressed the Bureau's proposal to design the 
procedures in proposed Sec.  1006.6(d)(3) so that a debt collector who 
uses them does not have reason to anticipate a third-party 
disclosure.\259\ A consumer advocate commenter opposed the reason-to-
anticipate standard, noting that consumers can be harmed even by

[[Page 76777]]

unforeseeable disclosures. An industry commenter supported the 
standard, arguing that debt collectors should not be penalized for 
third-party disclosures they had no reason to anticipate, particularly 
when the circumstances giving rise to a disclosure, such as a third 
party's access to the consumer's email account or telephone, are out of 
the debt collector's control.
---------------------------------------------------------------------------

    \259\ See 84 FR 23274, 23300 n.238 (May 21, 2019) (citing FTC 
staff and court opinions finding that debt collectors do not violate 
FDCPA section 805(b) unless they have reason to anticipate that a 
disclosure may be heard or read by third parties).
---------------------------------------------------------------------------

    As in the proposal, the Bureau has designed the procedures in the 
final rule around the reason-to-anticipate standard. The reason-to-
anticipate standard recognizes that it is generally not possible for a 
debt collector to eliminate entirely the risk that a third party will 
see or hear a debt collection communication. The standard is therefore 
consistent with FDCPA section 813(c), which protects debt collectors 
who unintentionally violate the statute notwithstanding the use of 
reasonable procedures. FDCPA section 813(c), like the reason-to-
anticipate standard, generally recognizes that a debt collector acting 
in good faith pursuant to reasonable procedures should not be liable 
for errors (in this context, a third-party disclosure) that the debt 
collector did not intend and could not have foreseen.
Reasonably Confirm and Document
    An industry commenter asked the Bureau to clarify the proposed 
requirement that a debt collector's procedures include steps to 
reasonably confirm and document that the debt collector acted in 
accordance with proposed Sec.  1006.6(d)(3).\260\ Another industry 
commenter suggested that procedures to reasonably confirm and document 
compliance should include an audit component and asked the Bureau to 
publish sample procedures. Consumer and consumer advocate commenters 
generally did not address the proposed requirement to reasonably 
confirm and document compliance.
---------------------------------------------------------------------------

    \260\ See id. at 23301.
---------------------------------------------------------------------------

    The final rule retains the requirement that a debt collector's 
procedures include steps to reasonably confirm and document that the 
debt collector acted in accordance with Sec.  1006.6(d)(3). Depending 
on their size, the scope of their operations, and other business-
specific facts, different debt collectors may take different approaches 
to reasonably confirming and documenting compliance with Sec.  
1006.6(d)(3). The Bureau declines to specify by rule a single set of 
steps or elements that all procedures must or should include under 
Sec.  1006.6(d)(3). As the Bureau noted in the preamble to the 
proposal, however, procedures permitting a debt collector to use 
obviously incorrect email addresses merely because the addresses were 
obtained consistent with Sec.  1006.6(d)(3) would not satisfy the 
requirement to reasonably confirm and document compliance.\261\ In this 
circumstance, any purported confirmation of the debt collector's 
compliance with Sec.  1006.6(d)(3) would not be reasonable.
---------------------------------------------------------------------------

    \261\ See id. at 23300.
---------------------------------------------------------------------------

Scope of Procedures
    The procedures in proposed Sec.  1006.6(d)(3) would have applied 
only to a debt collector's email and text message communications.\262\ 
Two industry commenters requested that the Bureau clarify the term 
email. One did not propose a definition, while the other asked the 
Bureau to adopt an expansive definition that would include private 
communication tools offered by social media platforms. This commenter 
asserted that social media accounts, like email accounts, are password 
protected and generally not reassigned, and, as a result, direct 
messaging communications on social media should be treated the same as 
email communications. The commenter also stated that the definition of 
email should include mobile application or web-based technologies that 
allow consumers to initiate a live written conversation with a business 
through a ``chat box.''
---------------------------------------------------------------------------

    \262\ See id.
---------------------------------------------------------------------------

    A group of consumer advocate commenters asked the Bureau to clarify 
that the term email does not include direct messages, whether sent 
through social media platforms or free-standing messaging platforms. 
These commenters asserted that, on some direct messaging platforms, 
users search for each other by first and last name rather than by a 
distinct and individual user name, which increases the likelihood of 
misdirected messages, particularly among consumers with common names.
    In light of the apparent variations in direct messaging technology, 
the Bureau is unable to assess how well the procedures in final Sec.  
1006.6(d)(3) through (5) would address the risk of third-party 
disclosures in the direct messaging context. Therefore, for purposes of 
Sec.  1006.6(d)(3) through (5), the Bureau declines to define the term 
email to include direct messaging technology in mobile applications or 
on social media. Debt collectors may use these communication media, 
subject to the requirements and prohibitions of the FDCPA and the final 
rule.
    Multiple industry commenters advocated expanding the procedures in 
proposed Sec.  1006.6(d)(3), or developing new procedures, to cover 
additional communication technologies, such as smart phone 
notifications, ringless voicemails, and traditional telephone calls and 
voicemails. Each of these contexts may pose third-party disclosure 
risks that differ, in varying degrees, from the third-party disclosure 
risks posed by email and text message communications. Because the 
Bureau did not propose procedures related to other communications 
technologies, it lacks the benefit of public comment about what such 
procedures might look like.\263\ Developing procedures to cover such 
technologies is outside the scope of this rulemaking.
---------------------------------------------------------------------------

    \263\ See 84 FR 23274, 23300 (May 21, 2019) (``The procedures in 
proposed Sec.  1006.6(d)(3) address email and text message 
communications only. At this time, the Bureau does not propose 
procedures related to the use of less-developed and less-widespread 
forms of electronic communications because consumers do not appear 
accustomed to using such technologies in their financial lives.'').
---------------------------------------------------------------------------

    The Bureau reiterates, however, that the final rule identifies 
neither the only circumstances in which a debt collector may 
communicate with a consumer electronically nor the only technologies a 
debt collector may use to do so. Nor does it identify the only 
procedures that may be reasonably adapted to avoid a violation of the 
prohibition on third-party disclosures. Thus, a debt collector would 
not necessarily violate Sec.  1006.6(d)(1) or FDCPA section 805(b) by 
communicating with a consumer electronically other than by email or 
text message, or by email or text message without using the procedures 
in Sec.  1006.6(d)(3) through (5). Moreover, depending on the facts, a 
debt collector might be able to show by a preponderance of the evidence 
that any third-party disclosures were unintentional and that the debt 
collector employed procedures reasonably adapted to avoid them.
First-Party Debt Collectors
    Two credit union commenters asked the Bureau to clarify the rules 
for creditors' use of email and text messages. The procedures in Sec.  
1006.6(d)(3) through (5) apply to FDCPA debt collectors only. Creditors 
who are not FDCPA debt collectors are not subject to the FDCPA's 
prohibition on third-party disclosures, although they are covered by 
other consumer financial laws. To the extent commenters were requesting 
that the Bureau develop and finalize procedures applicable to 
creditors, such a request is outside the scope of this rulemaking.

[[Page 76778]]

Telephone Consumer Protection Act
    The Telephone Consumer Protection Act (TCPA) generally prohibits 
the use of automated dialing equipment to call a telephone number 
without a consumer's consent.\264\ A group of consumer advocate 
commenters asked the Bureau to clarify how the Bureau's procedures 
interact with the TCPA. Congress has vested the FCC--not the Bureau--
with authority to implement the TCPA.\265\ The final rule does not 
interpret the TCPA; nor does anything in the final rule alter any FCC 
rule or any obligation imposed on debt collectors by such a rule.
---------------------------------------------------------------------------

    \264\ See 47 U.S.C. 227; ACA Int'l v. Fed. Commc'ns Comm'n, 885 
F.3d 687 (D.C. Cir. 2018).
    \265\ See 47 U.S.C. 227(b)(2).
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.6(d)(3), which sets forth procedures that debt collectors may use 
to reduce their risk of civil liability for unintentional third-party 
disclosures when communicating with consumers by email or text message. 
In response to numerous comments regarding the details of the proposed 
procedures, and as discussed in detail below, the Bureau is finalizing 
procedures that differ substantively and organizationally from those 
that the Bureau proposed.\266\
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    \266\ The text of the introductory paragraph of final Sec.  
1006.6(d)(3) is largely the same as the text of the introductory 
paragraph of proposed Sec.  1006.6(d)(3), with technical edits for 
clarity.
---------------------------------------------------------------------------

6(d)(3)(i)
    As proposed, Sec.  1006.6(d)(3)(i) identified the first of two 
conditions that a debt collector would have had to satisfy to obtain a 
safe harbor from civil liability for an unintentional third-party 
disclosure when communicating by email or text message. Under proposed 
Sec.  1006.6(d)(3)(i), the debt collector's procedures would have had 
to include steps to reasonably confirm and document that the debt 
collector communicated using an email address, or telephone number for 
text messages, in accordance with one of the three methods described in 
proposed Sec.  1006.6(d)(3)(i)(A) through (C).
    As proposed, Sec.  1006.6(d)(3)(i)(A) through (C) provided a safe 
harbor if, among other things, the consumer had used the email address 
or telephone number to communicate with the debt collector (proposed 
Sec.  1006.6(d)(3)(i)(A), the ``consumer-use'' method); the consumer 
received notice and an opportunity to opt out of the debt collector's 
use of the email address or telephone number for text messages 
(proposed Sec.  1006.6(d)(3)(i)(B), the ``notice-and-opt-out'' method); 
or the creditor or a prior debt collector had obtained the email 
address or telephone number from the consumer and used it to 
communicate about the debt (proposed Sec.  1006.6(d)(3)(i)(C), the 
``creditor-or-prior-debt-collector-use'' method). As proposed, the 
methods in Sec.  1006.6(d)(3)(i)(A) through (C) did not distinguish 
between communications sent by email and communications sent by text 
message.
    Many commenters offered substantive feedback about the three 
methods of obtaining and using email addresses and telephone numbers 
described in proposed Sec.  1006.6(d)(3)(i)(A) through (C). Those 
comments are addressed where relevant in the section-by-section 
analysis of Sec.  1006.6(d)(4) and (5). Some commenters also 
highlighted the differences between email and text message 
communications, noting the unique third-party disclosure risks 
presented by the reassignment of mobile telephone numbers.
    After considering the public comments, the Bureau is, as proposed, 
finalizing Sec.  1006.6(d)(3)(i) to identify the first of two 
conditions that a debt collector must satisfy to obtain a safe harbor 
from civil liability for an unintentional third-party disclosure when 
communicating by email or text message. However, in light of comments 
highlighting the different third-party disclosure risks of email 
communications and text message communications, the final rule sets 
forth different procedures for email messages and text messages and 
also addresses them separately (email in Sec.  1006.6(d)(4) and text 
messages in Sec.  1006.6(d)(5)). To reflect this change, final Sec.  
1006.6(d)(3)(i) provides that, for a debt collector to obtain a safe 
harbor from civil liability for an unintentional third-party 
disclosure, a debt collector's procedures must include steps to 
reasonably confirm and document that the debt collector communicated 
with the consumer by sending an email to an email address described in 
Sec.  1006.6(d)(4) or a text message to a telephone number described in 
Sec.  1006.6(d)(5).
6(d)(3)(ii)
    Proposed Sec.  1006.6(d)(3)(ii) identified the second of two 
conditions a debt collector would have had to satisfy to obtain a safe 
harbor from civil liability for an unintentional third-party disclosure 
when communicating by email or text message. Specifically, under 
proposed Sec.  1006.6(d)(3)(ii), the debt collector's procedures would 
have had to include steps to reasonably confirm and document that the 
debt collector took additional steps to prevent communications using an 
email address or telephone number that the debt collector knew had led 
to an unauthorized third-party disclosure. The Bureau proposed Sec.  
1006.6(d)(3)(ii) on the basis that a debt collector whose procedures 
are not designed to prevent recurrence of a known violation may intend 
to convey information related to the debt or its collection to a third 
party.
    A group of consumer advocate commenters argued that proposed Sec.  
1006.6(d)(3)(ii) did not sufficiently address the risk of repeat third-
party disclosures. According to these commenters, the Bureau should 
simply require debt collectors to stop using an email address or 
telephone number for text messages if the debt collector knows that 
using the address or telephone number has led to a third-party 
disclosure, unless the consumer has expressly consented. One industry 
commenter requested that the Bureau provide examples of additional 
steps a debt collector could take to prevent communications using an 
email address or telephone number that the debt collector knows has led 
to a third-party disclosure.
    The Bureau is finalizing Sec.  1006.6(d)(3)(ii) with modifications 
for clarity. Specifically, Sec.  1006.6(d)(3)(ii) provides that, to 
obtain a safe harbor from civil liability, a debt collector's 
procedures must include steps to reasonably confirm and document that 
the debt collector did not communicate with the consumer by sending an 
email to an email address or a text message to a telephone number that 
the debt collector knows has led to a disclosure prohibited by Sec.  
1006.6(d)(1).
    The Bureau is not adopting the suggestion to require debt 
collectors simply to stop using email addresses and telephone numbers 
that have led to third-party disclosures. As noted, the Bureau is 
finalizing Sec.  1006.6(d)(3) through (5) as an interpretation of FDCPA 
section 813(c)'s bona fide error defense. A bona fide error defense is 
only available under FDCPA section 813(c) if a debt collector maintains 
procedures reasonably adapted to avoid an error. Accordingly, Sec.  
1006.6(d)(3)(ii) is framed in terms of a debt collector's procedures. 
The Bureau notes, however, that, if a debt collector sends repeated 
emails to an email address or text messages to a telephone number that 
the debt collector knows has led to a third-party disclosure, that 
conduct would likely show that the debt collector's procedures are not 
reasonable and that

[[Page 76779]]

the debt collector is not entitled to a safe harbor from civil 
liability.\267\
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    \267\ Moreover, depending on the facts, a debt collector who 
repeatedly sends an email or a text message to an email address or 
telephone number that the debt collector knows has led to a third-
party disclosure may violate FDCPA section 808's prohibition on 
unfairness.
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    In response to the industry commenter's request for examples, the 
Bureau is adopting new comment 6(d)(3)(ii)-1, which clarifies that, for 
purposes of Sec.  1006.6(d)(3)(ii), a debt collector knows that sending 
an email to an email address or a text message to a telephone number 
has led to a disclosure prohibited by Sec.  1006.6(d)(1) if any person 
has informed the debt collector of that fact. Thus, to comply with 
Sec.  1006.6(d)(3)(ii), it is necessary (but not sufficient) for a debt 
collector to accept and track complaints.
6(d)(4) Procedures for Email Addresses
    As noted above, the final rule reorganizes proposed Sec.  
1006.6(d)(3)(i) by separating email procedures and text message 
procedures, and final Sec.  1006.6(d)(4) describes the three procedures 
that a debt collector may use to obtain a safe harbor from civil 
liability for an unintentional third-party disclosure when 
communicating by email. The final email procedures are discussed in 
detail in the section-by-section analysis of Sec.  1006.6(d)(4)(i) 
through (iii).
    The Bureau received one overarching comment regarding its proposed 
email procedures. One industry commenter stated that requiring debt 
collectors to encrypt email communications or protect them with 
passwords would reduce the risk of third-party disclosure. As proposed, 
the email procedures would not have required encryption or password 
protection, and the Bureau declines to require debt collectors to take 
these steps to obtain a safe harbor from civil liability for third-
party disclosures. The Bureau notes, however, that a debt collector who 
encrypts its emails or protects them with a password would not thereby 
lose access to a safe harbor from civil liability under Sec.  
1006.6(d)(3) for which the debt collector otherwise qualified.
6(d)(4)(i) Procedures Based on Communication Between the Consumer and 
the Debt Collector
    Proposed Sec.  1006.6(d)(3)(i)(A) (the ``consumer-use'' method) for 
emails provided that a debt collector could obtain a safe harbor from 
civil liability for an unintentional third-party disclosure if, in 
addition to complying with Sec.  1006.6(d)(3)(ii), the debt collector 
maintained procedures to reasonably confirm and document that the debt 
collector communicated with the consumer using an email address, 
including an employer-provided email address, that the consumer 
recently used to contact the debt collector for purposes other than 
opting out of electronic communications.\268\ As discussed below, the 
Bureau is finalizing the email procedures in proposed Sec.  
1006.6(d)(3)(i)(A) as Sec.  1006.6(d)(4)(i), with modifications and 
additions to address comments received, and with revisions for clarity.
---------------------------------------------------------------------------

    \268\ As noted, proposed Sec.  1006.6(d)(3)(i)(A) would have 
applied to both email addresses and telephone numbers, but final 
Sec.  1006.6(d)(4)(i) applies only to email addresses. This section-
by-section analysis therefore addresses proposed Sec.  
1006.6(d)(3)(i)(A) only with respect to comments that specifically 
discussed email addresses, or that did not distinguish between email 
addresses and telephone numbers. Comments received in response to 
proposed Sec.  1006.6(d)(3)(i)(A) that discussed telephone numbers 
are addressed in the section-by-section analysis of Sec.  
1006.6(d)(5)(i).
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    The Bureau received numerous comments regarding its assumption that 
a debt collector may not have reason to anticipate a third-party 
disclosure when sending an email to an email address, including an 
employer-provided email address, that the consumer recently used to 
communicate with the debt collector. The Bureau reasoned that a 
consumer generally is better positioned than a debt collector to 
determine whether third parties have access to a specific email 
address, and a consumer's decision to communicate with a debt collector 
using a specific email address may suggest that the consumer assessed 
the risk of third-party disclosure to be low.\269\
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    \269\ See 84 FR 23274, 23301 (May 21, 2019) (discussing the 
Bureau's rationale for including both employer-provided and personal 
email addresses in the proposed Sec.  1006.6(d)(3)(i)(A) safe 
harbor).
---------------------------------------------------------------------------

    In general, industry commenters supported the Bureau's reasoning, 
while several consumer advocate commenters rejected it. Consumer 
advocate commenters generally asserted that it is unlikely that 
consumers will have done a third-party disclosure risk analysis before 
using a particular email address to communicate with a debt collector, 
and that consumers who lack regular access to a computer or email 
address might use another person's email address to communicate with 
the debt collector. Consumer advocate commenters also asserted that a 
consumer may feel some urgency to contact a debt collector and may use 
a certain email address to do so without intending to establish that 
address as a regular means of contact. As to employer-provided email 
addresses specifically, consumer advocate commenters argued that 
employees may not be aware that employers can and do monitor emails 
sent or received on employer-provided accounts, and that even consumers 
who are aware of this possibility likely would be unaware that sending 
a carefully worded email to a debt collector could insulate the debt 
collector from third-party disclosure liability if the debt collector 
replied to that address.
    The Bureau determines that consumers are generally better 
positioned than debt collectors to determine if third parties have 
access to a particular email account, whether personal or employer 
provided. A consumer who uses a particular email address to contact a 
debt collector about a debt likely expects the debt collector to 
respond using the same address. In addition, because a third party with 
access to a consumer's email account typically can read outgoing and 
incoming communications, an email message sent by a consumer to a debt 
collector may, like an email message received by a consumer from a debt 
collector, result in a third-party disclosure. For these reasons, the 
Bureau continues to believe that a consumer's willingness to use an 
email address to contact a debt collector without conditions suggests 
that the risk of third-party disclosure is low if the debt collector 
responds to that email. Therefore, a debt collector who uses such an 
email address generally would lack reason to anticipate a third-party 
disclosure, unless the consumer has asked the debt collector not to 
engage in such communications.\270\
---------------------------------------------------------------------------

    \270\ The Bureau notes that Sec.  1006.14(h) prohibits a debt 
collector from communicating or attempting to communicate with a 
person through a medium of communication if the person has requested 
that the debt collector not use that medium to communicate with the 
person.
---------------------------------------------------------------------------

    The Bureau also received numerous comments regarding proposed Sec.  
1006.6(d)(3)(i)(A)'s recency requirement, i.e., the requirement that 
the email address be one that the consumer recently used to contact the 
debt collector. While many commenters confirmed that telephone numbers 
are regularly reassigned, several industry commenters stated that email 
addresses typically are not reassigned and that the proposed recency 
requirement for email addresses therefore was unnecessary. Several 
industry commenters also objected on the ground that a recency 
requirement would impose a burden on debt collectors to track 
information, such as when a consumer last used an email address. A 
group of consumer advocate commenters acknowledged that email addresses 
are reassigned far

[[Page 76780]]

less frequently than telephone numbers but nevertheless supported the 
recency requirement for email addresses.
    The Bureau has decided not to include a recency requirement as part 
of the email procedures in final Sec.  1006.6(d)(4)(i).\271\ The Bureau 
proposed the recency requirement principally to address the risk that a 
telephone number might be reassigned from one consumer to another, and 
would have applied the requirement to email addresses largely for 
consistency and ease of administration.\272\ In light of comments 
asserting that a recency requirement imposes some burden on creditors 
and debt collectors to track and transfer information, and comments 
indicating that emails are reassigned infrequently if at all, the 
Bureau concludes that a recency requirement should not apply to email 
addresses.\273\
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    \271\ As discussed in the section-by-section analysis of Sec.  
1006.6(d)(5), the Bureau is finalizing a recency requirement as part 
of the text message procedures.
    \272\ See 84 FR 23274, 23301 (May 21, 2019) (discussing that 
emails are not regularly reassigned but proposing to apply the 
recency requirement to emails as well as to telephone numbers for 
consistency and ease of administration of the regulation). Although 
it appears that at least one email provider does allow email 
addresses to be reassigned, it is unclear how often this occurs and 
commenters generally agreed that, to the extent it happens, email 
reassignment is far less common that telephone number reassignment. 
See AJ Dellinger, Yahoo Hack: Why You Shouldn't Delete Your Email 
Address, Account, Int'l Bus. Times (Oct. 5, 2017).
    \273\ To the extent that commenters addressed specific elements 
of the proposed recency requirement for emails, such as how to 
define ``recent,'' those comments are moot because the Bureau is not 
finalizing a recency requirement for emails. The Bureau therefore 
does not discuss them.
---------------------------------------------------------------------------

    Several industry commenters requested that the Bureau expand the 
procedures in proposed Sec.  1006.6(d)(3)(i)(A), or create new 
procedures, to protect a debt collector who communicates with a 
consumer by email after receiving the consumer's permission to use the 
email address for debt collection communications, such as if the 
consumer provides the email address to the debt collector over the 
telephone or while using the debt collector's website, or provides the 
email address to a court for purposes of receiving electronic service 
of process.\274\ The Bureau concludes that, if a consumer has directly 
consented to a debt collector's use of a particular email address and 
has not withdrawn that consent,\275\ the debt collector generally does 
not have reason to anticipate that using the email address to 
communicate with the consumer will lead to a third-party disclosure. 
Accordingly, and as discussed below, the final rule includes a new 
provision, Sec.  1006.6(d)(4)(i)(B), to account for the direct consent 
scenario.\276\
---------------------------------------------------------------------------

    \274\ Relatedly, a group of academic commenters requested that 
the Bureau prohibit debt collectors from using embedded cookies, 
which can track a user's browsing history, on their websites. The 
Bureau does not further address this comment, as it is outside the 
scope of the rulemaking.
    \275\ As explained in the section-by-section analysis of Sec.  
1006.6(e), a debt collector who communicates electronically must 
provide consumers with a reasonable and simple way to opt out of 
such communications.
    \276\ As discussed in the section-by-section analysis of Sec.  
1006.6(d)(5)(ii), the final rule similarly includes a new provision 
covering a debt collector who communicates with a consumer by text 
message after receiving the consumer's unwithdrawn direct consent to 
do so.
---------------------------------------------------------------------------

    Many industry commenters also requested that the Bureau expand the 
procedures in proposed Sec.  1006.6(d)(3)(i)(A), or create new 
procedures, to cover not only an email address that the consumer 
provided to the debt collector, but also an email address that the 
consumer provided to, or used to contact, the creditor. Some of these 
commenters argued that, if a consumer provided an email address when 
opening an account or communicating with a creditor, the consumer knew 
or should have known that the debt collector would use the email 
address to collect the debt, and there is no need to delay the 
collection process by requiring consumers to re-confirm their 
preferences. Similarly, an industry commenter argued that a consumer 
who has chosen to communicate with a creditor electronically should be 
assumed to prefer communicating with a debt collector electronically, 
and that an opt-in system burdens consumer choice and delays the 
collection process by imposing an additional requirement before debt 
collectors may begin electronic debt collection communications. Some 
commenters advocated for a safe harbor from civil liability as long as 
the creditor's account opening materials disclosed that an email 
address the consumer gives the creditor could be used for debt 
collection purposes. Other commenters, recognizing that a consumer's 
communication preferences may change over time and that years may 
elapse between when a consumer provides a creditor with electronic 
contact information and when a creditor transfers the consumer's debt 
to a debt collector, suggested a safe harbor for email addresses 
provided by the consumer to the creditor within a particular timeframe, 
such as within the 270 days preceding the debt collector's use. Another 
industry commenter suggested a safe harbor for a debt collector who 
sends an email to an email address used by the creditor to send the 
consumer delinquency communications in the months before an account is 
placed for collection.
    As the Bureau noted in the proposal, a consumer might agree to 
receive electronic communications from a creditor without considering 
the risk that a third party might read those communications, but a 
consumer who is indifferent to the disclosure of creditor 
communications may not be indifferent to the disclosure of debt 
collection communications.\277\ Thus, a consumer's decision to 
communicate electronically with a creditor does not, without more, 
suggest that the risk of third-party disclosure is particularly low. 
Nor does a disclosure in account opening materials, without more, 
suggest that the risk of third-party disclosure is particularly low. 
Years may pass, and a consumer's circumstances may change, between the 
time a consumer opens an account and the time the account is 
transferred to a debt collector. The Bureau therefore declines to add 
the procedures requested by these commenters. The Bureau notes, 
however, that nothing in Sec.  1006.6(d)(4)(i) prohibits a debt 
collector from sending an email to an email address provided by the 
consumer to the creditor. Depending on the facts, a debt collector may 
be able to do so without violating FDCPA section 805(b).\278\
---------------------------------------------------------------------------

    \277\ See 84 FR 23274, 23304 (May 21, 2019).
    \278\ For example, in some circumstances, a consumer's 
willingness to receive delinquency communications from a creditor 
electronically may better suggest that the risk of third-party 
disclosure is low than a consumer's willingness to receive routine 
account communications from a creditor electronically. Similarly, in 
some circumstances, a debt collector's use of an email address or 
telephone number recently provided by the consumer to the creditor 
may pose lower third-party disclosure risk than a debt collector's 
use of an email address or telephone number provided by the consumer 
to the creditor at account opening.
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing proposed 
Sec.  1006.6(d)(3)(i)(A) as Sec.  1006.6(d)(4)(i). Section 
1006.6(d)(4)(i)(A) provides that a debt collector may obtain a safe 
harbor from civil liability for an unintentional third-party disclosure 
when sending an email to an email address if the consumer used the 
email address to communicate with the debt collector about the debt and 
the consumer has not since opted out of communications to that email 
address.\279\ Section

[[Page 76781]]

1006.6(d)(4)(i)(B) provides that a debt collector may obtain a safe 
harbor from civil liability for an unintentional third-party disclosure 
when sending an email to an email address if the debt collector has 
received directly from the consumer prior consent to use the email 
address to communicate with the consumer about the debt and the 
consumer has not withdrawn that consent.
---------------------------------------------------------------------------

    \279\ Proposed Sec.  1006.6(d)(3)(i)(A) specified that a debt 
collector could not use an email address used by the consumer to opt 
out of electronic communications. As finalized, Sec.  
1006.6(d)(4)(i)(A) retains this prohibition: A debt collector is not 
covered by Sec.  1006.6(d)(4)(i)(A) if the debt collector 
communicates using an email address the consumer used to opt out of 
electronic communications.
---------------------------------------------------------------------------

    The Bureau also is adopting new comments 6(d)(4)(i)(B)-1 and -2 to 
clarify the meaning of direct prior consent for purposes of Sec.  
1006.6(d)(4)(i)(B). Comment 6(d)(4)(i)(B)-1 clarifies that a consumer 
may provide direct consent orally, in writing, or electronically. 
Comment 6(d)(4)(i)(B)-2 clarifies that, if a consumer provides an email 
address to a debt collector (including on the debt collector's website 
or online portal), the debt collector may treat the consumer as having 
consented directly to the debt collector's use of the email address to 
communicate with the consumer about the debt for purposes of Sec.  
1006.6(d)(4)(i)(B) if the debt collector discloses clearly and 
conspicuously that the debt collector may use the email address to 
communicate with the consumer about the debt.\280\
---------------------------------------------------------------------------

    \280\ A consumer who consents to electronic service of process 
typically provides consent to the court rather than to the debt 
collector. Accordingly, a consumer's consent to electronic service 
of process generally is not covered by Sec.  1006.6(d)(4)(i)(B). The 
Bureau believes, however, that a debt collector generally would lack 
reason to anticipate a third-party disclosure when sending an email 
to an email address if the consumer has agreed to receive litigation 
communications relating to the debt at that address.
---------------------------------------------------------------------------

6(d)(4)(ii) Procedures Based on Communication by the Creditor
    Proposed Sec.  1006.6(d)(3)(i)(B) (the ``notice-and-opt-out'' 
method) generally provided that a debt collector could obtain a safe 
harbor from civil liability for an unintentional third-party disclosure 
if, in addition to complying with Sec.  1006.6(d)(3)(ii), the debt 
collector maintained procedures to reasonably confirm and document 
that: (1) The debt collector communicated with the consumer using a 
personal email address after the creditor or the debt collector 
provided the consumer with notice of such communications and a 
reasonable opportunity to opt out; and (2) the consumer did not opt 
out.\281\
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    \281\ As noted, proposed Sec.  1006.6(d)(3)(i)(B) would have 
applied to both email addresses and telephone numbers, but final 
Sec.  1006.6(d)(4)(ii) applies only to email addresses. This 
section-by-section analysis therefore addresses proposed Sec.  
1006.6(d)(3)(i)(B) only with respect to comments that specifically 
discussed email addresses, or that did not distinguish between email 
addresses and telephone numbers. Comments received in response to 
proposed Sec.  1006.6(d)(3)(i)(B) that discussed telephone numbers 
are addressed in the section-by-section analysis of Sec.  
1006.6(d)(5).
---------------------------------------------------------------------------

    The Bureau received a number of comments relating to the general 
concept of permitting a debt collector to use notice-and-opt-out 
procedures to obtain a safe harbor from civil liability for 
unintentional third-party disclosures when sending an email to a 
consumer.\282\ Industry commenters generally supported the Bureau's 
reasoning that a consumer's failure to opt out after receiving notice 
that an email address could be used for debt collection communications 
may suggest that the consumer has assessed the risk of third-party 
disclosure to be low. Industry commenters also generally opposed any 
requirement that consumers opt into electronic communications, with 
several predicting that few consumers would opt in, and that, as a 
result, electronic communications would be unlikely to take place at 
all. These commenters noted that, in at least one State that requires 
consumers to opt into email communications, debt collectors generally 
do not use email to communicate with consumers.\283\
---------------------------------------------------------------------------

    \282\ Commenters also submitted numerous comments about 
particular aspects of proposed Sec.  1006.6(d)(3)(i)(B); those 
comments are addressed where relevant in the section by section 
analysis of Sec.  1006.6(d)(4)(ii)(A) through (E).
    \283\ See 23 CRR-NY 1.6 (permitting a debt collector to 
communicate with a consumer by email only if the consumer has ``(1) 
voluntarily provided an electronic mail account to the debt 
collector which the consumer has affirmed is not an electronic mail 
account furnished or owned by the consumer's employer; and (2) 
consented in writing to receive electronic mail correspondence from 
the debt collector in reference to a specific debt'').
---------------------------------------------------------------------------

    Consumer advocate commenters requested that the Bureau not adopt a 
notice-and-opt-out approach. These commenters argued that the Bureau 
should permit electronic communications only pursuant to an opt-in 
approach, which would enable consumers, before agreeing to electronic 
communications, to: (1) Weigh any risks due to irregular internet or 
cellphone access; (2) confirm the addresses and telephone numbers to 
which electronic communications may be directed, ensuring that, 
particularly for consumers who regularly change telephone numbers or 
abandon email addresses, communications are sent to the consumer rather 
than to a third party; (3) weigh the financial cost of electronic 
communications (for consumers with limited text message or data plans); 
(4) familiarize themselves with the sender and weigh any security 
risks, helping to ensure that consumers actually would open emails and 
minimizing the chance that emails would be blocked by spam filters and 
other screening devices; \284\ and (5) weigh any privacy-related risks, 
including that emails and text messages could be viewed by a consumer's 
telephone or email provider, could appear on a publicly visible 
computer or telephone screen, or could be coming from a phony, rather 
than legitimate, debt collector.
---------------------------------------------------------------------------

    \284\ As the Bureau noted in the proposal, several Federal 
agencies advise consumers not to open emails from senders they do 
not recognize. See 84 FR 23274, 23363 n.578 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau recognizes that, as consumer advocates observed, for an 
opt-out system to work the consumer must, among other things, actually 
receive the opt-out notice and have the opportunity to consider it. The 
Bureau also recognizes that a consumer who receives an opt-out notice 
may ignore it, fail to consider the risks of receiving emails 
(including the risk of third-party disclosure), or not take the steps 
necessary to opt out. However, the Bureau believes that the safeguards 
it has incorporated in the rule, which are discussed below, will 
mitigate these concerns.\285\ For these reasons, the Bureau is 
finalizing the notice-and-opt-out method in proposed Sec.  
1006.6(d)(3)(i)(B) as Sec.  1006.6(d)(4)(ii), with modifications as 
discussed in the section-by-section analysis of Sec.  
1006.6(d)(4)(ii)(A) through (E) to increase the likelihood that a 
consumer will have an opportunity to make an adequately informed choice 
whether to opt out of receiving emails.
---------------------------------------------------------------------------

    \285\ See in particular the section-by-section analysis of Sec.  
1006.6(d)(4)(ii)(C), which discusses that: (1) The opt-out notice 
must come from the creditor, be provided in written or electronic 
form, and describe the third-party disclosure considerations 
implicated by debt collection communications; and (2) the consumer 
must be provided a reasonable and simple method to opt out and at 
least 35 days to do so. See also the section-by-section analysis of 
Sec.  1006.6(d)(4)(ii)(E), which clarifies that debt collectors 
proceeding under the opt-out method generally cannot obtain a safe 
harbor from civil liability when emailing a consumer at an employer-
provided email address.
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6(d)(4)(ii)(A)
    As proposed, the notice-and-opt-out method in Sec.  
1006.6(d)(3)(i)(B) generally would have provided a safe harbor from 
civil liability for debt collector communications sent to any personal 
email address other than the address to which the opt-out notice itself 
was sent, provided the other opt-out requirements were met. Under 
proposed Sec.  1006.6(d)(3)(i)(B), then, a debt collector could have 
used the notice-and-opt-out method to obtain a safe harbor from civil 
liability for an unintentional third-party disclosure when sending an 
email to an email

[[Page 76782]]

address obtained through skip tracing or any other method.
    To increase the likelihood that the email address for which a debt 
collector using the notice-and-opt-out method obtains a safe harbor 
actually belongs to the consumer, and thereby minimize the risk of a 
third-party disclosure, the Bureau finds that it is important to limit 
the types of email addresses debt collectors may use on an opt-out 
basis. An email address obtained by the creditor directly from the 
consumer is highly likely to belong to the consumer; by contrast, an 
email address obtained through skip tracing generally lacks the same 
degree of reliability.\286\ For these reasons, the Bureau is finalizing 
Sec.  1006.6(d)(4)(ii)(A), which provides that, for purposes of the 
notice-and-opt-out method, the debt collector may send an email only to 
an email address that a creditor obtained from the consumer.
---------------------------------------------------------------------------

    \286\ An industry commenter urged the Bureau to create a safe 
harbor permitting the use of any email address that has been 
``verified.'' The commenter did not define ``verify'' but noted that 
it is possible to obtain email addresses from commercially available 
databases. Because the Bureau currently lacks information to 
evaluate the completeness and accuracy of such databases, the Bureau 
declines the commenter's suggestion to provide a safe harbor to a 
debt collector who ``verifies'' a consumer's email address using 
such a database.
---------------------------------------------------------------------------

    Final Sec.  1006.6(d)(4)(ii)(A) is similar to an aspect of proposed 
Sec.  1006.6(d)(3)(i)(C),\287\ which, as discussed in the section-by-
section analysis of final Sec.  1006.6(d)(4)(iii), provided that a debt 
collector could satisfy the ``creditor-or-prior-debt-collector-use'' 
method of obtaining a safe harbor only if, among other things, the debt 
collector used an email address obtained from the consumer by the 
creditor or a prior debt collector.\288\ In response to that proposed 
requirement, a group of consumer advocate commenters asked the Bureau 
to clarify how a creditor could obtain an email address from the 
consumer and how a debt collector would know that a creditor had done 
so. There are many ways for a creditor to obtain an email address from 
a consumer for purposes of the notice-and-opt-out procedures in Sec.  
1006.6(d)(4)(ii). For example, the creditor may request the email 
address at account opening,\289\ or at a later stage of the parties' 
relationship, or the consumer might voluntarily provide the email 
address on a website or otherwise. The Bureau does not believe it is 
necessary to specify by rule precisely how a debt collector would know 
that the creditor had obtained an email address from the consumer. 
Different debt collectors may have different approaches to reasonably 
confirming and documenting this fact.
---------------------------------------------------------------------------

    \287\ As discussed in the section-by-section analysis of Sec.  
1006.6(d)(4)(iii), the Bureau is not finalizing Sec.  
1006.6(d)(3)(i)(C) as proposed but, as here, is incorporating 
aspects of that provision into the final notice-and-opt-out 
procedures. The Bureau therefore responds to certain comments made 
in response to Sec.  1006.6(d)(3)(i)(C) in this section-by-section 
analysis.
    \288\ Unlike proposed Sec.  1006.6(d)(3)(i)(C), final Sec.  
1006.6(d)(4)(ii) does not cover a debt collector's use of an email 
address obtained by a prior debt collector. Safe harbor procedures 
covering a debt collector's use of such an email address are found 
in final Sec.  1006.6(d)(4)(iii).
    \289\ The Bureau notes that Sec.  1006.6(d)(4)(ii) does not 
provide a safe harbor to a debt collector who simply sends an email 
to an email address obtained by the creditor at account opening. 
Instead, for a debt collector to obtain a safe harbor from civil 
liability under Sec.  1006.6(d)(4)(ii), the other requirements of 
the notice-and-opt-out procedures must be satisfied.
---------------------------------------------------------------------------

6(d)(4)(ii)(B)
    As noted, the notice-and-opt-out method in proposed Sec.  
1006.6(d)(3)(i)(B) generally would have provided a safe harbor for debt 
collector communications sent to any personal email address other than 
the address to which the opt-out notice was sent, provided the other 
opt-out requirements were met. There was no requirement that the 
creditor (or any other person) previously had used the email address to 
communicate with the consumer.
    To further reduce the risk of a third-party disclosure when debt 
collectors use the notice-and-opt-out method, the Bureau believes that 
it is important to incorporate such a requirement into Sec.  
1006.6(d)(4)(ii). While any requirement that the email address had been 
used by the creditor to communicate with the consumer (even if only for 
advertising or marketing) would help achieve this goal, the Bureau 
determines that requiring the creditor to have used the email address 
to communicate with the consumer about the account reduces the risk of 
third-party disclosure even further. Although the FDCPA recognizes that 
creditor communications are less sensitive than debt collector 
communications, some creditor communications, such as communications 
about the account, are more sensitive than others, such as advertising 
or marketing communications. The Bureau therefore believes that a 
consumer's willingness to communicate electronically with a creditor 
about an account says more about the risk of third-party disclosure 
should the account enter collections than a consumer's willingness to 
receive advertisements or marketing materials electronically. 
Conversely, if a consumer has asked a creditor to stop using an email 
address to communicate about an account, a debt collector may have 
reason to anticipate that using the address to communicate about the 
debt could lead to a third-party disclosure.
    For these reasons, the Bureau is finalizing Sec.  
1006.6(d)(4)(ii)(B), which provides that, for purposes of the notice-
and-opt-out method, a debt collector may send an email only to an email 
address used by the creditor to communicate with the consumer about the 
account, and only if the consumer did not ask the creditor to stop 
using it. The Bureau also is adopting new comment 6(d)(4)(ii)(B)-1 to 
clarify the types of communications that constitute communications 
about the account for purposes of Sec.  1006.6(d)(4)(ii)(B).
    Final Sec.  1006.6(d)(4)(ii)(B) is similar to aspects of proposed 
Sec.  1006.6(d)(3)(i)(C), which, as discussed in the section-by-section 
analysis of final Sec.  1006.6(d)(4)(iii), provided that a debt 
collector could satisfy the ``creditor-or-prior-debt-collector-use'' 
method of obtaining a safe harbor only if, among other things, the debt 
collector used an email address to which the creditor or a prior debt 
collector sent communications about the debt, and the consumer did not 
ask the creditor or prior debt collector to stop. The Bureau received a 
number of comments regarding those aspects of proposed Sec.  
1006.6(d)(3)(i)(C), and those comments have informed final Sec.  
1006.6(d)(4)(ii)(B).\290\
---------------------------------------------------------------------------

    \290\ As discussed in the section-by-section analysis of Sec.  
1006.6(d)(4)(iii), the Bureau is not finalizing Sec.  
1006.6(d)(3)(i)(C) as proposed but, as here, is incorporating 
aspects of that provision into the final notice-and-opt-out 
procedures. The Bureau therefore responds to certain comments 
addressing Sec.  1006.6(d)(3)(i)(C) in this section-by-section 
analysis.
---------------------------------------------------------------------------

    An industry commenter objected to requiring the creditor to have 
communicated ``about the debt,'' arguing that the requirement should be 
eliminated or broadened to include communications ``about the account'' 
because a creditor's communications with a consumer typically involve 
the account rather than the debt. By contrast, a group of consumer 
advocate commenters argued the requirement would not sufficiently 
protect consumers because it would not have required that the consumer 
actually received or accessed the communications, or that the creditor 
or debt collector took any steps to confirm the consumer's receipt and 
access. In addition, the consumer advocate commenters noted, any 
requirements placed on creditors would not be enforceable against 
creditors who were not also FDCPA debt collectors. The commenters also 
argued that a

[[Page 76783]]

consumer's failure to request that the creditor stop using a particular 
email address is just as likely to mean that messages to that address 
had gone to the consumer's spam folder or had reached the wrong person 
as to mean that the consumer had assessed third-party disclosure risk 
to be low. In addition, these commenters noted, a creditor is under no 
obligation to inform the consumer of the right or ability to opt out of 
communications, so a consumer's failure to opt out should not 
implicitly authorize a debt collector to send emails to that email 
address.
    The Bureau determines that, given the multiple consumer protections 
built into the final notice-and-opt-out procedures to limit the 
likelihood of a third-party disclosure--including requirements relating 
to the form and content of the opt-out notice, as well as who may 
deliver it and in what manner--it is not necessary to require the 
creditor to have used the email address to communicate about the debt, 
as distinguished from the account. Nor does the Bureau believe it is 
necessary to require that the consumer actually received or was able to 
view the creditor's communications, or that the creditor took steps to 
confirm the consumer's receipt and access of those communications. 
Under Sec.  1006.6(d)(4)(ii)(A), the email address must have been 
obtained by the creditor from the consumer and is therefore highly 
likely to belong to the consumer, particularly because email addresses 
generally are not reassigned. Moreover, a consumer who provides an 
email address to a creditor is likely to expect email communications 
about the account from the creditor and to follow up should any 
expected communications not arrive, diminishing the risk that a 
creditor's emails will be blocked by a spam filter.\291\ In addition, 
to the extent that the email address is one for which the creditor has 
obtained consent under the E-SIGN Act, the creditor will already have 
confirmed the consumer's ability to access the communications.\292\ 
Further, under Sec.  1006.6(d)(4)(ii), a consumer's failure to opt out 
of a creditor's past use of an email address does not, without more, 
provide a safe harbor to a debt collector who uses that email address; 
the creditor must, among other things, provide the consumer with notice 
and a reasonable opportunity to opt out of debt collection 
communications to that address. Accordingly, the final rule does not 
treat a consumer's failure to exercise an undisclosed opt-out right as 
implicitly authorizing a debt collector to send emails to that email 
address.
---------------------------------------------------------------------------

    \291\ The Bureau is not aware of evidence suggesting that 
creditor communications are especially likely to be blocked by spam 
filters. Cf. Gmail Help, Prevent Mail to Gmail Users From Being 
Blocked or Sent to Spam, https://support.google.com/mail/answer/81126?hl=en (last visited Oct. 1, 2020) (identifying factors that 
trigger Gmail's spam filter).
    \292\ See 15 U.S.C. 7001(c).
---------------------------------------------------------------------------

    Regarding the requirement that the consumer did not ask the 
creditor to stop using the address, one industry commenter suggested, 
without further explanation, that only a consumer's written request 
should suffice. The Bureau declines the commenter's suggestion; an oral 
request can suggest just as well as a written request that the risk of 
third-party disclosure is high.
    For these reasons, the Bureau is finalizing Sec.  
1006.6(d)(4)(ii)(B) as described above.
6(d)(4)(ii)(C)
    As proposed, Sec.  1006.6(d)(3)(i)(B)(1) contained a number of 
requirements regarding the opt-out notice. The creditor or debt 
collector would have been required to notify the consumer clearly and 
conspicuously, no more than 30 days before the debt collector sent its 
first email communication, that the debt collector might use a 
particular personal email address for such communications. The creditor 
or debt collector also would have been required to provide the notice 
other than through the email address that the debt collector planned to 
use for debt collection communications, and to describe how to opt out. 
For the reasons discussed below, the Bureau is finalizing proposed 
Sec.  1006.6(d)(3)(i)(B)(1), with modifications and additions, as final 
Sec.  1006.6(d)(4)(ii)(C) to provide that, before a debt collector uses 
an email address to communicate with a consumer about a debt under 
Sec.  1006.6(d)(4)(ii), the creditor must send the consumer a written 
or electronic notice that clearly and conspicuously discloses the 
information identified in Sec.  1006.6(d)(4)(ii)(C)(1) through 
(5).\293\
---------------------------------------------------------------------------

    \293\ For clarity, the Bureau is finalizing the notice content 
requirements as Sec.  1006.6(d)(4)(ii)(C)(1) through (5) and 
addresses content-related comments in that section-by-section 
analysis.
---------------------------------------------------------------------------

Who May Provide the Opt-Out Notice
    Proposed Sec.  1006.6(d)(3)(i)(B)(1) would have permitted either 
the creditor or the debt collector to provide the opt-out notice. 
Several industry commenters observed that a creditor who provides the 
opt-out notice itself will incur costs to do so, while a group of 
consumer advocate commenters expressed concern about enforcing the law 
against creditors who provide the opt-out notice in a manner that 
violates the rule. As commenters also noted in discussing electronic 
communications generally, many consumers are suspicious of 
communications from entities they do not know or recognize, such as 
debt collectors. Consumers may ignore or delete such communications 
without opening them and may be reluctant to click on any links they 
contain, including links to opt out of further communications. Indeed, 
as the Bureau noted in the proposal, several Federal agencies have 
warned consumers against clicking on links from unknown senders.\294\
---------------------------------------------------------------------------

    \294\ For example, the FTC advises consumers not to open links 
or attachments to emails they do not recognize, in order to prevent 
phishing and malware. See 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. Trade Comm'n, 
Malware (Nov. 2015), https://www.consumer.ftc.gov/articles/0011-malware. The FDIC offers consumers similar guidance. See Fed. 
Deposit Ins. Corp., Beware of Malware: Think Before You Click, 
https://www.fdic.gov/consumers/consumer/news/cnwin16/malware.html 
(last updated Mar. 8, 2016).
---------------------------------------------------------------------------

    The Bureau recognizes, as industry commenters noted, that creditors 
will incur a cost to send the opt-out notice. Some creditors may absorb 
these costs while others may seek to require debt collectors to absorb 
them. The Bureau notes, however, that debt collectors are not required 
to follow the procedures in Sec.  1006.6(d)(4)(ii). A debt collector 
who deems the procedures too expensive may use the other procedures in 
Sec.  1006.6(d)(4) or operate outside of the safe harbor. As to the 
consumer advocate commenter's concern about enforceability, the Bureau 
reiterates that the final rule may be enforced against FDCPA debt 
collectors.\295\
---------------------------------------------------------------------------

    \295\ Thus, if a debt collector relies on a creditor to take an 
action that a creditor does not actually take, such as sending an 
opt-out notice in compliance with Sec.  1006.6(d)(4)(ii), the 
creditor generally would not be liable under the rule. But the rule 
still may be enforced against the debt collector. For example, a 
consumer could allege that, to the extent the debt collector's 
procedures led it to rely on a creditor who did not send the opt-out 
notice, those procedures did not reasonably confirm and document 
that the debt collector communicated in accordance with Sec.  
1006.6(d)(4)(ii), and the debt collector is not entitled to a safe 
harbor from civil liability.
---------------------------------------------------------------------------

    The Bureau agrees that consumers may be reluctant to open emails 
from, or click on hyperlinks in emails from, unknown or untrusted 
sources. However, the Bureau determines that these concerns are less 
salient when a written or electronic communication comes from a 
recognized entity with which the consumer has an ongoing relationship, 
such as a creditor who has communicated with the consumer. For these 
reasons, the Bureau is finalizing Sec.  1006.6(d)(4)(ii)(C) to provide 
that the

[[Page 76784]]

creditor, and only the creditor, may send the opt-out notice.
How the Opt-Out Notice May Be Provided
    Proposed Sec.  1006.6(d)(3)(i)(B)(1) would not have permitted the 
creditor or the debt collector to send the notice to the specific email 
address the debt collector intended to use for future communications. 
Consumer advocate commenters generally did not address this limitation. 
Several industry commenters opposed it, arguing that it effectively 
would require a debt collector to establish right-party contact before 
providing the opt-out notice, which could require multiple calls to the 
consumer. These commenters also argued that the limitation could be 
confusing to consumers, who are used to receiving emails and clicking 
on unsubscribe links to stop future emails to that email address, not 
to prevent future emails to a different email address.
    The final rule does not include the requirement to send the opt-out 
notice other than to the email address the debt collector intends to 
use. The purpose of this requirement was to prevent a third-party 
disclosure of the opt-out notice itself. That concern was more salient 
under the proposal, which would have permitted debt collectors to send 
the opt-out notice. Because only creditors may provide the opt-out 
notice under the final rule and because the opt-out notice may be sent 
only to an email address the creditor used to communicate with the 
consumer about the account, the Bureau believes that the proposed 
requirement is unnecessary in the final rule. The final rule does, 
however, require the creditor to send the opt-out notice to an address 
the creditor obtained from the consumer and used to communicate with 
the consumer about the account. The purpose of this requirement is to 
help ensure that the consumer receives the opt-out notice.\296\
---------------------------------------------------------------------------

    \296\ As noted above, nothing prohibits a creditor from sending 
the opt-out notice to the email address the debt collector intends 
to use, and the Bureau expects that, for convenience, most creditors 
who send the notice electronically will send it to that email 
address.
---------------------------------------------------------------------------

Form of Opt-Out Notice
    Proposed Sec.  1006.6(d)(3)(i)(B)(1) would have required the 
creditor or the debt collector to provide clearly and conspicuously the 
information in the opt-out notice. It also would have permitted the 
notice to be provided orally, in writing, or electronically.
    Industry commenters generally did not address these delivery 
issues. A group of consumer advocate commenters appeared to support 
delivery of the opt-out notice by mail only. According to these 
commenters, telephone calls to consumers, particularly telephone calls 
from debt collectors, already involve multiple disclosures, and an opt-
out notice related to electronic debt collection communications may be 
missed by consumers overwhelmed with other information. These 
commenters also asserted that consumers would be unlikely to listen to 
opt-out messages delivered by robocall, and they expressed concern that 
an opt-out notice delivered electronically might not be seen at all, 
particularly if blocked by a consumer's spam filter.
    Final Sec.  1006.6(d)(4)(ii)(C) retains the requirement that the 
information in the opt-out notice be clear and conspicuous. In 
addition, final Sec.  1006.6(d)(4)(ii)(C) requires that the notice be 
delivered in writing or electronically, rather than orally (whether in 
a robocall or live conversation).\297\ Requiring that the notice be 
delivered in writing or electronically helps ensure that consumers can 
review the contents of the notice while making their opt-out decisions. 
The Bureau declines, however, to require that the opt-out notice be 
provided only by mail. The Bureau believes that the risk that a spam 
filter might block an opt-out notice was of greater concern under the 
proposal, which would have permitted debt collectors to send the opt-
out notice. Under the final rule, however, the opt-out notice can be 
provided only by the creditor, a known sender, to an email address the 
creditor used to communicate with the consumer about the account, which 
should reduce the risk that an electronic notice would be flagged as 
spam.\298\
---------------------------------------------------------------------------

    \297\ Because Sec.  1006.6(d)(4)(ii)(C), unlike proposed Sec.  
1006.6(d)(3)(i)(B)(1), permits a creditor to send the opt-out notice 
to the specific email address the debt collector intends to use for 
future communications, the Bureau believes that there is less need 
to permit creditors to deliver the opt-out notice orally.
    \298\ See, e.g., Google, Email Whitelists and Blacklists, 
https://support.google.com/a/answer/60752?hl=en(last visited Oct. 4, 
2020) (identifying how users can block unknown senders); Yahoo!, 
Yahoo Mail Safety Guide, https://safety.yahoo.com/SafetyGuides/Mail/index.htm (last visited Oct. 1, 2020) (same); AOL, Manage Spam and 
Privacy in AOL Mail, https://help.aol.com/articles/aol-mail-spam-and-privacy (last visited Oct. 1, 2020) (same); Cf. Cade Metz, 
Google Says Its AI Catches 99.9 Percent of Gmail Spam, Wired, 
https://www.wired.com/2015/07/google-says-ai-catches-99-9-percent-gmail-spam/ (July 9, 2015) (noting that, in 2015, Google's false 
positive rate for spam--i.e., legitimate email misidentified as 
spam--was .05 percent).
---------------------------------------------------------------------------

Timing of Opt-Out Notice
    To ensure that consumers could make their opt-out decisions at a 
time reasonably contemporaneous with potential electronic debt 
collection communications, proposed Sec.  1006.6(d)(3)(i)(B)(1) would 
have required the opt-out notice to be provided no more than 30 days 
before the debt collector engaged in debt collection communications by 
email.
    Consumer advocate commenters generally did not address this 
requirement. A few industry commenters supported the requirement as 
proposed; others asked that the period be lengthened or eliminated 
altogether. One industry commenter who called for eliminating the 
timing requirement argued that, once a debt is in collection, a 
consumer typically has ignored the creditor for 120 or 180 days. 
According to this commenter, such a consumer also is likely to ignore a 
notice sent from the creditor or the debt collector, so the timing 
requirement would serve no purpose. Another industry commenter argued 
that a timing requirement could interfere with the mortgage servicing 
practice of sending Real Estate Settlement Procedures Act of 1974 
(RESPA) \299\-required transfer-of-servicing letters, also known as 
hello and goodbye letters, by email in some cases. This commenter 
suggested that, as long as a consumer has consented to receiving email 
communications from a prior servicer, the final rule should allow a new 
servicer to provide a hello letter by email if the email also includes 
the opt-out notice. Industry commenters who asked the Bureau to extend 
the 30-day period generally argued that 30 days is too little time for 
a creditor to send the consumer an opt-out notice and place the account 
with a debt collector, and for a debt collector to then process the 
file for collections and send an electronic communication. One such 
commenter asked the Bureau to adopt a 90-day period; another requested 
a 180-day period.
---------------------------------------------------------------------------

    \299\ Public Law 93-533, 88 Stat. 1274 (1974).
---------------------------------------------------------------------------

    The Bureau determines that consumers should receive the opt-out 
notice at a time reasonably contemporaneous with potential debt 
collection communications. As discussed elsewhere, the Bureau believes 
that a notice provided by the creditor at account opening would 
generally not serve this goal because years may pass, and a consumer's 
circumstances may change, between the time the consumer opens an 
account and the time a debt enters collections.

[[Page 76785]]

In light of industry commenters' concerns, however, final Sec.  
1006.6(d)(4)(ii)(C) does not contain a specific timing requirement. 
Instead, as discussed in the section-by-section analysis of Sec.  
1006.6(d)(4)(ii)(C)(1), the Bureau addresses the timing issue by 
requiring the opt-out notice to identify the debt collector to which 
the creditor has transferred or will transfer the debt. Creditors 
usually decide to whom they will transfer a debt close to the time they 
transfer it, which, in turn, is likely to be reasonably contemporaneous 
with the potential debt collection communication.\300\
---------------------------------------------------------------------------

    \300\ With respect to the industry commenter's concern about 
sending transfer-of-servicing letters by email, the Bureau notes 
that Sec.  1006.6(d)(4)(iii) includes procedures that servicers can 
use in that situation. The Bureau is not adopting the commenter's 
suggested solution because, for the reasons discussed earlier in 
this section-by-section analysis, final Sec.  1006.6(d)(4)(ii) 
requires the opt-out notice to come from the creditor.
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.6(d)(4)(ii)(C), which provides that a debt collector may obtain a 
safe harbor from civil liability for an unintentional third-party 
disclosure if, among other things, before the debt collector used an 
email address to communicate with the consumer about the debt, the 
creditor sent a written or electronic notice, to an address the 
creditor obtained from the consumer and used to communicate with the 
consumer about the account, that clearly and conspicuously disclosed 
the information listed in Sec.  1006.6(d)(4)(ii)(C)(1) through (5). The 
Bureau also is adopting new comments 6(d)(4)(ii)(C)-1 through -3 to 
clarify certain aspects of Sec.  1006.6(d)(4)(ii)(C). Comment 
6(d)(4)(ii)(C)-1 clarifies the requirement to provide the notice 
clearly and conspicuously.\301\ Comment 6(d)(4)(ii)(C)-2 provides 
sample language that a creditor may use to comply with Sec.  
1006.6(d)(4)(ii)(C). Comment 6(d)(4)(ii)(C)-3 clarifies that the opt-
out notice may be contained in a larger communication that conveys 
other information, as long as the notice is clear and conspicuous.\302\
---------------------------------------------------------------------------

    \301\ This comment resembles proposed comment 6(d)(3)(i)(B)(1)-
1, with modifications to reflect the fact that the final rule does 
not permit a creditor to deliver the opt-out notice orally.
    \302\ Proposed comment 6(d)(3)(i)(B)(1)-3 would have clarified 
that a debt collector or a creditor may include the opt-out notice 
in the same communication as the opt-out notice described in 
proposed Sec.  1006.42(d)(1) or (2), as applicable. As explained in 
the section-by-section analysis of final Sec.  1006.42, the Bureau 
is not finalizing proposed Sec.  1006.42(d). Accordingly, the Bureau 
is not adopting proposed comment 6(d)(3)(i)(B)(1)-3.
---------------------------------------------------------------------------

6(d)(4)(ii)(C)(1)
    Proposed Sec.  1006.6(d)(3)(i)(B)(1) would have required the opt-
out notice to contain the legal name of the debt collector to which the 
debt was being transferred. Commenters generally did not address this 
requirement.
    To harmonize the proposed requirement with the final rule's 
approach that only the creditor may provide the opt-out notice, and to 
address the timing concerns discussed in the section-by-section 
analysis of Sec.  1006.6(d)(4)(ii)(C), final Sec.  
1006.6(d)(4)(ii)(C)(1) retains the proposed requirement but modifies it 
to provide that the opt-out notice must disclose that the debt has been 
or will be transferred to the debt collector. Comment 
6(d)(4)(ii)(C)(1)-1 clarifies that, to satisfy this requirement, the 
opt-out notice must identify the name of the specific debt collector to 
which the debt has been or will be transferred.
    The Bureau understands that most creditors do not know the precise 
debt collector to which they will transfer a debt until relatively 
close in time to the transfer. Moreover, the Bureau believes that, even 
among creditors who use only a single debt collector to collect their 
debts, or who otherwise know the identity of a debt collector well in 
advance, many would not send the opt-out notice before the consumer has 
become delinquent, because doing so could undermine the creditor's 
relationship with the consumer. In addition, the Bureau anticipates 
that, to facilitate compliance with recordkeeping obligations imposed 
by other consumer protection statutes and regulations, many creditors 
will choose to send the opt-out notice close in time to the debt 
collector's communication. The Bureau therefore finds that Sec.  
1006.6(d)(4)(ii)(C)(1)'s requirement to identify a specific debt 
collector will adequately ensure that the consumer receives the opt-out 
notice at a time reasonably contemporaneous with the proposed 
electronic communications, reducing the likelihood that the consumer's 
circumstances will have changed by the time the debt collector 
communicates electronically.
    In addition, although consumers generally do not have pre-existing 
relationships with particular debt collectors, it is possible that some 
consumers, particularly those with multiple debts in collection, may 
have interacted with a particular debt collector in the past. Requiring 
the creditor to identify the debt collector by name in the opt-out 
notice allows such a consumer to make a more informed choice about 
whether to opt out of electronic communications.
6(d)(4)(ii)(C)(2)
    Proposed Sec.  1006.6(d)(3)(i)(B)(1) would have required the opt-
out notice to contain the email address that the debt collector 
proposed to use for debt collection communications. The Bureau received 
no comments regarding this requirement and is finalizing it as Sec.  
1006.6(d)(4)(ii)(C)(2), which provides that the opt-out notice must 
disclose the email address and the fact that the debt collector might 
use the email address to communicate with the consumer about the debt.
6(d)(4)(ii)(C)(3)
    Proposed Sec.  1006.6(d)(3)(i)(B)(1) would not have required the 
opt-out notice to disclose that others with access to the email address 
might see the debt collector's communications. The Bureau believes that 
such a requirement would focus the consumer's attention on the risk of 
third-party disclosure from debt collection communications and thereby 
help to address consumer advocates' concerns, discussed elsewhere, that 
a consumer's failure to opt out after receiving the opt-out notice 
might not reflect a consumer's assessment of the risk of a third-party 
disclosure. For this reason, the Bureau is finalizing Sec.  
1006.6(d)(4)(ii)(C)(3) to provide that the opt-out notice must disclose 
that, if others have access to the email address, then it is possible 
they may see the emails.
6(d)(4)(ii)(C)(4)
    Proposed Sec.  1006.6(d)(3)(i)(B)(1) would have required the opt-
out notice to describe one or more methods that the consumer could use 
to opt out. As proposed, a debt collector could have employed any opt-
out method--even a potentially inconvenient one--as long as it was 
disclosed in the notice. While commenters generally did not address 
this proposed requirement, the Bureau is finalizing it with 
modifications to ensure that the burden of opting out does not prevent 
or unduly hinder consumers who want to opt out from doing so.
    Specifically, final Sec.  1006.6(d)(4)(ii)(C)(4) requires the opt-
out notice to disclose instructions for a reasonable and simple method 
by which the consumer can opt out of a debt collector's use of the 
email address identified in the opt-out notice. A reasonable-and-simple 
requirement, which is also used in the Bureau's Regulation V,\303\ 
should help to ensure that a consumer who wishes to opt out is not 
deterred by the process of doing so. Comment 6(d)(4)(ii)(C)(4)-1 
provides

[[Page 76786]]

illustrative examples of opt-out methods that satisfy the reasonable-
and-simple standard.
---------------------------------------------------------------------------

    \303\ 12 CFR 1022.25.
---------------------------------------------------------------------------

6(d)(4)(ii)(C)(5)
    Proposed Sec.  1006.6(d)(3)(i)(B)(1) would have required the opt-
out notice to specify a reasonable period within which a consumer could 
opt out, but it did not define the term reasonable period.
    Several industry commenters opposed an opt-out period, arguing that 
a consumer who provided electronic contact information to a creditor at 
account opening has decided to communicate electronically and, for 
these consumers, an opt-out period would only delay the use of 
electronic communications. Other industry commenters warned that 
failing to define the term reasonable period would create legal 
uncertainty and litigation risk, thereby discouraging use of the safe 
harbor and, in turn, electronic communications in debt collection. 
These commenters suggested opt-out periods ranging between five and 14 
days, variously noting that almost all requests to opt out would be 
received within the first week, that the CAN-SPAM Act requires covered 
entities to process email opt-out requests within 10 days,\304\ and 
that mortgage servicers must provide consumers at least 14 days to 
respond to an offer of loss mitigation in certain circumstances under 
the Bureau's mortgage servicing rules.\305\ A group of consumer 
advocate commenters also urged the Bureau to define the term reasonable 
period, suggesting that an opt-out period of fewer than 30 days could 
result in consumer confusion given the 30-day validation period 
required by FDCPA section 809.\306\
---------------------------------------------------------------------------

    \304\ 15 U.S.C. 7704(a)(4)(A); see also 84 FR 13115, 13118 (Apr. 
4, 2019).
    \305\ 12 CFR 1024.41(e).
    \306\ 15 U.S.C. 1692g.
---------------------------------------------------------------------------

    The Bureau declines the suggestion to eliminate the opt-out period 
altogether. As explained in the section-by-section analysis of Sec.  
1006.6(d)(4)(i), a consumer's decision to communicate electronically 
with a creditor does not, without more, suggest that the risk of third-
party disclosure is particularly low. However, the Bureau agrees with 
industry and consumer advocate commenters about the need to define the 
opt-out period more clearly. Leaving the period undefined, or relying 
on a reasonableness requirement, could create legal uncertainty that 
could hamper the use of electronic communications in debt collection 
and make it harder for consumers to enforce their rights.
    Accordingly, the final rule specifies that the opt-out period must 
last at least 35 days from the date the opt-out notice is sent. In 
deciding to finalize a 35-day minimum opt-out period, the Bureau 
concluded that, consistent with FDCPA section 809, which affords 
consumers 30 days within which to exercise certain statutory rights, 
consumers should be afforded at least 30 days within which to inform 
the debt collector of a decision to opt out. The Bureau included an 
additional five days to account for the time it might take an opt-out 
notice to reach a consumer by mail.\307\
---------------------------------------------------------------------------

    \307\ The Bureau recognizes that, if a creditor sends the opt-
out notice by email, a consumer might receive it instantaneously and 
read it soon thereafter. The Bureau notes, however, that some 
consumers, particularly those with limited internet access, do not 
check email regularly. Accordingly, a 35-day minimum period applies 
no matter how the opt-out notice is delivered.
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.6(d)(4)(ii)(C)(5), which requires the opt-out notice to disclose 
the date by which the debt collector or the creditor must receive the 
consumer's request to opt out, which must be at least 35 days after the 
date the notice is sent. The Bureau may consider changing the 35-day 
period in the future based on actual stakeholder experience with this 
provision.\308\ The Bureau also is adopting new comment 
6(d)(4)(ii)(C)(5)-1 to clarify that the opt-out notice may instruct the 
consumer to respond to the debt collector or to the creditor but not to 
both. The comment is meant to provide creditors and debt collectors 
with the flexibility to decide among themselves who will be responsible 
for receiving and processing opt-out requests, and to design the opt-
out process accordingly.\309\
---------------------------------------------------------------------------

    \308\ The Bureau recognizes that the information in a validation 
notice is more extensive than the information in the opt-out notice, 
and that a consumer's decision about how to engage with a debt 
collector in response to a validation notice may be more complex 
than a consumer's decision about whether to communicate with a debt 
collector using a particular email account.
    \309\ Proposed comment 6(d)(3)(i)(B)(1)-2 would have clarified 
that, if a creditor or a debt collector provides the opt-out notice 
orally, the creditor or the debt collector may require the consumer 
to make an opt-out decision during that same communication. Because 
final Sec.  1006.6(d)(4)(ii) does not permit oral delivery of the 
opt-out notice, the Bureau is not finalizing proposed comment 
6(d)(3)(i)(B)(1)-2.
---------------------------------------------------------------------------

6(d)(4)(ii)(D)
    Proposed Sec.  1006.6(d)(3)(i)(B)(2) provided that, for a debt 
collector to obtain a safe harbor from civil liability under the 
notice-and-opt-out method, the opt-out period must have expired, and 
the consumer must not have opted out. Proposed comment 
6(d)(3)(i)(B)(2)-1 clarified that, notwithstanding the expiration of 
the Sec.  1006.6(d)(3)(i)(B)(2) opt-out period, a consumer would remain 
free to request that a debt collector not use a particular email 
address, or not communicate using email generally, under proposed Sec.  
1006.14(h). For the reasons discussed below, the Bureau is finalizing 
proposed Sec.  1006.6(d)(3)(i)(B)(2) as Sec.  1006.6(d)(4)(ii)(D), 
largely as proposed but with non-substantive changes to reflect the 
revised organization and terminology in the final rule. The Bureau also 
is adopting new commentary for clarity and in response to feedback.
    First, an industry commenter raised a possible implementation issue 
regarding proposed Sec.  1006.6(d)(3)(i)(B)(2), observing that, given 
the time necessary for an opt-out notice to reach a consumer and for 
the consumer to notify a debt collector of a decision to opt out, a 
debt collector acting in good faith may risk communicating with the 
consumer after the opt-out period ends but before receiving the 
consumer's request to opt out. The commenter urged the Bureau to 
address this issue by creating a bright-line rule allowing for 
communication up to 45 days after the opt-out period ends.
    The Bureau believes that the commenter's proposed solution entails 
an unnecessarily prolonged risk of third-party disclosure. After the 
opt-out period ends, a debt collector who sends an email to an email 
address pursuant to the procedures in Sec.  1006.6(d)(4)(ii) remains 
within the safe harbor unless and until the debt collector receives the 
consumer's request to opt out of emails to that email address. Once the 
debt collector receives such a request, future emails to that email 
address would not be protected by the safe harbor.\310\
---------------------------------------------------------------------------

    \310\ Moreover, future emails to that address would be covered 
by Sec.  1006.14(h), which prohibits communicating or attempting to 
communicate with a person through a medium of communication if the 
person has requested that the debt collector not use that medium to 
communicate with the person. See the section-by-section analysis of 
Sec.  1006.14(h) and comment 14(h)(1)-1. Section 1006.14(h) would 
apply regardless of when the debt collector receives the consumer's 
request to opt out, i.e., whether before or after the opt-out period 
ends. A debt collector who sends an email to an email address after 
receiving a consumer's request to opt out under Sec.  
1006.6(d)(4)(ii) but before processing that request may have a bona 
fide error defense to civil liability under FDCPA section 813(c) 
with respect to unintentional violations of Sec.  1006.14(h).
---------------------------------------------------------------------------

    Second, a group of consumer advocate commenters requested that the 
Bureau revise proposed comment 6(d)(3)(i)(B)(2)-1 to clarify that 
consumers can, even after the expiration

[[Page 76787]]

of the opt-out period: (1) opt out of the debt collector's use of an 
email address pursuant to Sec.  1006.6(e); \311\ and (2) cease 
communication under Sec.  1006.6(c)(1).\312\ The Bureau is finalizing 
proposed comment 6(d)(3)(i)(B)(2)-1 as comment 6(d)(4)(ii)(D)-1, with 
revisions to incorporate these suggestions.
---------------------------------------------------------------------------

    \311\ Section 1006.6(e) requires a debt collector who 
communicates or attempts to communicate with a consumer 
electronically in connection with the collection of a debt using a 
specific email address, telephone number for text messages, or other 
electronic-medium address to include in such communication or 
attempt to communicate a clear and conspicuous statement describing 
a reasonable and simple method by which the consumer can opt out of 
further electronic communications or attempts to communicate by the 
debt collector to that address or telephone number.
    \312\ Section 1006.6(c)(1) prohibits a debt collector from 
communicating or attempting to communicate further with a consumer 
with respect to a debt if the consumer notifies the debt collector 
in writing that the consumer refuses to pay the debt or the consumer 
wants the debt collector to cease further communication with the 
consumer.
---------------------------------------------------------------------------

    Finally, industry commenters requested that the Bureau clarify 
whether a debt collector should treat a consumer's request to opt out 
as a request to cease communication under Sec.  1006.6(c)(1). A 
consumer's request to opt out in response to an opt-out notice that 
identifies a particular email address to which debt collection 
communications may be sent is generally not a request to opt out of all 
communications. Accordingly, new comment 6(d)(4)(ii)(D)-2 clarifies 
that, in the absence of evidence that the consumer refuses to pay the 
debt or wants the debt collector to cease all communication with the 
consumer, a consumer's request to opt out under Sec.  
1006.6(d)(4)(ii)(D) is not a request to cease all communication with 
respect to the debt under Sec.  1006.6(c)(1).
6(d)(4)(ii)(E)
    The notice-and-opt-out procedures in proposed Sec.  
1006.6(d)(3)(i)(B) would not have covered a debt collector who knew or 
should have known that the email address to which the debt collector 
sent an email was provided by the consumer's employer. In support of 
this proposed limitation, the Bureau explained that employer-provided 
email addresses present a heightened risk of third-party disclosure 
because many employers have a legal right to read messages sent and 
received by employees on employer-provided email accounts, and some 
employers exercise that right. The Bureau expressed concern that, 
unlike a consumer's affirmative decision to contact a debt collector 
using an employer-provided email address, a consumer's failure to opt 
out of a debt collector's use of an employer-provided email address 
after receiving an opt-out notice may not indicate that the consumer 
has assessed the risk of third-party disclosure to be low.\313\
---------------------------------------------------------------------------

    \313\ Proposed Sec.  1006.22(f)(3) would have prohibited a debt 
collector from communicating or attempting to communicate with a 
consumer using an email address that the debt collector knew or 
should have known was provided to the consumer by the consumer's 
employer, unless the debt collector received directly from the 
consumer either prior consent to use that email address or an email 
from that email address. As discussed in the section-by-section 
analysis of final Sec.  1006.22(f)(3), the Bureau is finalizing that 
provision with modifications. A debt collector who sends an email in 
conformity with Sec.  1006.6(d)(4)(ii) complies with Sec.  
1006.22(f)(3).
---------------------------------------------------------------------------

    Consumer advocate commenters generally supported the Bureau's 
proposal to exclude employer-provided email addresses from the proposed 
notice-and-opt-out procedures, while industry commenters generally 
opposed it. Many industry commenters raised operational concerns, 
stating that there is generally no way to know whether an email address 
is employer provided. These commenters stated that no database of 
employer-provided email addresses exists, and that reviewing domain 
names is a labor-intensive and manual process, as well as insufficient 
to determine whether an address is employer provided. For example, an 
``.edu'' domain name may indicate that a consumer is either a student 
or an employee of an educational institution. According to these 
commenters, because it is difficult to distinguish employer-provided 
email addresses from personal ones, excluding employer-provided email 
addresses from the notice-and-opt-out procedures would create an 
implementation problem that would discourage debt collectors from using 
the procedures, thus stifling electronic communications and harming 
consumers.
    In addition to these operational concerns, industry commenters 
noted that consumers often disclose employer-provided email addresses 
to creditors, including on account-opening documents. According to 
these commenters, a consumer who has disclosed an employer-provided 
email address to a creditor has chosen to communicate about the account 
by email, and that choice should be honored even after the account is 
transferred to a debt collector. Conversely, these commenters argued, a 
consumer who does not want to receive debt collection communications on 
an employer-provided email account can decline to provide the creditor 
with such an email address.
    In addition, several industry commenters argued that, although the 
Bureau based its proposal to exclude employer-provided email addresses 
from the safe harbor on its belief that many employers have the right 
to monitor emails received on employer-provided accounts, the Bureau 
presented no evidence justifying that belief. Relatedly, an industry 
commenter argued that the Bureau's concern about employer monitoring is 
misplaced because a personal email account may be monitored by a 
consumer's commercial email provider. Industry commenters also argued 
that other proposed rule provisions--such as the requirement in 
proposed Sec.  1006.6(e) to include, in all electronic communications, 
instructions for opting out of such communications--would sufficiently 
protect consumers who receive unwanted emails on employer-provided 
accounts.
    As the Bureau noted in the proposal, many employers have a legal 
right to read, and frequently do read, messages sent or received by 
employees on employer-provided email accounts.\314\ The Bureau 
disagrees that a debt collector who sends an email to an employer-
provided email address should be entitled to a safe harbor from civil 
liability as long as the consumer provided that address to the 
creditor. As discussed in the section-by-section analysis of Sec.  
1006.6(d)(4)(i), a consumer's decision to communicate by email with a 
creditor does not, without more, suggest that the risk of third-party 
disclosure is particularly low should a debt collector send an email to 
the same email address. Although the Bureau agrees that proposed Sec.  
1006.6(e)--which the Bureau is finalizing largely as proposed in final 
Sec.  1006.6(e)--would help limit the risk of third-party disclosure by 
enabling consumers to opt

[[Page 76788]]

out of electronic communications easily, the Bureau notes that the 
protection afforded by Sec.  1006.6(e) is effective only after the debt 
collector has sent an email to the consumer and the consumer's privacy 
interest has already been compromised.
---------------------------------------------------------------------------

    \314\ See 84 FR 23274, 23324 n.357 (May 21, 2019) (citing Am. 
Mgmt. Ass'n & ePolicy Inst., Electronic Monitoring and Surveillance 
2007 Survey (2008), https://www.epolicyinstitute.com/2007-survey-results (reporting that a survey of employers conducted in 2007 
found that, among other things, 43 percent of employers monitored 
their employees' email accounts and 66 percent of employers 
monitored their employees' internet connection, with 45 percent of 
employers tracking the content, keystrokes, and time spent at the 
keyboard); Bingham v. Baycare Health Sys., No. 8:14-CV-73-T-23JSS, 
2016 WL 3917513, at *4 (M.D. Fla. July 20, 2016) (collecting cases 
and concluding that ``the majority of courts have found that an 
employee has no reasonable expectation of privacy in workplace 
emails when the employer's policy limits personal use or otherwise 
restricts employees' use of its system and notifies employees of its 
policy'')); see generally Andrew Milam Jones, Employee Monitoring: 
An Overview of Technologies, Treatment, and Best Practices, 83 Tx. 
B.J. 98 (2020); Shawn Marie Boyne, Data Protection in the United 
States, 66 Am. J. Comp. L. 299, 313-14 (2018).
---------------------------------------------------------------------------

    As for the observation that a personal email account may be 
monitored or scanned by a commercial email provider, the Bureau 
believes that monitoring by an employer is distinguishable from 
monitoring or scanning by a non-employer email provider. Congress and 
the courts have recognized that a consumer may suffer significant harm, 
including loss of employment, if an employer learns that the consumer 
has a debt in collection.\315\ Although some commercial email providers 
monitor or scan consumer email accounts to deliver targeted 
advertisements or services through associated applications,\316\ this 
type of activity generally does not threaten a consumer's employment or 
reputation in the same way.
---------------------------------------------------------------------------

    \315\ S. Rep. No. 382, supra note 52, at 1699 (``[A] debt 
collector may not contact third persons such as a consumer's 
friends, neighbors, relatives, or employer. Such contacts are not 
legitimate collection practices and result in serious invasions of 
privacy, as well as the loss of jobs.''); id. at 1696 (``Collection 
abuse takes many forms, including . . . disclosing a consumer's 
personal affairs to friends, neighbors, or an employer.''); 122 
Cong. Rec. H730707 (daily ed. July 19, 1976) (remarks of Rep. 
Annunzio on H. Rep. No. 13720) (Clearinghouse No. 31,059U) 
(``Communication with a consumer at work or with his employer may 
work a tremendous hardship for a consumer because such calls can 
embarrass a consumer and can result in his losing a deserved 
promotion'' and ``[i]f a consumer loses his job, he is in a worse, 
not better, position to pay the debt.''); Am. Fin. Servs. Ass'n v. 
Fed. Trade Comm'n, 767 F.2d 957, 974 (D.C. Cir. 1985) (upholding 
provision in the FTC's Credit Practices Rule that prohibited certain 
wage assignments because, among other things, the rulemaking record 
showed that ``employers tend to view the consumer's failure to repay 
the debt as a sign of irresponsibility. As a consequence, many lose 
their jobs after wage assignments are filed. Even if the consumer 
retains the job, promotions, raises, and job assignments may be 
adversely affected.'') (citing Credit Practices Rule, 49 FR 7740, 
7758 (Mar. 1, 1984) (codified at 16 CFR 444)); Fed. Trade Comm'n v. 
LoanPointe, LLC, No. 2:10-CV-225DAK, 2011 WL 4348304, at *6-8 (D. 
Utah Sept. 16, 2011) (holding that ``Defendants' practice of 
disclosing debts and the amount of the debts to consumers' 
employers'' violated the FDCPA and ``qualifies as an unfair practice 
under the FTC Act''), aff'd, 525 F. App'x 696 (10th Cir. 2013).
    \316\ See, e.g., Jack Schofield, What's the Best Email Service 
That Doesn't Scan Emails for Ad Targeting, The Guardian (Apr. 19, 
2018), https://www.theguardian.com/technology/askjack/2018/apr/19/whats-the-best-email-service-that-doesnt-scan-emails-for-ad-targeting; cf. Daisuke Wakabayashi, Google Will No Longer Scan Gmail 
for Ad Targeting, N.Y. Times (June 23, 2017), https://www.nytimes.com/2017/06/23/technology/gmail-ads.html.
---------------------------------------------------------------------------

    The Bureau recognizes that distinguishing between employer-provided 
and personal email addresses presents a practical challenge for debt 
collectors. The Bureau is aware of no database of employer-provided 
email addresses that debt collectors can consult, and reviewing domain 
names will not always answer whether an email address is personal or 
employer provided. The Bureau finds, however, that most employer-
provided email addresses have domain names that are not available to 
the general public and that it is relatively straightforward for a debt 
collector to distinguish domain names that are publicly available from 
those that are not. The Bureau also finds that, if employer-provided 
email addresses have domain names that are publicly available, it will 
be difficult (absent actual knowledge) for a debt collector to 
distinguish such an email address from a personal one.
    For these reasons, the Bureau is finalizing Sec.  
1006.6(d)(4)(ii)(E) to maintain the exclusion of most employer-provided 
email addresses from the notice-and-opt-out safe harbor, but also to 
clarify how debt collectors can distinguish between employer-provided 
and personal email addresses for purposes of satisfying the safe 
harbor. Specifically, Sec.  1006.6(d)(4)(ii)(E) provides that a debt 
collector may obtain a safe harbor from civil liability for an 
unintentional third-party disclosure if, among other things, the debt 
collector communicated by sending an email to an email address with a 
domain name that is available for use by the general public, unless the 
debt collector knows the address is provided by the consumer's 
employer. The Bureau believes that Sec.  1006.6(d)(4)(ii)(E) 
effectively excludes most employer-provided email addresses from the 
notice-and-opt-out safe harbor, thereby largely avoiding the third-
party disclosure risks associated with such addresses while imposing a 
manageable operational burden on debt collectors. To the extent a debt 
collector regards the limitation in Sec.  1006.6(d)(4)(ii)(E) as 
overbroad--because, for example, it does not cover a debt collector who 
sends an email to an ``.edu'' address--the Bureau reiterates that a 
debt collector may communicate by email without following the 
procedures in Sec.  1006.6(d)(4)(ii). Such a debt collector would, 
however, lose the protection of the safe harbor (unless the debt 
collector's use of the email address otherwise satisfies the 
requirements of Sec.  1006.6(d)(3)).
    The Bureau also is adopting new comments 6(d)(4)(ii)(E)-1 and -2 to 
clarify certain aspects of final Sec.  1006.6(d)(4)(ii)(E). Comment 
6(d)(4)(ii)(E)-1 clarifies that the domain name of an email address is 
available for use by the general public when multiple members of the 
general public are permitted to use the same domain name, whether for 
free or through a paid subscription. Such a name includes, for example, 
gmail.com">[email protected]gmail.com and [email protected]. Such a name does not include 
one that is reserved for use by specific registrants, such as a domain 
name branded for use by a particular commercial entity (e.g., 
[email protected]) or reserved for particular types of 
institutions (e.g., [email protected], [email protected], or 
[email protected]). Comment 6(d)(4)(ii)(E)-2 clarifies that, for 
purposes of Sec.  1006.6(d)(4)(ii)(E), a debt collector knows that an 
email address is provided by the consumer's employer if any person has 
informed the debt collector that the address is employer provided. 
Comment 6(d)(4)(ii)(E)-2 further clarifies that Sec.  
1006.6(d)(4)(ii)(E) does not require a debt collector to conduct a 
manual review of consumer email addresses to determine whether an email 
address might be employer provided.
6(d)(4)(iii) Procedures Based on Communication by the Prior Debt 
Collector
    Proposed Sec.  1006.6(d)(3)(i)(C) (the ``creditor-or-prior-debt-
collector-use'' method) provided that a debt collector could obtain a 
safe harbor from civil liability for an unintentional third-party 
disclosure if, in addition to complying with Sec.  1006.6(d)(3)(ii), 
the debt collector maintained procedures to reasonably confirm and 
document that: (1) The debt collector communicated with the consumer 
using a personal email address that the creditor or a prior debt 
collector obtained from the consumer to communicate about the debt; (2) 
the creditor or the prior debt collector recently sent communications 
about the debt to that email address; and (3) the consumer did not ask 
the creditor or the prior debt collector to stop such 
communications.\317\
---------------------------------------------------------------------------

    \317\ As noted, proposed Sec.  1006.6(d)(3)(i)(C) would have 
applied to both email addresses and telephone numbers, but final 
Sec.  1006.6(d)(4)(iii) applies only to email addresses. This 
section-by-section analysis therefore addresses proposed Sec.  
1006.6(d)(3)(i)(C) only with respect to comments that specifically 
discussed email addresses, or that did not distinguish between email 
addresses and telephone numbers. Comments received in response to 
proposed Sec.  1006.6(d)(3)(i)(C) that discussed telephone numbers 
are addressed in the section-by-section analysis of Sec.  
1006.6(d)(5).
---------------------------------------------------------------------------

    Many consumer advocate commenters opposed proposed Sec.  
1006.6(d)(3)(i)(C) on the ground that, when consumers provide email 
addresses to creditors, they typically do not think about the

[[Page 76789]]

possibilities that they will fail to make payments, that the account 
will be transferred to a debt collector, and that the debt collector 
will use the email address to communicate electronically. In addition, 
these commenters noted, years may pass, and a consumer's circumstances 
may change, between the time a consumer provides an email address to a 
creditor and the time a debt collector uses that email address to try 
to collect a debt. Thus, according to these commenters, a consumer's 
decision to provide an email address to a creditor says little about 
the risk of third-party disclosure if a debt collector uses that email 
address at some later date, and a debt collector who followed the 
procedures in proposed Sec.  1006.6(d)(3)(i)(C) could not claim that it 
lacked reason to anticipate a third-party disclosure. The Bureau agrees 
with these concerns and notes that there are other reasons why a 
consumer might provide an email address to a creditor but not to a debt 
collector. For example, a consumer may conclude that the potential risk 
to a creditor's reputation and the potential risk of losing the 
consumer as a customer--risks that may not exist, or that may exist to 
a lesser extent, for debt collectors--constrain the creditor from 
misusing the email address. The Bureau therefore declines to finalize a 
safe harbor based solely on the creditor's prior use of an email 
address.\318\ For the reasons discussed below, however, the Bureau is 
finalizing other aspects of proposed Sec.  1006.6(d)(3)(i)(C), with 
revisions, as Sec.  1006.6(d)(4)(iii).
---------------------------------------------------------------------------

    \318\ As discussed in the section-by-section analysis of Sec.  
1006.6(d)(4)(ii), however, the Bureau is strengthening the final 
notice-and-opt-out procedures by incorporating aspects of proposed 
Sec.  1006.6(d)(3)(i)(C) into them, including by requiring the 
creditor to send the notice to an email address obtained from the 
consumer and used to communicate about the account. The Bureau 
discusses those aspects of proposed Sec.  1006.6(d)(3)(i)(C), and 
public comments related to them, where relevant in the section-by-
section analysis of Sec.  1006.6(d)(4)(ii).
---------------------------------------------------------------------------

    First, like the proposal, the final rule provides a debt collector 
in certain circumstances with a safe harbor from civil liability for an 
unintentional third-party disclosure when sending an email to an email 
address obtained and used by a prior debt collector. However, unlike 
the proposal, a safe harbor is available under Sec.  1006.6(d)(4)(iii) 
only if the debt collector uses an email address obtained by a prior 
debt collector in accordance with either Sec.  1006.6(d)(4)(i) or (ii). 
As already discussed, the Bureau determines that an email address 
obtained by a debt collector pursuant to the procedures in Sec.  
1006.6(d)(4)(i) or (ii) presents a relatively low risk of unintentional 
third-party disclosure.\319\ Second, like the proposal, the final rule 
requires that a prior debt collector actually have communicated with 
the consumer about the debt using the email address the current debt 
collector intends to use.\320\ However, unlike the proposal, a safe 
harbor is available under Sec.  1006.6(d)(4)(iii) only if the 
immediately prior debt collector--i.e., the debt collector immediately 
preceding the current one--used the email address to communicate with 
the consumer about the debt. A consumer's personal circumstances may 
change over time, and limiting Sec.  1006.6(d)(4)(iii) to email 
addresses used by the immediately prior debt collector decreases this 
risk in some circumstances. Third, the final rule requires that, for a 
debt collector to obtain a safe harbor from civil liability under Sec.  
1006.6(d)(4)(iii), the consumer must not have asked the immediately 
prior debt collector to stop using the email address for debt 
collection communications.
---------------------------------------------------------------------------

    \319\ Section 1006.6(d)(4)(ii), as noted, does not protect a 
debt collector who uses an email address that a debt collector knows 
is provided by a consumer's employer. Section 1006.6(d)(4)(iii) does 
not include a similar prohibition. This is because a condition of 
Sec.  1006.6(d)(4)(iii) is that the consumer not have opted out of 
the immediately prior debt collector's use of the particular email 
address, a factor that, when satisfied, suggests that the risk of 
third-party disclosure is low if the later debt collector uses the 
email address. Therefore, a later debt collector may obtain a safe 
harbor from civil liability under Sec.  1006.6(d)(4)(iii) even if it 
knows that the consumer's email address is employer provided.
    \320\ The final rule eliminates the proposed recency requirement 
for the same reasons discussed in the section-by-section analysis of 
Sec.  1006.6(d)(4)(i)(A).
---------------------------------------------------------------------------

    Accordingly, final Sec.  1006.6(d)(4)(iii) provides that a debt 
collector may obtain a safe harbor from civil liability for an 
unintentional third-party disclosure when sending an email to an email 
address if: (1) Any prior debt collector obtained the email address in 
accordance with Sec.  1006.6(d)(4)(i) or (ii); (2) the immediately 
prior debt collector used the email address to communicate with the 
consumer about the debt; and (3) the consumer did not opt out of such 
communications.\321\ The Bureau is adopting new comment 6(d)(4)(iii)-1 
to clarify that, for purposes of Sec.  1006.6(d)(4)(iii), the 
immediately prior debt collector is the debt collector immediately 
preceding the current debt collector. The Bureau also is adopting new 
comment 6(d)(4)(iii)-2 to provide examples illustrating the rule.
---------------------------------------------------------------------------

    \321\ As noted in the section-by-section analysis of Sec.  
1006.6(d)(4)(ii)(C), an industry commenter expressed concern about 
how the procedures apply to the mortgage servicing practice of 
sending RESPA-required transfer-of-servicing letters, also known as 
hello and goodbye letters, by email. If a mortgage servicer who is 
an FDCPA debt collector sends such a hello letter, the debt 
collector may, under Sec.  1006.6(d)(4)(iii), obtain a safe harbor 
from civil liability for an unintentional third-party disclosure if 
the debt collector sends the letter to an email address that any 
prior debt collector obtained in accordance with Sec.  
1006.6(d)(4)(i) or (ii), the immediately prior debt collector used 
the email address to communicate with the consumer, and the consumer 
did not opt out of such communications.
---------------------------------------------------------------------------

6(d)(5) Procedures for Telephone Numbers for Text Messages
    As noted above, the final rule reorganizes proposed Sec.  
1006.6(d)(3)(i) by separating email procedures and text message 
procedures. Final Sec.  1006.6(d)(5) describes the procedures that a 
debt collector may use to obtain a safe harbor from civil liability for 
an unintentional third-party disclosure when communicating by text 
message. The final text message procedures are discussed in detail in 
the section-by-section analysis of Sec.  1006.6(d)(5)(i) and (ii).
Proposed Provisions Not Finalized
    The proposal identified opt-out procedures (proposed Sec.  
1006.6(d)(3)(i)(B)) and creditor-and-prior-debt-collector-use 
procedures (proposed Sec.  1006.6(d)(3)(i)(C)) that a debt collector 
could use to reduce the risk of liability for an unintentional third-
party disclosure when sending emails or text messages to a consumer. 
The Bureau is not finalizing either set of procedures as to text 
messages.
    As discussed in the section-by-section analysis of Sec.  
1006.6(d)(5)(i), the practice of reassigning telephone numbers 
increases the risk of third-party disclosure when a debt collector 
sends a text message to a telephone number. The Bureau determines that 
the text message procedures it is finalizing in Sec.  1006.6(d)(5)(i) 
and (ii)--which, as explained below, resemble an opt-in approach--
address the risk posed by reassignment comprehensively. The Bureau will 
monitor debt collectors' use of the text message procedures in Sec.  
1006.6(d)(5) and may revisit at a later date whether additional 
procedures, including procedures similar to those in final Sec.  
1006.6(d)(4)(ii) and (iii), can be designed to address the risk of 
third-party disclosure. Although the Bureau is not finalizing notice-
and-opt-out or prior-use safe harbor procedures for text messages, the 
Bureau notes that the final rule does not prohibit debt collectors from 
communicating with consumers by text message outside of the safe 
harbors.
6(d)(5)(i)
    As proposed, Sec.  1006.6(d)(3)(i)(A) (the ``consumer-use'' method) 
for text messages provided that a debt collector could obtain a safe 
harbor from civil

[[Page 76790]]

liability for an unintentional third-party disclosure if, in addition 
to complying with Sec.  1006.6(d)(3)(ii), the debt collector maintained 
procedures to reasonably confirm and document that the debt collector 
sent a text message to the consumer using a telephone number that the 
consumer recently used to contact the debt collector for purposes other 
than opting out of electronic communications.\322\ As discussed below, 
the Bureau is finalizing the proposed consumer-use method for text 
messages as Sec.  1006.6(d)(5)(i), with modifications and additions to 
address comments received, and with revisions for clarity.
---------------------------------------------------------------------------

    \322\ Proposed Sec.  1006.6(d)(3)(i)(A) would have applied to 
both email addresses and telephone numbers for text messages, but 
final Sec.  1006.6(d)(5)(i) only applies to telephone numbers for 
text messages. This section-by-section analysis therefore addresses 
proposed Sec.  1006.6(d)(3)(i)(A) only with respect to comments that 
specifically discussed text messages. Comments received in response 
to proposed Sec.  1006.6(d)(3)(i)(A) that discussed email addresses 
are addressed in the section-by-section analysis of Sec.  
1006.6(d)(4)(i).
---------------------------------------------------------------------------

    The Bureau based the proposed consumer-use procedures for text 
messages on the same assumption as the proposed consumer-use procedures 
for email addresses, i.e., that a debt collector may not have a reason 
to anticipate a third-party disclosure when sending a text message to a 
telephone number that the consumer recently used to communicate with 
the debt collector. The Bureau reasoned that, as with email addresses, 
consumers generally are better positioned than debt collectors to 
determine if third parties have access to a particular telephone number 
for text messages.\323\
---------------------------------------------------------------------------

    \323\ See the section-by-section analysis of Sec.  
1006.6(d)(4)(i).
---------------------------------------------------------------------------

    Feedback from industry and consumer advocate commenters regarding 
the Bureau's reasoning was similar to feedback regarding the consumer-
use procedures for email addresses, with industry generally supporting 
the Bureau's reasoning and consumer advocates generally opposing it for 
the reasons discussed in the section-by-section analysis of Sec.  
1006.6(d)(4)(i). Also for the reasons discussed in that section-by-
section analysis, the Bureau determines that a debt collector who sends 
a text message to a telephone number that the consumer has used to 
communicate with the debt collector by text message generally would 
lack reason to anticipate a third-party disclosure. However, for the 
reasons discussed in Sec.  1006.14(h)(1), a debt collector could not 
continue to use a telephone number for text messages if the consumer 
asked the debt collector not to engage in such communications.
    An industry commenter and a group of consumer advocate commenters 
asked whether the proposed consumer-use method--which would have 
provided a safe harbor for text messages sent to a telephone number 
that the consumer had used ``to contact'' the debt collector--would 
protect a debt collector who sent a text message to a telephone number 
that the consumer had used to call (but not to text) the debt 
collector. The group of consumer advocate commenters argued that a call 
from a telephone number does not invite a text message to that number, 
while the industry commenter simply asked for clarification. Because a 
consumer who places a telephone call to a debt collector generally can 
control who listens to the conversation by initiating or engaging in 
the call in private, the Bureau does not believe that a consumer's 
decision to call a debt collector, without more, generally suggests 
that the risk of third-party disclosure is low if the debt collector 
sends a text message to the same telephone number. Therefore, the text 
of Sec.  1006.6(d)(5)(i), and new comment 6(d)(5)(i)-1, clarify that 
the consumer-use method for text messages does not apply if the 
consumer only used the telephone number to communicate with the debt 
collector about the debt by telephone call.
    An industry commenter asked whether, under the proposed consumer-
use method, a debt collector would be protected from liability when 
responding to a consumer by text message if, after attempting to 
communicate with the consumer by telephone, the debt collector received 
a text message from the consumer asking ``Who is this? What is this 
about? Please text me back.'' The Bureau determines that a consumer who 
responds to a missed telephone call by sending a text message asking 
``who is this? what is this about?'' and requesting a return text 
message likely does not know that the underlying communication or 
attempted communication was from a debt collector or related to a debt. 
Such a request therefore would not, without more, suggest that the risk 
of third-party disclosure is low if the debt collector responded by 
text message.\324\ For this reason, the Bureau is finalizing the 
consumer-use method for text messages with a clarification that it 
applies only if the consumer used the telephone number to communicate 
with the debt collector about the debt. Accordingly, Sec.  
1006.6(d)(5)(i) does not cover a debt collector who sends a text 
message to a consumer after receiving a text message from the consumer 
asking ``Who is this? What is this about? Please text me back.''
---------------------------------------------------------------------------

    \324\ Nothing in the final rule prohibits a debt collector from 
communicating by text message in this scenario, although the Bureau 
notes that the prohibition in Sec.  1006.6(d)(1) would apply.
---------------------------------------------------------------------------

    The Bureau received numerous comments regarding proposed Sec.  
1006.6(d)(3)(i)(A)'s recency requirement, i.e., the requirement that 
the consumer have recently used the telephone number to contact the 
debt collector. As discussed in the section-by-section analysis of 
Sec.  1006.6(d)(4)(i), multiple industry, consumer, and consumer 
advocate commenters confirmed the Bureau's understanding, as discussed 
in the proposal, that telephone numbers are regularly reassigned. 
Consumer advocate commenters thus generally supported applying the 
recency requirement to telephone numbers, and industry commenters 
generally did not oppose doing so.
    Consumer advocate and industry commenters both argued, however, 
that the Bureau should define the term ``recently,'' with consumer 
advocates noting that a definition would better protect consumers and 
industry commenters noting that failing to define the term would create 
unnecessary litigation risk. A consumer advocate commenter urged the 
Bureau to define recent as within the past 30 days to reflect the 
month-to-month nature of many pay-as-you-go mobile telephone plans. 
This commenter also expressly opposed defining recent as within the 
past year, arguing that a period of this length fails to recognize that 
low-income consumers in financial crisis may change telephone numbers 
multiple times in a single year. Some industry commenters argued that 
30 days would adequately protect consumers while allowing debt 
collectors sufficient time to respond to consumer inquiries. A few 
industry commenters argued in favor of 60 days without explaining their 
reasoning, and others supported a one-year period.
    As discussed in the proposal, and as confirmed by commenters, 
millions of telephone numbers are disconnected and made available for 
reassignment each year, increasing the risk of third-party disclosure 
when a debt collector sends a text message.\325\ For this reason, the 
Bureau is finalizing a recency requirement as part of the consumer-use

[[Page 76791]]

method for text messages. The Bureau agrees with commenters that the 
final rule should better define what constitutes ``recently.'' In this 
regard, the Bureau notes that the FCC has established a 45-day minimum 
aging period and a 90-day maximum aging period for telephone number 
reassignments.\326\ In other words, no fewer than 45 days and no more 
than 90 days may pass between the time a carrier disconnects a 
telephone number and the time it reassigns the number to a new 
consumer. The Bureau does not have reason to believe that a significant 
number of consumers have their telephone numbers disconnected the same 
day they contact a debt collector. Accordingly, the Bureau believes 
that basing the text message recency requirement on the 45-day minimum-
aging period would be unnecessarily restrictive. At the same time, 
because all disconnected telephone numbers must be reassigned within 90 
days, the Bureau believes that basing the text message recency 
requirement on the 90-day maximum aging period would not adequately 
address the risk of third-party disclosure posed by reassignment. The 
Bureau therefore is finalizing a 60-day recency requirement as part of 
the consumer-use procedures for text messages. The Bureau finds that a 
60-day period will protect consumers against the risk of reassignment, 
facilitate the responsible use of text message communications in debt 
collection, and provide stakeholders with clarity.
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    \325\ See 84 FR 23274, 23301 (May 21, 2019) (noting that, 
according to a 2018 FCC notice of proposed rulemaking, 35 million 
telephone numbers are disconnected and made available for 
reassignment each year).
    \326\ See In re Advanced Methods to Target & Eliminate Unlawful 
Robocalls, 33 FCC Rcd. 12024, 12030-31 (Dec. 12, 2018) (citing 47 
CFR 52.15(f)(1)(ii), 52.103(d)).
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    An alternative way to address the risk of third-party disclosure 
posed by the reassignment of telephone numbers is to require debt 
collectors to confirm that a telephone number belongs to a consumer 
before sending a text message to that number, such as by consulting a 
reliable third-party database. Indeed, several industry commenters 
urged the Bureau to incorporate the use of a third-party database into 
the procedures. For example, several industry commenters argued that 
debt collectors should receive a safe harbor from civil liability for 
an unintentional third-party disclosure when using any telephone number 
for text messages as long as the telephone number has recently been 
verified or validated as accurate. One industry commenter would have 
defined validated to mean that a debt collector had confirmed the 
accuracy of the telephone number using a third-party database.\327\
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    \327\ A consumer advocate commenter also proposed requiring debt 
collectors to verify consumers' contact information before 
communicating electronically, but the commenter did not define the 
term verify, and it is possible the commenter was simply advocating 
for an opt-in system.
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    The FCC has observed that, although commercial databases currently 
exist to help callers determine whether a telephone number has been 
reassigned, these databases are not comprehensive.\328\ For this 
reason, in December 2018, the FCC announced the creation of a new 
database to serve as a single, comprehensive source for determining 
whether a telephone number has been reassigned.\329\ The purpose of the 
database, known as the Reassigned Numbers Database, is to help curb the 
proliferation of unwanted telephone calls directed to reassigned 
telephone numbers.\330\ Once operational, the database will contain 
reassigned number information from each provider that obtains North 
American Numbering Plan U.S. geographic numbers and toll-free 
numbers.\331\ Users will be able to consult the database to determine 
whether a telephone number has been permanently disconnected since a 
particular date--such as the date the consumer last consented to 
communicate by text message or the date of the consumer's most recent 
text message--and therefore no longer belongs to the consumer.\332\ If 
the database shows that a particular telephone number has been 
disconnected, then a debt collector has reason to anticipate that 
sending a text message to that number will result in a third-party 
disclosure. Thus, once operational, the FCC's Reassigned Numbers 
Database can help debt collectors comply with FDCPA section 805(b) and 
the final rule's prohibition on third-party disclosures.
---------------------------------------------------------------------------

    \328\ Reassigned Numbers Database (RND) Technical Requirements 
Document, 35 FCC Rcd. 38, ] 1.3 (Jan. 13, 2020) (observing that 
``[c]ommercial databases exist to aid callers, but these databases 
are not comprehensive''); 33 FCC Rcd. at 12027 (observing that 
commercial databases ``are not comprehensive'').
    \329\ 33 FCC Rcd. at 12025.
    \330\ Id.
    \331\ Id.
    \332\ Id. at 12029.
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    Accordingly, the final rule permits debt collectors sending text 
messages to use a complete and accurate database to verify that a 
particular telephone number continues to belong to the consumer. Debt 
collectors may rely either on this method or on the receipt of a recent 
text message from the consumer. Comment 6(d)(5)-1 clarifies that, for 
purposes of the consumer-use procedures, the FCC's Reassigned Numbers 
Database qualifies as a complete and accurate database,\333\ as does 
any commercially available database that is substantially similar in 
terms of completeness and accuracy to the FCC's Reassigned Numbers 
Database.\334\ The Bureau recognizes that, as a result of technological 
developments, debt collectors and others may develop new methods to 
confirm whether a telephone number has been reassigned, some of which 
may offer a level of certainty comparable to consulting a complete and 
accurate database. The Bureau will monitor the market for any such 
developments and consider whether to modify or expand the text message 
safe harbor procedures in the future.
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    \333\ The Bureau recognizes that the FCC's Reassigned Numbers 
Database is not yet operational. Once it is operational, debt 
collectors may incorporate its use into their procedures under Sec.  
1006.6(d)(5)(i).
    \334\ As noted, the FCC has observed that currently available 
commercial databases are not comprehensive. 33 FCC Rcd. at 12027. If 
a commercially available database that is substantially similar in 
terms of completeness and accuracy to the FCC's Reassigned Numbers 
Database does exist or come into existence, debt collectors may 
incorporate its use into their procedures under Sec.  
1006.6(d)(5)(i).
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.6(d)(5)(i), which provides that a debt collector may obtain a safe 
harbor from civil liability for an unintentional third-party disclosure 
when sending a text message to a telephone number if the consumer used 
the telephone number to communicate with the debt collector about the 
debt by text message, the consumer has not since opted out of text 
message communications to that telephone number, and within the past 60 
days either: (1) The consumer sent a text message to the debt collector 
from that telephone number; or (2) the debt collector confirmed, using 
a complete and accurate database, that the telephone number has not 
been reassigned from the consumer to another user since the date of the 
consumer's most recent text message to the debt collector from that 
telephone number. As noted, the Bureau also is adopting new comment 
6(d)(5)-1 to clarify the meaning of complete and accurate database, and 
new comment 6(d)(5)(i)-1 to clarify that Sec.  1006.6(d)(5)(i) does not 
apply if the consumer used the telephone number to communicate with the 
debt collector about the debt only by telephone call.

[[Page 76792]]

6(d)(5)(ii)
    Several industry commenters requested that the Bureau expand the 
procedures in proposed Sec.  1006.6(d)(3)(i)(A), or create new 
procedures, to protect a debt collector who communicates with a 
consumer by text message after receiving the consumer's permission to 
do so. The Bureau believes that, if a consumer has consented to a debt 
collector's use of a particular telephone number for text messages and 
has not withdrawn that consent, the debt collector generally does not 
have reason to anticipate that using the telephone number to 
communicate with the consumer by text message will lead to a third-
party disclosure--as long as the debt collector has taken steps to 
confirm that the telephone number has not been reassigned.\335\ For 
this reason, the Bureau is finalizing Sec.  1006.6(d)(5)(ii), which 
provides that a debt collector may obtain a safe harbor from civil 
liability for an unintentional third-party disclosure when sending a 
text message to a telephone number if the debt collector received 
directly from the consumer prior consent to use the telephone number to 
communicate with the consumer about the debt by text message, the 
consumer has not since withdrawn that consent, and within the past 60 
days the debt collector either: (1) Obtained the prior consent or 
renewed consent from the consumer; or (2) confirmed, using a complete 
and accurate database, that the telephone number has not been 
reassigned from the consumer to another user since the date of the 
consumer's most recent consent to use that telephone number to 
communicate about the debt by text message. The additional steps to 
confirm that the telephone number has not been reassigned are similar 
to those in Sec.  1006.6(d)(5)(i), and, like those steps, are designed 
to increase the likelihood that the telephone number continues to 
belong to the consumer when the debt collector communicates by text 
message.
---------------------------------------------------------------------------

    \335\ The section-by-section analysis of Sec.  1006.6(d)(4)(i) 
explains the basis for the Bureau's belief that a debt collector 
generally does not have reason to anticipate a third-party 
disclosure when communicating by email with the consumer's 
permission. The same explanation applies to text messages.
---------------------------------------------------------------------------

    As noted in the section-by-section analysis of Sec.  
1006.6(d)(5)(i), new comment 6(d)(5)-1 clarifies that the FCC's 
Reassigned Numbers Database qualifies as a complete and accurate 
database for purposes of Sec.  1006.6(d)(5)(ii), as does any 
commercially available database that is substantially similar in terms 
of completeness and accuracy to the FCC's Reassigned Numbers Database. 
The Bureau also is adopting new commentary to clarify the meaning of 
prior consent provided directly to a debt collector in the context of 
Sec.  1006.6(d)(5)(ii). Specifically, new comment 6(d)(5)(ii)-1 refers 
to comment 6(d)(4)(i)(B)-1 for guidance concerning how a consumer may 
provide prior consent directly to a debt collector generally, and to 
comment 6(d)(4)(i)(B)-2 for guidance concerning when a debt collector 
may treat a consumer who provides a telephone number for text messages 
as having provided prior consent directly to the debt collector.
6(e) Opt-Out Notice for Electronic Communications or Attempts To 
Communicate
    The use of electronic media for debt collection communications can 
further the interests of both consumers and debt collectors. As the 
Bureau explained in the proposal, however, electronic communications 
also pose potential consumer harms.\336\ One potential harm relates to 
consumer harassment. Because the marginal cost of transmitting 
electronic communications to consumers is low, particularly when 
compared to mail communications, debt collectors have less economic 
incentive to limit the number of such communications. Repeated or 
continuous debt collection communications can have the natural 
consequence of harassing, oppressing, or abusing the recipient.\337\
---------------------------------------------------------------------------

    \336\ In this section-by-section analysis, the Bureau uses the 
phrase ``electronic communication'' to refer to emails, text 
messages, and other similar electronic communications that are 
readable.
    \337\ As explained in the section-by-section analysis of Sec.  
1006.14(a), the general prohibition in Sec.  1006.14(a) prohibits 
conduct the natural consequence of which is to harass, oppress, or 
abuse any person in connection with the collection of a debt. In the 
final rule, the Bureau is adopting two comments to clarify that the 
general prohibition on harassing conduct applies to debt collectors' 
use of communication media other than telephone calls, including 
cumulative communications involving telephone calls and other media.
---------------------------------------------------------------------------

    Another potential consumer harm relates to communication costs. As 
explained in the section-by-section analysis of Sec.  1006.6(d)(3), 
consumers without unlimited text messaging plans may incur a charge 
each time they receive a text message, or each time they receive a text 
message that exceeds a specified limit. Some consumers without 
unlimited data plans also may incur a charge when they receive emails.
    A way to help consumers address potentially harassing or costly 
electronic communications is to provide them with a convenient way to 
opt out of such communications.\338\ Thus, proposed Sec.  1006.6(e) 
would have required debt collectors to describe, clearly and 
conspicuously in every electronic communication, how consumers can opt 
out of receiving such communications directed at a specific email 
address, telephone number for text messages, or other electronic-medium 
address.\339\ It also would have prohibited a debt collector from 
requiring, directly or indirectly, that the consumer, to opt out, pay 
any fee to the debt collector or provide any information other than the 
email address, telephone number for text messages, or other electronic-
medium address subject to the opt-out request. In response to feedback, 
the Bureau is finalizing proposed Sec.  1006.6(e) with modifications 
for clarity as described below. Among other things, final Sec.  
1006.6(e) increases protection for consumers and increases clarity for 
debt collectors by specifying that the opt-out method debt collectors 
provide must be reasonable and simple.
---------------------------------------------------------------------------

    \338\ As the Bureau noted in the proposal, an opt-out 
requirement is consistent with several established public policies 
protecting consumers who receive electronic communications. For 
example, with respect to emails, the Controlling the Assault of Non-
Solicited Pornography and Marketing (CAN-SPAM) Act of 2003, 15 
U.S.C. 7701 et seq., reflects a public policy in favor of providing 
consumers with a specific mechanism to opt out of certain email 
messages. See 15 U.S.C. 7704(a)(3) (requiring that commercial emails 
include a functioning return email address or other internet-based 
mechanism, clearly and conspicuously displayed, for the recipient to 
request not to receive future email messages from the sender at the 
address where the message was received); Fed. Trade Comm'n, CAN-SPAM 
Act: A Compliance Guide for Business (Sept. 2009), https://www.ftc.gov/tips-advice/business-center/guidance/can-spam-act-compliance-guide-business (explaining that messages covered by the 
CAN-SPAM Act ``must include a clear and conspicuous explanation of 
how the recipient can opt out of getting email from [the sender] in 
the future''). In addition, the FTC's regulations implementing the 
CAN-SPAM Act prohibit charging a fee or imposing other requirements 
on recipients who wish to opt out of certain email communications. 
16 CFR 316.5.
    \339\ See 84 FR 23274, 23304-06 (May 21, 2019). Proposed comment 
6(e)-1 would have clarified the meaning of clear and conspicuous and 
provided examples of how to comply with proposed Sec.  1006.6(e).
---------------------------------------------------------------------------

Opt-Out Concept in General
    Most industry commenters supported proposed Sec.  1006.6(e) 
although, as explained below, many industry commenters also requested 
that the Bureau clarify certain aspects of the proposal. Several 
industry commenters appeared to oppose proposed Sec.  1006.6(e) on the 
ground that it would make electronic communications more difficult, and 
one suggested that, instead of requiring debt collectors to provide 
opt-out instructions in each electronic

[[Page 76793]]

communication, the Bureau should allow debt collectors to inform 
consumers periodically of the right to opt out, or in a standard notice 
on the debt collector's website. The Bureau determines that 
periodically notifying consumers of the right to opt out, or requiring 
consumers to find and review a notice on a debt collector's website, 
does not adequately protect consumers from potentially harassing and 
costly electronic communications. A consumer who finds electronic 
communications harassing or costly should not endure additional 
harassment or cost while waiting for a debt collector to explain how to 
opt out, and a consumer should not bear the burden and risk of 
locating, reviewing, and using an opt-out notice that appears only on a 
debt collector's website. Nor does the Bureau believe that allowing 
consumers to opt out of electronic communications makes such 
communications more difficult. Presumably, many consumers who opt out 
of electronic communications with a debt collector would not respond to 
such communications even if opting out were difficult or 
impossible.\340\
---------------------------------------------------------------------------

    \340\ To the extent commenters asked the Bureau to clarify 
whether a creditor's electronic communications must include opt-out 
instructions, the Bureau confirms that Sec.  1006.6(e) applies only 
to FDCPA debt collectors.
---------------------------------------------------------------------------

    Although, as discussed in the section-by-section analysis of Sec.  
1006.6(d)(4), many consumer advocate commenters and multiple government 
and academic commenters urged the Bureau to adopt an opt-in system for 
electronic communications, they also supported allowing consumers to 
opt out of electronic communications once such communications have 
begun. These commenters argued that the ability to opt out of 
electronic communications is critical to prevent harassment, 
particularly because the Bureau did not include emails and texts 
messages in proposed Sec.  1006.14(b)'s frequency limits.\341\ Consumer 
advocate commenters also argued that enabling consumers to opt out of 
electronic communications is especially important for certain groups of 
consumers, such as those who are contacted using an employer-provided 
email address or telephone number and wish to end those contacts 
immediately, those who lack reliable access to a particular medium of 
electronic communication and therefore prefer to opt out of 
communications using that medium, and those who are contacted 
erroneously and prefer to opt out rather than to call the debt 
collector.
---------------------------------------------------------------------------

    \341\ One local government commenter argued that an opt-out 
approach for text messages effectively would permit an unfair debt 
collection practice. Specifically, the commenter argued that only an 
opt-in approach is consistent with FDCPA section 808(5), which 
prohibits a debt collector from causing charges to be made to any 
person for communications by concealment of the true purpose of the 
communication and provides, as an example, a consumer incurring 
collect telephone call charges because the debt collector concealed 
the true purpose of the call. While, as the commenter noted, the 
Bureau referred to FDCPA section 808(5) in the section-by-section 
analysis of proposed Sec.  1006.6(e), the Bureau does not believe 
and did not mean to suggest that a debt collector necessarily 
violates FDCPA section 808(5) by sending a text message to a 
consumer with a limited text messaging plan. Rather, the Bureau 
believes that, as with any communication, a violation of FDCPA 
section 808(5) would require the debt collector to engage in 
concealment of the true purpose of the text message. The Bureau 
believes that a debt collector who communicates by text message 
pursuant to the procedures in Sec.  1006.6(d)(5) would be unlikely 
to engage in such concealment. As explained further in the relevant 
section-by-section analysis, Sec.  1006.6(d)(5) provides a safe 
harbor from civil liability to a debt collector who sends a text 
message to a telephone number only if, among other things, the 
consumer used the telephone number to send a text message to the 
debt collector or the consumer consented directly to the debt 
collector's use of text messages. In both cases, the consumer has 
evidenced a familiarity with the debt collector and a willingness to 
communicate by text message.
---------------------------------------------------------------------------

    However, many consumer and consumer advocate commenters, and 
several government and academic commenters, also expressed concern that 
proposed Sec.  1006.6(e), on its own, would not sufficiently protect 
consumers from the risks of electronic debt collection communications. 
For example, some commenters noted that, if a consumer was worried 
about phishers and scammers, the consumer might be reluctant to 
exercise an opt-out right, particularly one that required clicking on a 
link or replying to an email or text message from an unknown sender. 
Other commenters expressed concern that a debt collector might not 
honor a consumer's opt-out request, pointing to the difficulty reported 
by some consumers when trying to opt out of electronic communications 
outside of the debt collection context and to the Bureau's consumer 
survey, which showed that 75 percent of surveyed consumers who asked a 
creditor or debt collector to stop contacting them (orally or in 
writing) reported that the creditor or debt collector attempted to 
contact them anyway.\342\ An academic commenter and a local government 
commenter also asserted that opt-out procedures generally create 
barriers to consumer action and that certain vulnerable populations, 
such as older consumers, might have difficulty navigating even 
relatively simply opt-out procedures.
---------------------------------------------------------------------------

    \342\ See CFPB Debt Collection Consumer Survey, supra note 16, 
at 35.
---------------------------------------------------------------------------

    The Bureau determines that a way to address potentially harassing 
or costly electronic communications is to provide consumers with a 
convenient way to opt out of such communications. In response to 
concerns that the ability to opt out, on its own, does not sufficiently 
protect consumers from the risks of electronic communications, the 
Bureau notes that Sec.  1006.6(e) is one of several provisions in the 
final rule designed to address those risks. For example, Sec.  
1006.6(d)(3) through (5) describes procedures to limit third-party 
disclosures when sending an email or text message; Sec.  1006.14(a) 
prohibits a debt collector from communicating electronically in a 
manner that has the natural consequence of harassing, oppressing, or 
abusing any person in connection with the collection of a debt; Sec.  
1006.14(h) prohibits a debt collector from using a medium of 
communication if a person has requested that the debt collector not use 
that medium; and Sec. Sec.  1006.18(d) and 1006.22(f)(4) include 
protections regarding debt collectors' use of social media.
Ease of Use of Opt-Out Instructions
    Many consumer and consumer advocate commenters, several academic 
commenters, a group of State Attorneys General, and other State and 
local government commenters noted that proposed Sec.  1006.6(e) would 
have required a debt collector to describe how to opt out, but it would 
not have required the opt-out mechanism to take a particular form. For 
example, these commenters expressed concern that, as drafted, proposed 
Sec.  1006.6(e) would have permitted a debt collector to construct a 
complicated opt-out mechanism, such as requiring a consumer to opt out 
by mail only, or by telephone call during particular hours. Several 
consumer advocate commenters observed that, even if a debt collector 
does not intend to make it difficult to opt out, an unnecessarily 
limited opt-out method may be problematic for some consumers. For 
example, if a debt collector inadvertently emailed a consumer at work, 
an opt-out method that required a return email from that email address 
could be problematic for a consumer whose employer-provided account is 
monitored and who would therefore prefer to contact the debt collector 
by telephone or through another communication medium. Similarly, if a 
debt collector required opt-out requests to be communicated by 
telephone during particular hours, those hours might not be convenient 
for a consumer. A group of State Attorneys General and a group of 
consumer advocate commenters argued that, in this respect, proposed 
Sec.  1006.6(e) was less protective of consumers than other

[[Page 76794]]

consumer protection laws and regulations. For example, the CAN-SPAM Act 
requires email marketers to provide a reply email or internet-based 
means by which an opt-out request may be sent by the consumer,\343\ and 
the FCC allows consumers to revoke consent under the TCPA in any manner 
that clearly expresses a desire not to receive further messages.\344\
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    \343\ See 15 U.S.C. 7704(a)(3)(A) (making it ``unlawful for any 
person to initiate the transmission to a protected computer of a 
commercial electronic mail message that does not contain a 
functioning return electronic mail address or other internet-based 
mechanism'').
    \344\ See In re Rules & Regulations Implementing the Tel. 
Consumer Prot. Act of 1991, 30 FCC Rcd. 7961, 7996 (July 10, 2015), 
set aside in part by ACA Int'l v. Fed. Commc'ns Comm'n, 885 F.3d 687 
(D.C. Cir. 2018).
---------------------------------------------------------------------------

    Consumer, consumer advocate, government, and academic commenters 
who urged the Bureau to strengthen proposed Sec.  1006.6(e) offered 
several suggestions. Many such commenters urged the Bureau to require a 
debt collector to accept an opt-out request in the same medium in which 
the debt collector communicated with the consumer and the opt-out 
instructions were delivered. Thus, for example, a consumer should be 
permitted to opt out of email communications by replying to a debt 
collector's email. Other commenters urged the Bureau to require a debt 
collector to accept an opt-out request in any medium that the debt 
collector uses to communicate with consumers. Thus, for example, a debt 
collector who communicates with consumers by telephone, email, and mail 
would have to accept an opt-out request submitted by any of those 
methods, even if the request is in response to an email. Other 
commenters argued that the final rule should adopt a more general 
standard, such by as requiring debt collectors to allow consumers to 
opt out using any ``convenient method'' or any ``reasonable method.''
    Relatedly, several consumer advocate commenters urged the Bureau to 
strengthen proposed Sec.  1006.6(e) by elaborating generally on the 
procedural and disclosure requirements that debt collectors must 
follow. For example, a consumer advocate commenter urged the Bureau to 
require debt collectors to provide consumers with a hyperlink allowing 
them to opt out of electronic communications. A group of consumer 
advocate commenters urged the Bureau to require debt collectors to list 
all the ways a consumer may opt out of electronic communications, and 
to do so in textual rather than graphic format to ensure that the 
information is available to visually impaired consumers who use text 
reading tools and to consumers who use email programs that do not 
download graphics. Other commenters suggested that the Bureau require 
debt collectors to disclose that the right to opt out can be exercised 
at any time, and to ensure that the disclosure appears in the body of a 
communication where it can be seen without scrolling down.
    The Bureau agrees that the ability to opt out of electronic 
communications affords little protection if the costs to consumers of 
opting out prevent or unduly hinder them from making that choice. 
Accordingly, final Sec.  1006.6(e) clarifies that a debt collector must 
describe a reasonable and simple method by which the consumer can opt 
out of further electronic communications or attempts to communicate by 
the debt collector to a particular electronic address or telephone 
number.\345\ The Bureau also is adopting commentary providing examples, 
informed by suggestions from commenters, of opt-out methods that comply 
with the reasonable-and-simple standard. Specifically, comment 6(e)-1 
clarifies that, in the context of text message communications, the 
standard is satisfied if a consumer can opt out by replying ``stop'' to 
the debt collector. Comment 6(e)-1 also clarifies that, in the context 
of email communications, the standard is satisfied if a consumer can 
opt out by clicking on a link in the email or replying with the word 
``stop'' in the subject line. The Bureau expects that most debt 
collectors will follow these examples when they communicate 
electronically with consumers.
---------------------------------------------------------------------------

    \345\ As explained in the section-by-section analysis of Sec.  
1006.6(d)(4)(ii), the reasonable-and-simple standard also appears in 
the Bureau's Regulation V. 12 CFR 1022.25.
---------------------------------------------------------------------------

Permissible Fees and Required Information in Connection With Opt-Out 
Requests
    Proposed Sec.  1006.6(e) would have prohibited a debt collector 
from requiring, directly or indirectly, that the consumer, in order to 
opt out, pay any fee to the debt collector. A group of consumer 
advocate commenters noted that, because this prohibition was limited to 
paying a fee to a debt collector, a debt collector could still require 
the consumer to pay a fee to a third party. For example, the commenters 
noted, proposed Sec.  1006.6(e) would appear to have allowed debt 
collectors to require a certified letter to opt out, with the fee paid 
to the postal service. In addition, these commenters observed, a debt 
collector who requires consumers to send a text message to opt out 
would force consumers with limited text messaging plans to incur a 
charge, with the fee paid to the consumer's telephone provider. An 
industry commenter recommended that debt collectors include, in all 
text messages to consumers, a statement that message rates may apply.
    Final Sec.  1006.6(e) retains the prohibition on fees as proposed. 
The consumer advocate commenters' concern about the cost of an opt-out 
notice sent by certified mail (and other similarly inconvenient media) 
is addressed by Sec.  1006.6(e)'s reasonable-and-simple requirement; an 
opt-out method that requires a consumer to use certified mail (which 
entails the consumer arranging for a special form of delivery that is 
costlier than ordinary mail and generally unwarranted under the 
circumstances) is not reasonable and simple. Section 1006.6(e) does 
not, however, prohibit a consumer from incurring a fee for sending an 
opt-out request by text message as long as such fee is not paid, 
directly or indirectly, to the debt collector. Because such a consumer 
has already expressed a willingness to incur the costs of text message 
communications, the Bureau does not believe it is necessary to prohibit 
consumers from incurring such costs in Sec.  1006.6(e). And, as 
discussed in detail in the section-by-section analyses of Sec. Sec.  
1006.6(b)(1) and 1006.14(h), a consumer may control communications in 
other ways, including by, for example, informing a debt collector by 
telephone that the consumer does not want to receive text messages. The 
Bureau also does not believe it is necessary to require debt collectors 
to note, in text messages to consumers, that message rates may apply. 
The Bureau understands from consumer advocate commenters that consumers 
with limited text messaging plans generally are aware that they may be 
charged for text messages.
    Proposed Sec.  1006.6(e) also would have prohibited a debt 
collector from requiring that the consumer, in order to opt out, 
provide any information other than the email address, telephone number 
for text messages, or other electronic-medium address subject to the 
opt-out request. Federal government agency staff encouraged the Bureau 
to ensure that this prohibition would not inadvertently prevent 
consumers from also sharing their opt-out preferences. The Bureau 
intended to allow debt collectors to solicit a consumer's opt-out 
preferences, and the final rule expressly adds the consumer's opt-out 
preferences to the list of information that a debt collector may 
require the consumer to provide.

[[Page 76795]]

Processing Period for Opt-Out Requests
    Multiple industry commenters and one consumer advocate commenter 
requested that the Bureau specify the time period within which a debt 
collector would be required to process a consumer's request to opt out. 
One industry commenter suggested that the Bureau require debt 
collectors to process opt-out requests within a ``reasonable'' period 
of time, while another industry commenter suggested a 72-hour 
processing period. Several industry commenters suggested a 10-day 
processing period, which is the period the FTC has set for processing 
opt-out requests under the CAN-SPAM Act. An industry commenter who 
presently communicates with consumers by email stated that it processes 
opt-out requests in less than 10 minutes, another industry commenter 
predicted that debt collectors would be able to process opt-out 
requests in 24 to 48 hours, and another industry commenter predicted 
that debt collectors would be able to process opt-out requests in fewer 
than 10 days. A consumer advocate commenter proposed a processing 
period of 24 hours, arguing that the frequency of some debt collection 
communications means that a short compliance period is necessary to 
ensure that a consumer's opt-out request is honored.
    The Bureau recognizes that any maximum processing period for opt-
out requests under Sec.  1006.6(e) must be short enough to protect 
consumers from unwanted electronic communications but long enough for 
compliance to be practical. Given the disparate periods of time 
suggested by commenters, and the fact that few debt collectors 
communicate electronically and process electronic opt-out requests 
today, the final rule does not specify the period of time afforded a 
debt collector to process an opt-out request under Sec.  1006.6(e). 
However, depending on the circumstances, a debt collector who 
unintentionally communicates with a consumer electronically after 
receiving a consumer's request to opt out but before processing the 
request may have a bona fide error defense to civil liability under 
FDCPA section 813(c). For example, if a debt collector who schedules an 
email to be sent to a consumer later receives an opt-out request from 
the consumer but sends the previously scheduled email to the consumer 
before the request can be processed (notwithstanding the maintenance of 
procedures to avoid such an error), the debt collector may have a bona 
fide error defense to civil liability under FDCPA section 813(c).\346\
---------------------------------------------------------------------------

    \346\ Cf. Transworld Sys., Inc., 953 F.2d at 1036 (holding debt 
collector's letter, mailed shortly after receiving consumer's cease 
communication notification, constituted bona fide error where debt 
collector's procedures were reasonably adapted to avoid such an 
error); ACB Receivables Mgmt., Inc., 15 F. Supp. 3d at 629 (denying 
bona fide error defense where debt collector communicated with 
consumer after receiving consumer's cease communication notification 
but failed to present any evidence of redundancy or safeguards in 
its procedures to prevent such errors); Carrigan, 494 F. Supp. at 
827 (denying bona fide error defense where debt collector 
communicated with consumer after receiving consumer's cease 
communication notification but failed to provide evidence that it 
maintained proper procedures governing mail handling).
---------------------------------------------------------------------------

Other Requests for Clarification
    The requirements of final Sec.  1006.6(e), like the requirements of 
proposed Sec.  1006.6(e), apply to all electronic communications using 
a specific email address, telephone number for text messages, or other 
electronic-medium address. A group of consumer advocate commenters 
expressed concern that direct messages sent using certain social media 
platforms--such as platforms that allow users to search by name rather 
than by email address, telephone number, or another account 
identifier--might not be covered by proposed Sec.  1006.6(e) because 
those platforms may not use electronic-medium addresses. These 
commenters urged the Bureau to clarify that opt-out notices are 
required for all electronic communications. The language of Sec.  
1006.6(e) makes clear that it applies to all electronic communications, 
regardless of whether that particular form of electronic communication 
is specified in the rule. This includes direct messaging communications 
on social media and communications in an application on a website, 
mobile telephone, or computer. It also includes electronic 
communications using platforms that allow users to search by name or 
another identifier rather than by email address or telephone number.
    Several industry commenters asked the Bureau to clarify the scope 
of an opt-out request made under Sec.  1006.6(e). For example, some 
industry commenters asked whether a Sec.  1006.6(e) opt-out request 
applies to all of a consumer's debts being collected by a particular 
debt collector or only to the specific debt about which the debt 
collector communicated. Other industry commenters asked whether a Sec.  
1006.6(e) opt-out request applies to all electronic communication media 
or only to the medium of electronic communication (or the particular 
address or telephone number) used by the debt collector to communicate 
with the consumer. Some industry commenters asked whether a Sec.  
1006.6(e) opt-out request should be treated as a request to cease all 
communication regardless of medium, while other industry commenters 
asked whether a consumer's request that a debt collector cease sending 
text messages to a particular telephone number should also be treated 
as request to cease telephone calls to that number. A consumer advocate 
commenter and a local government commenter asked whether a Sec.  
1006.6(e) opt-out request made to one debt collector binds future debt 
collectors collecting the same debt.
    Consistent with proposed Sec.  1006.6(e), final Sec.  1006.6(e) 
requires a debt collector to describe how to opt out of further 
electronic communications or attempts to communicate by the debt 
collector to a particular address or telephone number. In general, the 
Bureau determines that a consumer who requests that a debt collector 
cease using a particular address or telephone number to communicate 
electronically about one of the consumer's debts likely wishes the debt 
collector to cease using that particular address or telephone number to 
communicate about any other debt being collected by the debt collector. 
Comment 14(h)(1)-3.ii addresses this issue further.
    Moreover, absent evidence to the contrary, a consumer's request to 
opt out of electronic communications to a particular address or 
telephone number is not a request to opt out of electronic 
communications to a different address or telephone number, a request to 
opt out of all electronic communications, or a request to opt out of 
communications altogether. A consumer who objects to receiving 
electronic communications sent to a particular address or telephone 
number (because, for example, that address or number has been provided 
by the consumer's employer or is subject to usage fees) may not object 
to a debt collector's use of a different address or number or to a debt 
collector's use of a different medium of communication.
    Similarly, absent evidence to the contrary, a consumer's request to 
opt out of text messages to a particular telephone number is not a 
request to opt out of telephone calls to that number. A consumer who 
objects to receiving text messages from a debt collector (because, for 
example, the consumer is charged for each such message) may not object 
to receiving telephone calls. Nor does a consumer's request to opt out 
under Sec.  1006.6(e) bind a subsequent debt

[[Page 76796]]

collector.\347\ A consumer who objects to one debt collector's use of 
electronic communications might not object to another debt collector's 
use of such communications if, for example, the timing and frequency of 
the communications differ or the consumer's personal circumstances have 
changed.
---------------------------------------------------------------------------

    \347\ The Bureau notes, however, that, as explained above, Sec.  
1006.6(d)(4)(iii) provides that a debt collector may obtain a safe 
harbor from civil liability for an unintentional third-party 
disclosure when sending an email to an email address if: (1) Any 
prior debt collector obtained the email address in accordance Sec.  
1006.6(d)(4)(i) or (ii); (2) the immediately prior debt collector 
used the email address to communicate with the consumer about the 
debt; and (3) the consumer did not opt out of such communications. 
Thus, if a consumer opts out of the immediately prior debt 
collector's use of an email address by following instructions 
provided pursuant to Sec.  1006.6(e), a subsequent debt collector 
who uses that email address to communicate with the consumer would 
not be covered by Sec.  1006.6(d)(4)(iii). Such a debt collector 
may, however, be covered by Sec.  1006.6(d)(4)(i) or (ii).
---------------------------------------------------------------------------

    In the proposal, the Bureau requested comment on whether to 
identify in the final rule a non-exclusive list of words or phrases--
such as ``stop,'' ``unsubscribe,'' ``end,'' ``quit,'' or ``cancel''--
that express an opt-out instruction. Several industry commenters 
requested that the final rule include such a list. Two industry 
commenters argued that the final rule should allow debt collectors to 
identify for consumers the exact words needed to opt out and that, if a 
consumer uses different words, a debt collector should have more time 
to process the request. Another industry commenter suggested that the 
Bureau identify an exclusive list of words that express an opt-out 
request. An industry commenter suggested that debt collectors should be 
required to treat only two words as expressing an opt-out instruction: 
``stop'' and ``opt out.'' A group of consumer advocate commenters urged 
the Bureau to require debt collectors to honor standard opt-out 
phrases, such as ``stop,'' ``unsubscribe,'' ``end,'' ``quit,'' and 
``cancel.''
    The Bureau determines that words such as ``stop,'' ``unsubscribe,'' 
``end,'' ``quit,'' or ``cancel'' generally express a consumer's intent 
to opt out. But these are not the only words that express such an 
intent. A consumer may respond to a debt collector's electronic 
communication with an email or text message that makes the consumer's 
desire to opt out clear without using one of these words. Given the 
variety of ways in which a consumer may express an intent to opt out, 
the Bureau declines to identify an exclusive list of words that express 
such an intention. Conversely, a debt collector who receives a request 
to ``stop,'' ``unsubscribe,'' ``end,'' ``quit,'' or ``cancel'' will be 
considered to have received an opt-out request even though the specific 
term the consumer used does not conform precisely to the opt-out 
instructions provided by the debt collector pursuant to Sec.  
1006.6(e).
    Proposed Sec.  1006.6(e) would have required a debt collector to 
describe how to opt out clearly and conspicuously, and proposed comment 
6(e)-1 would have clarified, among other things, that an email would 
comply with the clear and conspicuous requirement by including 
instructions in a textual format, in a type size no smaller than the 
other text in the email. Several industry and consumer advocate 
commenters requested that the Bureau elaborate on the clear and 
conspicuous requirement, including by specifying a minimum type size 
for instructions contained in emails and clarifying whether a font 
comparison to the rest of an email should exclude graphics, logos, or 
other non-substantive content within the message. Several industry 
commenters also urged the Bureau to provide model instructions that 
would satisfy the clear and conspicuous requirement.
    Final Sec.  1006.6(e) retains the clear and conspicuous 
requirement. The Bureau also is adopting commentary that refers to 
comment 6(d)(4)(ii)(C)-1 for guidance on the meaning of clear and 
conspicuous and provides examples illustrating how to comply with the 
rule when sending a text message or email. The Bureau declines, 
however, to specify precisely where in an electronic communication the 
instructions required by Sec.  1006.6(e) must be placed or how large 
the type size must be. Different debt collectors may design their 
electronic communications in different ways, and the Bureau does not 
believe it is necessary or warranted to specify such details, as long 
as the disclosure satisfies the clear and conspicuous standard.
    An industry commenter asked the Bureau to clarify whether a debt 
collector who receives an opt-out request under Sec.  1006.6(e) may 
send the consumer a single reply to acknowledge the request and advise 
the consumer that the request applies only to the specific 
communication medium used by the debt collector and the specific debt 
being collected. The same commenter also asked the Bureau to provide 
model language. As noted above, and as comment 14(h)(1)-3.ii 
illustrates, a consumer's request to opt out under Sec.  1006.6(e) 
applies to any of the consumer's debts being collected by the debt 
collector--not just the specific debt being collected. Further, 
although Sec.  1006.14(h)(2)(i) permits a debt collector to send an 
electronic confirmation of a consumer's request to opt out provided 
that the confirmation contains no information other than a statement 
confirming the person's request and that the debt collector will honor 
it, the Bureau does not believe it is necessary or warranted to provide 
model language given the brevity of the communication.
    A group of consumer advocate commenters observed that, although 
proposed Sec.  1006.6(e) would have required a debt collector to 
describe how to opt out of electronic communications directed to a 
particular address or telephone number, it would not have explicitly 
required the debt collector to honor such a request; instead, the 
requirement to honor an opt-out request would have appeared in proposed 
Sec.  1006.14(h). The final rule retains the same structure, with the 
requirement to disclose an opt-out method appearing in Sec.  1006.6(e) 
and the requirement to honor an opt-out request appearing in Sec.  
1006.14(h)(1). Section 1006.14(h)(1) broadly prohibits debt collectors 
from communicating or attempting to communicate with a person through a 
medium of communication if the person has requested that the debt 
collector not use that medium to communicate with the person, and 
comment 14(h)(1)-3.ii illustrates that such a request includes an opt-
out request made pursuant to the Sec.  1006.6(e) instructions.
    Another consumer advocate commenter recommended that the Bureau 
permit consumers to provide debt collectors with a list of third 
parties who should not be contacted for any reason, including for 
location-call purposes. Although nothing in the final rule would 
prohibit a consumer from offering such a list or a debt collector from 
requesting or accepting such a list, the commenter's request is outside 
the scope of this rulemaking.
    A local government commenter recommended that the Bureau require 
debt collectors to disclose to consumers additional information about 
how to limit debt collection communications. For example, the commenter 
suggested that the Bureau require debt collectors to disclose that 
consumers can cease all telephone communications or cease telephone 
communications to a particular number. As the Bureau noted in the 
proposal, Sec.  1006.6(e) addresses a group of concerns that are unique 
to electronic communications and attempts to communicate. With respect 
to telephone calls in particular, consumers likely know how to ask debt

[[Page 76797]]

collectors to stop placing unwanted telephone calls; Sec.  
1006.14(h)(1) would require debt collectors to honor such requests; and 
the rebuttable presumptions established by Sec.  1006.14(b)(2) would 
address the frequency of such calls. For these reasons, the Bureau 
declines the commenter's suggestion to require debt collectors to 
provide more detailed information about how consumers may limit 
telephone communications.
    An industry commenter asked the Bureau to create an exception to 
Sec.  1006.6(e) for electronic communications sent to an email address 
provided by the consumer to a court pursuant to a State's e-filing 
rules, arguing that there may be a potential conflict with some State 
court e-filing rules. The Bureau declines the commenter's request. As 
discussed above, Sec.  1006.6(e) requires a debt collector to disclose 
an opt-out method, whereas Sec.  1006.14(h)(1) requires a debt 
collector to honor an opt-out request. The Bureau believes that the 
situation raised by the commenter is addressed by final Sec.  
1006.14(h)(2)(iii), which provides that, notwithstanding the 
prohibition in Sec.  1006.14(h)(1), a debt collector may, if required 
by applicable law, communicate or attempt to communicate with a person 
in connection with the collection of any debt using a medium that the 
person has requested the debt collector not use.\348\
---------------------------------------------------------------------------

    \348\ For additional discussion, see the section-by-section 
analysis of Sec.  1006.14(h)(2)(iii).
---------------------------------------------------------------------------

    For all of the reasons discussed above, the Bureau is finalizing 
Sec.  1006.6(e), which provides that a debt collector who communicates 
or attempts to communicate with a consumer electronically in connection 
with the collection of a debt using a specific email address, telephone 
number for text messages, or other electronic-medium address must 
include in such communication or attempt to communicate a clear and 
conspicuous statement describing a reasonable and simple method by 
which the consumer can opt out of further electronic communications or 
attempts to communicate by the debt collector to that address or 
telephone number. Final Sec.  1006.6(e) also provides that the debt 
collector may not require, directly or indirectly, that the consumer, 
in order to opt out, pay any fee to the debt collector or provide any 
information other than the consumer's opt-out preferences and the email 
address, telephone number for text messages, or other electronic-medium 
address subject to the opt-out request. In addition, the Bureau is 
adopting comment 6(e)-1, which refers to comment 6(d)(4)(ii)(C)-1 for 
guidance on the meaning of clear and conspicuous and to comment 
6(d)(4)(ii)(C)(4)-1 for guidance on the meaning of reasonable and 
simple, and provides examples illustrating the rule.
    The Bureau is finalizing Sec.  1006.6(e) as an interpretation of 
FDCPA sections 806 and 808, pursuant to its authority under FDCPA 
section 814(d) to prescribe rules with respect to the collection of 
debts by debt collectors. FDCPA section 806 prohibits conduct the 
natural consequence of which is to harass, oppress, or abuse any person 
in connection with the collection of a debt. Because the marginal cost 
of transmitting electronic communications to consumers is low, 
particularly when compared to mail communications, debt collectors have 
less economic incentive to limit the number of such communications. As 
multiple consumer advocate commenters confirmed, a reasonable and 
simple mechanism to opt out allows some consumers to protect themselves 
from emails and text messages they believe are harassing, oppressive, 
or abusive. Section 1006.6(e) provides consumers with such a mechanism.
    FDCPA section 808 prohibits the use of unfair or unconscionable 
means to collect or attempt to collect any debt. It is unfair or 
unconscionable under the FDCPA for a debt collector to send a consumer 
an electronic communication, such as an email or text message, without 
providing a reasonable and simple method to opt out. Because the 
marginal cost of transmitting electronic communications to consumers is 
low, particularly when compared to mail communications, debt collectors 
have less economic incentive to limit the number of such 
communications. Moreover, as multiple consumer advocate commenters 
confirmed, for a consumer who does not maintain an unlimited data plan, 
emails and text messages can lead to charges the consumer does not want 
to incur. In the absence of a reasonable and simple opt-out method, a 
consumer who wants to unsubscribe from electronic communications may 
incur time and cost doing so. On balance, in the Bureau's view, these 
costs to consumers do not outweigh the benefits to debt collectors of 
omitting opt-out instructions from electronic communications.
    The Bureau also is finalizing Sec.  1006.6(e) pursuant to its 
authority under section 1032(a) of the Dodd-Frank Act to prescribe 
rules to ensure that the features of any consumer financial 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. A consumer's ability to opt out of electronic 
communications from a debt collector is a feature of debt collection, 
and the opt-out instructions required by proposed Sec.  1006.6(e) 
disclose that feature to consumers.
Section 1006.10 Acquisition of Location Information
    FDCPA section 804 imposes certain requirements and limitations on a 
debt collector who communicates with any person other than the consumer 
for the purpose of acquiring location information about the 
consumer.\349\ FDCPA section 803(7) defines the term location 
information.\350\ The Bureau proposed Sec.  1006.10 to implement FDCPA 
sections 803(7) and 804.\351\ Proposed Sec.  1006.10 generally mirrored 
the statute, with minor wording and organizational changes for clarity. 
In addition, proposed Sec.  1006.10(c) would have clarified that 
proposed Sec.  1006.14(b)'s limits on telephone calls also apply to 
location calls, and proposed comments 10(a)-1 and 10(b)(2)-1 would have 
clarified how Sec.  1006.10 applies in the decedent debt context.
---------------------------------------------------------------------------

    \349\ 15 U.S.C. 1692b.
    \350\ 15 U.S.C. 1692a(7).
    \351\ See 84 FR 23274, 23307 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau received two overarching comments regarding proposed 
Sec.  1006.10. First, several consumer advocates recommended 
prohibiting any communications with third parties, including for 
location purposes. These commenters argued that such communications 
risk violating the privacy of consumers, subjecting the third parties 
to harassment, and giving domestic abusers the opportunity to learn 
details of a consumer's financial situation or to manipulate the debt 
collector into revealing other private information about the consumer. 
The Bureau declines to adopt such a prohibition because FDCPA section 
804 expressly allows debt collectors to contact third parties to seek 
location information and, as discussed below, includes restrictions on 
the form, content, and frequency of location communications that are 
specifically designed to protect consumers' privacy and third parties 
from harassment.
    FDCPA section 805(c) provides that, subject to certain exceptions, 
if a consumer notifies a debt collector in writing that the consumer 
refuses to pay a debt or that the consumer wishes the debt collector to 
cease further

[[Page 76798]]

communication with the consumer, the debt collector shall cease further 
communication with the consumer with respect to such debt.\352\ A group 
of State Attorneys General recommended giving third parties (i.e., 
parties who are not consumers under either FDCPA section 803(3) or 
805(d)) the right to cease communications from debt collectors. The 
Bureau declines to include such a provision--which does not appear in 
the FDCPA and which the Bureau did not propose--in this final rule. 
However, several other provisions in the statute or the final rule (or 
both) apply to location communications and may provide third parties 
similar protection. For example, under the final rule, a third party's 
request to never be contacted again is a factor that may rebut a debt 
collector's presumption of compliance with Sec.  1006.14(b)(1) and 
FDCPA section 806(5) when telephone call volume is at or below the 
levels specified in Sec.  1006.14(b)(2)(i).\353\ Moreover, as discussed 
below, FDCPA section 804(3) and final Sec.  1006.10(c) prohibit debt 
collectors from communicating more than once with a third party to seek 
location information unless requested to do so by such person, or 
unless the debt collector reasonably believes that the earlier response 
of such person is erroneous or incomplete and that such person now has 
correct or complete location information. For these reasons, and for 
the reasons discussed below, the Bureau is finalizing proposed Sec.  
1006.10 largely as proposed, with minor changes for clarity. The Bureau 
is finalizing proposed Sec.  1006.10 pursuant to its authority under 
FDCPA section 814(d) to prescribe rules with respect to the collection 
of debts by debt collectors and to interpret FDCPA section 804.
---------------------------------------------------------------------------

    \352\ 15 U.S.C. 1692c(c).
    \353\ See the section-by-section analysis of Sec.  
1006.14(b)(2).
---------------------------------------------------------------------------

10(a) Definition
    Consistent with the statute, the Bureau proposed Sec.  1006.10(a) 
to provide that location information means a consumer's place of abode 
and telephone number at such place or the consumer's place of 
employment. The Bureau received several comments on this proposed 
definition. Several industry commenters asked the Bureau to clarify 
that location information includes a consumer's mobile telephone number 
and email address. Other commenters noted that proposed Sec.  
1006.10(a) mirrored the FDCPA section 803(7)'s disjunctive definition 
of location information, i.e., the consumer's place of abode and 
telephone number at such place, ``or'' the consumer's place of 
employment. An industry commenter asked whether debt collectors could 
continue seeking one element of location information if they already 
had the other, while a consumer advocate asked the Bureau to clarify 
that possessing one element prohibits a debt collector from further 
location communications. Finally, consumer advocates recommended that 
the Bureau prohibit a debt collector from calling third parties under 
the pretense of gaining information that the debt collector already 
possesses.
    The Bureau declines to finalize the types of clarifications the 
commenters requested. The Bureau believes the definition of ``location 
information'' currently does not present a serious source of harm to 
consumers or burden to debt collectors. For example, the Bureau is 
unaware of significant recent litigation or enforcement actions 
concerning the definition of location information. While the Bureau 
understands that there may be some uncertainty regarding mobile 
telephone numbers and email addresses, the Bureau notes that nothing in 
the final rule prohibits a debt collector who is engaged in a 
permissible location communication from requesting other pieces of 
contact information for the consumer. Finally, the Bureau does not 
believe that it is necessary or warranted to provide additional 
interpretation regarding the pretext for location communications. The 
Bureau notes that Sec.  1006.10(b) specifies that communications under 
this section must be ``for the purpose of acquiring location 
information.'' The Bureau will monitor this definitional issue for any 
potential consumer harm or compliance concerns and revisit at a later 
time if needed.
10(b) Form and Content of Location Communications
    The Bureau proposed Sec.  1006.10(b) to implement the paragraphs of 
FDCPA section 804 that address the form and content of location 
communications.\354\ Proposed Sec.  1006.10(b) generally mirrored the 
statute, and the Bureau received only a few comments addressing it. For 
the reasons discussed below, the Bureau is finalizing Sec.  1006.10(b) 
as proposed.
---------------------------------------------------------------------------

    \354\ See FDCPA section 804(1)-(2) and (4)-(6), 15 U.S.C. 
1692b(1)-(2) and (4)-(6) (proposed as Sec.  1006.10(b)(1) through 
(5)).
---------------------------------------------------------------------------

    Two industry commenters expressed dissatisfaction with FDCPA 
section 804(1), proposed to be implemented as Sec.  1006.10(b)(1), 
which requires that, during location communications, debt collectors 
state, among other things, ``that [they are] confirming or correcting 
location information'' for the consumer. The commenters believed that 
such language reveals that the consumer owes a debt. A group of State 
Attorneys General asked the Bureau to adopt a broad interpretation of 
FDCPA section 804(5) (proposed to be implemented as Sec.  
1006.10(b)(4)). FDCPA section 804(5) restricts debt collectors from 
using any language or symbol in mailed location communications that 
indicates the debt collector is in the debt collection business. The 
commenter requested that the Bureau interpret this restriction as 
applying to location communications sent by media in addition to mail.
    The Bureau has considered these comments but declines to interpret 
the statutory requirement related to these provisions. The Bureau did 
not propose changes to these statutory provisions and concludes that 
additional information, including through public comment, would be 
advisable before adopting any such interpretations.
    One industry commenter asked for clarity on proposed Sec.  
1006.10(b)(5), which would have implemented FDCPA section 804(6), and 
provided, in relevant part that, if a debt collector knows that a 
consumer is represented by an attorney, the debt collector must not 
communicate with any person other than the attorney, unless the 
attorney fails to respond ``within a reasonable period of time.'' The 
commenter asked the Bureau to clarify the meaning of a ``reasonable 
period of time.'' The Bureau believes that reasonableness generally 
depends upon the facts and circumstances surrounding a debt collector's 
communications with a consumer's attorney. Accordingly, the Bureau 
declines to identify a blanket period of time after which all 
communications with persons other than a consumer's attorney are 
permissible in all cases.
    Finally, in its Policy Statement on Decedent Debt, the FTC stated 
that it would refrain from taking enforcement action under FDCPA 
section 804(2) against debt collectors who state that they are seeking 
to locate a person ``with the authority to pay any outstanding bills of 
the decedent out of the decedent's estate.'' \355\ The Bureau requested 
comment on the language debt collectors may use to locate a person 
handling the decedent's affairs in the FTC's Policy Statement (``with 
the authority to pay any outstanding bills of the decedent out of the 
decedent's estate'') compared to proposed comment

[[Page 76799]]

10(b)(2)-1 (``authorized to act on behalf of the deceased consumer's 
estate''). An industry commenter supported the Bureau's language, while 
a trade group commenter and a group of consumer advocates stated that 
they had no concerns with the proposal. Several commenters, however, 
preferred that debt collectors use other language to locate the person 
authorized to act on behalf of the deceased consumer's estate. Most of 
these commenters preferred the FTC's language for several reasons, 
including that some individuals might be authorized to act on behalf of 
the estate only in limited ways that do not involve paying the deceased 
consumer's debts; that the privacy interests the FDCPA aimed to protect 
were lower in the decedent debt context; and that referring to the 
authority to act on behalf of the estate was likely to prompt 
clarifying questions that might reveal that the consumer owes a debt. 
One industry commenter stated that it asked for the person ``handling 
the financial affairs'' of the deceased consumer and that the Bureau 
should adopt this language. A trade group commenter asked the Bureau to 
allow debt collectors to use the FTC's language in response to follow-
up questions during a location communication, while another trade group 
commenter suggested that the rule allow both the FTC's and the Bureau's 
language.
---------------------------------------------------------------------------

    \355\ FTC Policy Statement on Decedent Debt, supra note 157, at 
44918-23.
---------------------------------------------------------------------------

    The Bureau understands commenters' policy arguments but remains 
concerned about the phrase ``outstanding bills'' from the FTC's Policy 
Statement. FDCPA section 803(5) defines debt broadly to include ``any 
obligation or alleged obligation of a consumer to pay money arising out 
of a transaction . . . primarily for personal, family, or household 
purposes.'' \356\ Because the definition is not limited to delinquent 
or defaulted obligations, even references to outstanding bills may 
reveal that the consumer owes a debt under the FDCPA. Accordingly, the 
Bureau is finalizing comment 10(b)(2)-1, in relevant part, as proposed. 
To increase flexibility, final comment 10(b)(2)-1 also permits debt 
collectors to identify the person authorized to act on behalf of the 
deceased consumer's estate as the person handling the financial affairs 
of the deceased consumer because the Bureau notes that this language is 
also unlikely to reveal the existence of a debt.
---------------------------------------------------------------------------

    \356\ 15 U.S.C. 1692a(5). See also the section-by-section 
analysis of Sec.  1006.2(h).
---------------------------------------------------------------------------

    Two commenters made additional suggestions. A trade group commenter 
requested that the Bureau exempt location communications from the 
definition of communication in the decedent debt context. And consumer 
advocates asked the Bureau to require debt collectors to check whether 
public records listed an executor or administrator, and if so, to 
prohibit communications with anyone other than that individual. The 
Bureau declines to interpret communications so as not to include any 
location communications in the decedent debt context. The Bureau also 
declines to adopt a requirement to check public records. The Bureau 
supports the FTC's encouragement for debt collectors to make good-faith 
efforts to search public records before communicating with a deceased 
consumer's estate.\357\ Nevertheless, the Bureau concludes that final 
Sec.  1006.10's provisions regulating location communications, combined 
with final Sec.  1006.6(a)'s restrictions on the individuals with whom 
debt collectors may communicate, provides sufficient restrictions on 
communications consistent with the statutory provisions, without the 
need for definitional changes or new record-checking requirements.
---------------------------------------------------------------------------

    \357\ FTC Policy Statement on Decedent Debt, supra note 157, at 
44919-20.
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.10 and comments 10(a)-1 and 10(b)(2)-1 largely as proposed, with 
minor changes for clarity.
    Comment 10(a)-1 provides that, if a consumer obligated or allegedly 
obligated to pay any debt is deceased, location information includes 
the information described in Sec.  1006.10(a) for a person who is 
authorized to act on behalf of the deceased consumer's estate, as 
described in Sec.  1006.6(a)(4) and its associated commentary. Comment 
10(b)(2)-1 provides that, if the consumer obligated or allegedly 
obligated to pay the debt is deceased, and the debt collector is 
attempting to locate the person who is authorized to act on behalf of 
the deceased consumer's estate, the debt collector does not violate 
Sec.  1006.10(b)(2) by stating that the debt collector is seeking to 
identify and locate the person who is authorized to act on behalf of 
the deceased consumer's estate. The debt collector may also state that 
the debt collector is seeking to identify and locate the person 
handling the financial affairs of the deceased consumer.
10(c) Frequency of Location Communications
    Proposed Sec.  1006.10(c) would have implemented FDCPA section 
804(3), which provides that a debt collector must not communicate with 
a person for the purpose of obtaining location information more than 
once, unless the debt collector reasonably believes that the person's 
earlier response was erroneous or incomplete and that the person now 
has correct or complete information. Proposed Sec.  1006.10(c) also 
specified that debt collectors engaging in location communications by 
telephone must comply with the telephone frequency limits in Sec.  
1006.14(b).
    A government commenter and several consumers and consumer advocates 
objected to the proposal to apply the same frequency limits to location 
calls as to telephone calls generally (i.e., up to seven unanswered 
telephone calls to a person during a seven-day period).\358\ These 
commenters stated that the proposed frequency limits were too high for 
any person, but especially for third parties receiving location calls, 
who may be more likely to find such calls harassing because they do not 
owe the debt. Consumer advocates also suggested that third parties were 
unlikely to answer location telephone calls and therefore would not 
receive the benefit of proposed Sec.  1006.10(c)'s restriction on debt 
collectors communicating more than once with third parties for location 
information purposes. Some of these commenters proposed various 
alternative frequency limits, such as one attempt per third party per 
week.
---------------------------------------------------------------------------

    \358\ Specifically, proposed Sec.  1006.14(b) provided a bright-
line rule that a debt collector does not violate FDCPA section 
806(5)'s prohibition against repeated or continuous telephone calls 
if the debt collector places seven or fewer telephone calls to a 
person about a debt during a seven-day period (and does not place 
another telephone call to the person after having had a telephone 
conversation with the person during the seven-day period). 84 FR 
23274, 23401 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau declines to revise Sec.  1006.10(c) to set forth unique 
telephone calling frequencies for third parties. As discussed in the 
section-by-section analysis of Sec.  1006.14, the Bureau finds that the 
frequency standards described in that section are appropriate for third 
parties as well as consumers. Moreover, as discussed above, debt 
collectors' telephone calls to third parties are cabined by the general 
statutory prohibition, implemented in Sec.  1006.6(d), against 
communicating with third parties unless they have the purpose of 
obtaining location information. The Bureau acknowledges that, as 
suggested by some consumer advocates, some third parties could receive 
excess telephone calls. The Bureau is not aware, however, that debt 
collectors are routinely or successfully claiming in litigation or 
enforcement

[[Page 76800]]

actions that such telephone calls are properly placed for the purpose 
of acquiring location information and consistent with the prohibition 
against communicating more than once with a third party to seek 
location information. Finally, location communications are subject to 
Sec.  1006.14's general prohibition on harassing, oppressive, or 
abusive conduct.
Section 1006.14 Harassing, Oppressive, or Abusive Conduct
    FDCPA section 806 \359\ prohibits a debt collector from engaging in 
any conduct the natural consequence of which is to harass, oppress, or 
abuse any person in connection with the collection of a debt. It lists 
six non-exhaustive examples of such prohibited conduct. The Bureau 
proposed Sec.  1006.14 to implement and interpret FDCPA section 
806.\360\ Except with respect to Sec.  1006.14(b) and (h), proposed 
Sec.  1006.14 generally restated the statute, with only minor wording 
and organizational changes for clarity.
---------------------------------------------------------------------------

    \359\ 15 U.S.C. 1692d.
    \360\ See 84 FR 23274, 23307-22 (May 21, 2019).
---------------------------------------------------------------------------

    The following section-by-section analyses summarize and address 
comments related to proposed Sec.  1006.14(a), (b), and (h). Apart from 
one comment related to proposed Sec.  1006.14(g) that does not require 
any changes to regulation text or commentary,\361\ the Bureau did not 
receive feedback specifically addressing proposed Sec.  1006.14(c) 
through (g) and therefore is finalizing these paragraphs as proposed. 
The Bureau is finalizing Sec.  1006.14 pursuant to its authority under 
FDCPA section 814(d) to prescribe rules with respect to the collection 
of debts by debt collectors, as well as pursuant to its authority to 
implement and interpret FDCPA section 806.
---------------------------------------------------------------------------

    \361\ The commenter requested guidance on a debt collector's 
responsibility to identify the person the debt collector has reached 
during a telephone call (i.e., whether the debt collector has 
reached, or is being contacted by, the consumer or a third party). 
The commenter noted that this question is relevant to complying with 
the requirement under FDCPA section 806(6) (proposed as Sec.  
1006.14(g)) to meaningfully disclose, except with respect to 
location information calls, the debt collector's identity on 
telephone calls, as well as with respect to other requirements and 
prohibitions under the FDCPA and the regulation (as proposed). In 
response to this comment, the Bureau confirms that there are a 
number of contexts, including the meaningful disclosure of identity 
provision, in which the statute (and final rule) requires a debt 
collector to determine the identity of the person to whom the debt 
collector is speaking; the Bureau declines to provide detailed 
guidance as to how debt collectors should make such a determination.
---------------------------------------------------------------------------

    The Bureau notes that it received many comments from individual and 
consumer advocate commenters describing harassing conduct that they or 
their clients have experienced by debt collectors. For example, some 
commenters stated that they are afraid to answer telephone calls 
because debt collectors have called them repeatedly and used profane 
language. Other commenters described feeling shame when debt collectors 
disclosed information to neighbors and friends about debts they 
allegedly owed. Commenters described debt collectors threatening them 
with criminal prosecution or bodily harm if they did not pay an alleged 
debt immediately. Some commenters explained that these types of 
behaviors by debt collectors cause them stress that manifests into 
physical symptoms such as increased blood pressure, heavy breathing, 
pain, and loss of sleep. The Bureau emphasizes that the conduct 
described by commenters above is prohibited by FDCPA section 806 and 
final Sec.  1006.14, even if specific examples of such conduct are not 
discussed in the regulation text or commentary.
14(a) In General
    As noted, FDCPA section 806 generally prohibits a debt collector 
from engaging in any conduct the natural consequence of which is to 
harass, oppress, or abuse any person in connection with the collection 
of a debt, and FDCPA section 806(1) through (6) lists six non-
exhaustive examples of such prohibited conduct. Proposed Sec.  
1006.14(a) would have largely restated FDCPA section 806.\362\ For the 
reasons discussed below, the Bureau is finalizing Sec.  1006.14(a) 
generally as proposed but is adopting new comments 14(a)-1 and -2 in 
response to feedback requesting clarity about its scope.
---------------------------------------------------------------------------

    \362\ See 84 FR 23274, 23307 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau received a number of comments requesting clarification 
about the scope of FDCPA section 806 as it would have been implemented 
in proposed Sec.  1006.14(a). For example, a group of consumer 
advocates asked that the Bureau include in the rule text or commentary 
the statement the Bureau made in the preamble to the proposal that 
Sec.  1006.14(a) applies to communication media other than telephone 
calls. The same group of consumer advocates asked the Bureau to clarify 
that Sec.  1006.14(a) applies based on the cumulative effect of a debt 
collector's conduct across multiple communication media. An industry 
commenter asked the Bureau to confirm the opposite--i.e., that Sec.  
1006.14(a) applies separately to each communication method used by the 
debt collector.
    In light of these comments, the Bureau is adopting two comments to 
clarify that the general prohibition on harassing conduct in FDCPA 
section 806, as implemented in Sec.  1006.14(a), applies whether debt 
collectors place telephone calls or use other communication media. In 
addition, the comments clarify that all communication media are 
analyzed individually as well as cumulatively.\363\
---------------------------------------------------------------------------

    \363\ As provided for in comment 14(b)(1)-1, a debt collector 
who complies with Sec.  1006.14(b)(1) and FDCPA section 806(5) 
complies with Sec.  1006.14(a) and FDCPA section 806 solely with 
respect to the frequency of its telephone calls. When a debt 
collector both places telephone calls and uses at least one other 
type of communication media, compliance with Sec.  1006.14(a) 
depends on the whether the cumulative communications involving 
telephone calls and any other communication media have the natural 
consequence of harassing, oppressing, or abusing any person in 
connection with the collection of a debt.
---------------------------------------------------------------------------

    Comment 14(a)-1 clarifies that Sec.  1006.14(a), which implements 
FDCPA section 806, sets forth a general standard that prohibits a debt 
collector from engaging in any conduct the natural consequence of which 
is to harass, oppress, or abuse any person in connection with the 
collection of a debt. The comment clarifies, further, that the general 
prohibition covers the specific conduct described in Sec.  1006.14(b) 
through (h), as well as any conduct by the debt collector that is not 
specifically prohibited by Sec.  1006.14(b) through (h) but that the 
natural consequence of which is to harass, oppress, or abuse any person 
in connection with the collection of a debt. The comment explains that 
the conduct can occur regardless of the communication media the debt 
collector uses, including in-person interactions, telephone calls, 
audio recordings, paper documents, mail, email, text messages, social 
media, or other electronic media, even if not specifically addressed by 
Sec.  1006.14(b) through (h).
    Comment 14(a)-1 also includes an example involving a scenario in 
which, in connection with the collection of a debt: A debt collector 
sends a consumer numerous, unsolicited text messages per day for 
several consecutive days; the consumer does not respond; the debt 
collector does not communicate or attempt to communicate with the 
consumer using any other communication medium; and that, by sending the 
text messages, the debt collector has not violated Sec.  1006.14(b) 
through (h). The comment clarifies that even though the debt collector 
has not violated any specific prohibition under Sec.  1006.14(b) 
through (h), it is likely that the natural consequence of the debt 
collector's text messages is to harass,

[[Page 76801]]

oppress, or abuse the person receiving them and that when such natural 
consequence occurs, the debt collector has violated Sec.  1006.14(a) 
and FDCPA section 806.
    Comment 14(a)-2 addresses cumulative communications by the debt 
collector, and clarifies that, depending on the facts and 
circumstances, conduct that on its own would violate neither the 
general prohibition in Sec.  1006.14(a), nor any specific prohibition 
in Sec.  1006.14(b) through (h), nonetheless may violate Sec.  
1006.14(a) when such conduct is evaluated cumulatively with other 
conduct. The comment further clarifies that such conduct can occur 
through any communication medium the debt collector uses, including in-
person interactions, telephone calls, audio recordings, paper 
documents, mail, email, text messages, social media, or other 
electronic media. The comment then provides an example in which the 
debt collector places seven unanswered telephone calls within seven 
consecutive days to a consumer in connection with the collection of a 
debt and, during the same time period, sends multiple additional 
unsolicited emails about the debt to the consumer, to which the 
consumer does not respond. The comment notes that it is likely that the 
natural consequence of the cumulative effect of the debt collector's 
telephone calls and emails is to harass, oppress, or abuse the person 
receiving them; when such natural consequence occurs, the debt 
collector has violated Sec.  1006.14(a) and FDCPA section 806.
    The Bureau notes that, as discussed in the section-by-section 
analysis of Sec.  1006.14(b) setting forth the Bureau's final rule 
regarding telephone call frequencies, the Bureau received thousands of 
comments from consumers, consumer advocates, a local government, a 
group of State Attorneys General, members of Congress, and other 
commenters expressing concern that the proposal--which included numeric 
limits for debt collection telephone calls but did not include numeric 
limits for debt collection contacts through other communication media--
would have allowed debt collectors to send excessive or unlimited text 
messages and emails, or otherwise inundate consumers with these 
electronic communications. Some commenters expressed concern, for 
example, that debt collectors would program their systems to send 
multiple emails per second and cause consumers' data and text messaging 
plans to be maxed out, preventing consumers from using their devices.
    The Bureau understands that few debt collectors currently send 
electronic communications, and the Bureau is not aware of these debt 
collectors sending excessive electronic communications. Even if, as a 
result of this final rule, debt collectors choose to send electronic 
communications more frequently than they currently do, the Bureau does 
not believe that sending excessive electronic communications, including 
by programming systems to send multiple emails per second, generally 
would be a profitable strategy for debt collectors. Additionally, this 
type of conduct would undoubtedly harm consumers. It would not have 
been permitted by the proposal and is not permitted by the final rule. 
FDCPA section 806, as implemented by Sec.  1006.14(a), covers, among 
other things, the debt collector's use of any communication medium in 
connection with the collection of a debt. Consequently, a debt 
collector would violate the FDCPA and Regulation F by sending text 
messages or emails, making social media posts, or the like, if the 
natural consequence of that conduct is to harass, oppress, or abuse any 
person in connection with the collection of a debt. New final comments 
14(a)-1 and -2 further clarify this point.
    Finally, the Bureau received a request to clarify that Sec.  
1006.14(a) applies even if a consumer does not opt out of receiving 
electronic debt collection communications or communication attempts 
pursuant to the instructions in Sec.  1006.6(e) or exercise the right 
to request that the debt collector stop using a particular 
communication medium under Sec.  1006.14(h). The Bureau affirms that it 
does. Sections 1006.6(e) \364\ and 1006.14(h) \365\ provide consumers 
with tools to limit or stop debt collectors from communicating or 
attempting to communicate with them.\366\ Regardless of whether a 
consumer uses such tools, the final rule prohibits a debt collector 
from engaging in any conduct the natural consequence of which is to 
harass, oppress, or abuse any person in connection with the collection 
of a debt, as provided for in FDCPA section 806 and Sec.  1006.14(a). 
Because neither the text of Sec.  1006.14(a) nor the text of Sec.  
1006.6(e) or Sec.  1006.14(h) states or implies that a consumer would 
have to opt out of receiving electronic communications or request the 
debt collector stop using a particular communication medium to trigger 
Sec.  1006.14(a)'s general prohibition against harassing, oppressive, 
or abusive conduct, the Bureau concludes that it is not necessary or 
warranted to add new commentary to specify this fact.
---------------------------------------------------------------------------

    \364\ Pursuant to Sec.  1006.6(e), a debt collector who 
communicates or attempts to communicate with a consumer 
electronically in connection with the collection of a debt using a 
specific email address, telephone number for text messages, or other 
electronic-medium address must include in such communication or 
attempt to communicate a clear and conspicuous statement describing 
a reasonable and simple method by which the consumer can opt out of 
further electronic communications or attempts to communicate by the 
debt collector to that address or telephone number.
    \365\ Section 1006.14(h)(1) provides that, in connection with 
the collection of any debt, a debt collector must not communicate or 
attempt to communicate with a person through a medium of 
communication if the person has requested that the debt collector 
not use that medium to communicate with the person.
    \366\ A consumer may also notify a debt collector in writing 
that the consumer wants the debt collector to cease further 
communication with the consumer, and pursuant to Sec.  1006.6(c)(1), 
a debt collector must not communicate or attempt to communicate 
further with a consumer with respect to such debt.
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.14(a) largely as proposed, but with a minor grammatical revision 
to more closely align with the statute. Final Sec.  1006.14(a) thus 
provides that a debt collector must not engage in any conduct the 
natural consequence of which is to harass, oppress, or abuse any person 
in connection with the collection of a debt, including, but not limited 
to, the conduct described in Sec.  1006.14(b) through (h). In addition, 
as discussed, the Bureau is finalizing new comments 14(a)-1 and -2 to 
clarify that Sec.  1006.14(a) applies, among other things, to a debt 
collector's conduct in using any medium of communication in connection 
with the collection of a debt.
14(b) Repeated or Continuous Telephone Calls or Telephone Conversations
    FDCPA section 806(5) \367\ describes one example of conduct 
prohibited by section 806: Causing a telephone to ring or engaging any 
person in telephone conversation repeatedly or continuously with intent 
to annoy, abuse, or harass any person at the called number. Proposed 
Sec.  1006.14(b) would have implemented and interpreted FDCPA section 
806(5)--and, by extension, the general prohibition on harassing conduct 
in FDCPA section 806.\368\ Specifically, proposed Sec.  1006.14(b)(1) 
set forth the prohibition on placing telephone calls or engaging any 
person in telephone conversation repeatedly or continuously with intent 
to annoy, abuse, or harass; Sec.  1006.14(b)(2) described bright-line 
frequency limits for telephone calls and telephone conversations during 
a seven-day period; and proposed Sec.  1006.14(b)(3) through (5) 
described telephone calls excluded from the frequency limits, the

[[Page 76802]]

effect of complying with the frequency limits, and a definition, 
respectively.
---------------------------------------------------------------------------

    \367\ 15 U.S.C. 1692d(5).
    \368\ See 84 FR 23274, 23308-21 (May 21, 2019).
---------------------------------------------------------------------------

    As discussed in detail in the section-by-section analysis of final 
Sec.  1006.14(b)(1) through (4), the Bureau is finalizing its proposal 
regarding telephone call frequencies with revisions in light of 
feedback. Among other things, rather than finalizing a bright-line rule 
for permissible and prohibited telephone call frequency, the Bureau is 
finalizing telephone call frequencies in the form of a rebuttable 
presumption that a debt collector has either complied with or violated 
the prohibition in Sec.  1006.14(b)(1) regarding repeated or continuous 
telephone calls and telephone conversations.
    In this section-by-section analysis, the Bureau addresses feedback 
regarding proposed comment 14(b)(1)-1, which, for the reasons discussed 
below, the Bureau is finalizing, with revisions, as comment 14(b)-1. 
The Bureau also addresses feedback regarding proposed Sec.  
1006.14(b)(1)(ii) and (4), which the Bureau is not finalizing as part 
of this rule. Public comments regarding all other aspects of proposed 
Sec.  1006.14(b) are addressed in turn in the section-by-section 
analysis of final Sec.  1006.14(b)(1) through (4).
Final Comment 14(b)-1
    As noted, proposed Sec.  1006.14(b)(1) contained the provision 
implementing FDCPA section 806(5). Specifically, as proposed, Sec.  
1006.14(b)(1)(i) provided that, in connection with the collection of a 
debt, a debt collector must not place telephone calls or engage any 
person in telephone conversation repeatedly or continuously with intent 
to annoy, abuse, or harass any person at the called number.\369\ As 
discussed further in the section-by-section analysis of final Sec.  
1006.14(b)(1), proposed Sec.  1006.14(b)(1)(i) thus largely restated 
FDCPA section 806(5), except that, whereas the statute prohibits 
``[c]ausing a telephone to ring,'' proposed Sec.  1006.14(b)(1)(i) 
would have applied when a debt collector ``place[s] telephone calls.'' 
This interpretation meant that the proposed prohibition would have 
applied even if a debt collector's telephone call did not cause a 
traditional ring, as long as the telephone call connected to the dialed 
number. Proposed comment 14(b)(1)-1 would have clarified that, for 
purposes of the proposed telephone call frequency limits, ``placing a 
telephone call'' includes conveying a ringless voicemail (or 
``voicemail drop'') but does not include sending an electronic message 
(e.g., a text message or an email) to a mobile telephone.
---------------------------------------------------------------------------

    \369\ See id. at 23308.
---------------------------------------------------------------------------

    The Bureau received comments questioning whether the phrase 
``placing a telephone call'' in proposed commentary to Sec.  
1006.14(b)(1) also applied to the bright-line telephone call frequency 
limits in proposed Sec.  1006.14(b)(2), which used similar language. 
The Bureau intended proposed comment 14(b)(1)-1 to apply to the concept 
of placing a telephone call everywhere that concept is used in Sec.  
1006.14(b). Therefore, the Bureau is renumbering proposed comment 
14(b)(1)-1 as comment 14(b)-1 and is revising it to clarify that the 
interpretation applies throughout Sec.  1006.14(b).
    Ringless voicemails. The Bureau received a number of comments 
regarding its proposal in comment 14(b)(1)-1 to interpret the phrase 
``placing a telephone call'' to apply to ringless voicemails. Some 
industry commenters argued that the consumer experience with ringless 
voicemails is fundamentally different--and better--than with telephone 
calls and that ringless voicemails therefore should not be subject to 
telephone call frequency limits. They explained that a ringless 
voicemail is more like an email or text message than a telephone call. 
As described by one commenter, with a ringless voicemail, a consumer 
only receives a new voicemail according to the consumer's prescribed 
preferences, and, after receiving a new voicemail, the consumer can 
then choose if, when, and how the actual voicemail message content is 
presented. The commenter explained that, in most ringless voicemail 
applications, a consumer can swipe away any voicemail the consumer does 
not wish to read, listen to, or otherwise engage with, just like a 
consumer can do with an email or text message. This commenter also 
noted compliance challenges with tracking the cumulative number of 
telephone calls and ringless voicemails, given that the two types of 
calls are placed through independent systems run by different vendors. 
The commenter said that, if debt collectors have to track both 
telephone calls and ringless voicemails, they will opt to use one over 
the other instead of dealing with the complexities of cross channel 
frequency limit tracking. However, other industry commenters, Federal 
government agency staff, local government commenters, a group of 
consumer advocate commenters, and other commenters supported the 
proposal to clarify that ``placing a telephone call'' includes 
conveying a ringless voicemail.
    As noted above, section 806(5) of the FDCPA prohibits a debt 
collector from ``causing a telephone to ring or engaging any person in 
telephone conversation repeatedly or continuously with intent to annoy, 
abuse, or harass any person at the called number.'' \370\ The focus on 
telephone calls suggests that the provision was meant to apply to 
communications that present the opportunity for the parties to engage 
in a live telephone conversation or that result in an audio message. 
Ringless voicemails are audio messages that allow debt collectors to 
bypass a person's opportunity to answer the telephone by connecting 
directly to the person's voicemail. Even telephone calls that result in 
an audio message without an audible ring, if made repeatedly and 
continuously, nonetheless may be intended to harass or may have the 
natural consequence of harassing a person in ways that the FDCPA 
prohibits, particularly if, for example, the messages contain similar 
content and do not provide new information to the person receiving the 
messages. The Bureau recognizes that its interpretation of FDCPA 
section 806(5) may result in compliance challenges for a small number 
of debt collectors who place telephone calls and ringless voicemails 
using different systems and different vendors. However, the Bureau 
expects that those debt collectors will be able to overcome such 
challenges by developing new tracking systems; modifying their business 
models to use either telephone calls or ringless voicemails but not 
both; or using both in volumes that, even if combined, would be 
unlikely to create a violation.
---------------------------------------------------------------------------

    \370\ 15 U.S.C. 1692d(5).
---------------------------------------------------------------------------

    Communication media other than telephone calls. The Bureau received 
a large number of comments regarding its proposal in comment 14(b)(1)-1 
to interpret the phrase ``placing a telephone call'' not to include 
sending an electronic message (e.g., a text message or an email) to a 
mobile telephone, as well as its decision to not otherwise propose 
specific frequency limits for communication media other than telephone 
calls.
    Consumer, consumer advocate, State and local government, and State 
Attorneys General commenters stated that the Bureau should impose 
frequency limits on electronic communication media.\371\ State 
Attorneys General commenters described the prohibition in proposed 
Sec.  1006.14(a)--which would have

[[Page 76803]]

covered, and as finalized does cover, electronic communications--as 
insufficient to protect consumers from excessive electronic 
communications, noting that FDCPA section 806 has been difficult to 
apply in any context and has resulted in a significant amount of 
litigation and conflicting court opinions. One Federal government 
commenter reasoned that ``placing a telephone call'' should include 
sending a text message because the FCC has interpreted the phrase 
``mak[ing] any call'' in the TCPA as encompassing the sending of text 
messages.\372\
---------------------------------------------------------------------------

    \371\ Some of these commenters stated more broadly that the 
Bureau should apply frequency limits to all forms of communication 
media.
    \372\ See, e.g., In re Rules and Regulations Implementing the 
Tel. Consumer Prot. Act of 1991, 18 FCC Rcd. 14,014, 14,115 ] 165 
(2003).
---------------------------------------------------------------------------

    Commenters criticized the Bureau's rationale for not proposing to 
impose numeric limits on electronic communications. In the proposal, 
the Bureau grounded its justification in the specific language of FDCPA 
section 806(5), which the Bureau believed indicated Congress's 
intention to apply the provision to communications that present the 
opportunity for the parties to engage in a live telephone conversation 
or that result in an audio message. The Bureau also explained that it 
was not aware of debt collectors sending electronic messages to 
consumers repeatedly or continuously with intent to harass them or to 
cause substantial injury. Commenters asserted that the Bureau's 
reasoning for proposing telephone call frequency limits is equally 
applicable to electronic communication media, arguing that electronic 
communications are not less intrusive than telephone calls because 
consumers often receive notifications when they get text messages or 
emails that interrupt what they are doing and require them to assess 
whether such communications need immediate attention. Some commenters 
also criticized the Bureau's justification that there is little, if 
any, evidence that electronic communications harm consumers, arguing 
that the only reason evidence is lacking is because such communication 
media are not specifically contemplated under current law and thus not 
yet widely used by industry.
    A group of State Attorneys General and State and local government 
commenters, among others, predicted that, if the Bureau did not impose 
numeric limits on electronic debt collection communications or 
communication attempts, debt collectors would rely on them heavily; 
some of these commenters explained that electronic communications are 
virtually costless.\373\ Some commenters also observed that, absent a 
numeric limit on electronic communications, consumers with limited or 
pay-per-service plans--who tend to be lower-income and more likely to 
be subject to debt collection--will incur costs when debt collectors 
send text messages and emails.\374\
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    \373\ Some commenters recommended specific numeric limits for 
electronic communications, ranging from one per week to two per day, 
or specific numeric limits for cumulative communications across all 
communication media, ranging from two per week to one per day.
    \374\ To address concerns about the cost of text messaging, at 
least one consumer advocate commenter requested that the Bureau 
require debt collectors to use FTEU text messaging. Members of 
Congress stated that the Bureau, by not requiring FTEU text 
messaging, is placing the cost burden of text messages on consumers. 
More generally, a large number of commenters identified a consumer's 
lack of consent to electronic communications as a significant 
concern and requested that the Bureau require consumers to opt into 
receiving such communications from debt collectors. The Bureau 
addresses these comments in the section-by-section analysis of Sec.  
1006.6, which discusses communications in debt collection generally.
---------------------------------------------------------------------------

    Consumer advocates recommended that, if the Bureau does not impose 
numeric frequency limits on electronic communications, the Bureau 
should at least require debt collectors to report on their use of 
emails, text messages, and direct messages. Consumer advocates also 
encouraged the Bureau to consider specific limits in the future if debt 
collectors abuse these communication media.
    The Bureau received a large number of comments from the credit and 
collections industry expressing general support for the Bureau's 
proposal not to apply numeric frequency limits to communication media 
other than telephone calls.\375\ Many industry commenters distinguished 
electronic communications from telephone calls, arguing that, unlike 
telephone calls, electronic communication media do not harass consumers 
because they are passive communications that consumers can engage with 
at their convenience or can opt out of receiving entirely.\376\ 
Industry commenters argued that the proposed opt-out provision in Sec.  
1006.6(e) and the general prohibition against conduct the natural 
consequence of which is to harass, oppress, or abuse any person in 
connection with the collection of a debt in proposed Sec.  1006.14(a), 
along with FDCPA section 806, would impose sufficient limits on a debt 
collector's use of electronic communications.
---------------------------------------------------------------------------

    \375\ However, one industry commenter acknowledged that the 
scope of FDCPA section 806 and 806(5) is broad enough to include 
modern communication media such as emails and text messages if they 
are used to harass, oppress, or abuse a person in connection with 
the collection of a debt. Another industry commenter agreed but 
cautioned the Bureau against attributing carrier errors, such as 
sending the same text message multiple times, to the debt collector.
    \376\ See the section-by-section analysis of Sec.  1006.6. 
Industry commenters made similar points about communications by 
mail. Since the Bureau did not receive comments suggesting that 
communications solely by mail should be subject to particular weekly 
frequency limits, the Bureau does not further address those comments 
in this section-by-section analysis.
---------------------------------------------------------------------------

    Industry commenters asserted that a numeric frequency limit on 
electronic communication media would harm consumers.\377\ Many of these 
industry commenters explained that consumers prefer to communicate 
through electronic media because they can interact with and respond to 
an electronic message when it is most convenient. If the Bureau were to 
impose numeric frequency limits on electronic communications, it could 
discourage debt collectors from utilizing such media to communicate 
with consumers. Other industry commenters explained that the ability to 
communicate by email and text message will offset the negative impacts 
of the proposed telephone call frequency limits, such as the inability 
to establish contact with consumers.\378\ Some industry commenters 
cautioned that, if communications are restricted too much, debt 
collectors will instead file lawsuits against consumers to collect the 
debts.
---------------------------------------------------------------------------

    \377\ One industry commenter asked the Bureau to provide a safe 
harbor when the frequency of a debt collector's electronic 
communications is at or below the proposed telephone call frequency 
limits without a corresponding per se violation or presumption of a 
violation when the frequency of a debt collector's electronic 
communications is above the proposed limits.
    \378\ However, at least one industry commenter disagreed and 
explained that debt collectors may not have valid, personal email 
addresses for all accounts and may be unable to send text messages 
to certain telephone numbers.
---------------------------------------------------------------------------

    The Bureau declines to impose numeric limitations on a debt 
collector's use of electronic communication media or of a combination 
of telephone calls and electronic communication media. Because debt 
collectors do not presently engage in widespread use of electronic 
communications, the Bureau concludes that it does not have sufficient 
information to warrant applying numeric limitations to electronic 
communications. However, the Bureau reiterates that FDCPA section 806 
and Sec.  1006.14(a) apply to debt collectors' conduct in using such 
media,\379\ and the final rule contains several other provisions 
designed to curb harassment

[[Page 76804]]

from electronic communications and empower consumers to restrict debt 
collection communications.\380\ The Bureau also intends to actively 
monitor the market and to gather information on these electronic 
communications in general so that it may determine in the future 
whether numeric limitations on electronic communications are necessary 
and warranted and, if so, what specific numeric limitations the Bureau 
should consider.
---------------------------------------------------------------------------

    \379\ In particular, new comments 14(a)-1 and -2 address many 
policy concerns raised by stakeholders about how the proposal would 
have treated debt collectors' use of text messages and other 
electronic communication media.
    \380\ For example, under Sec.  1006.6(e), a debt collector who 
communicates or attempts to communicate with a consumer 
electronically in connection with the collection of a debt using a 
specific email address, telephone number for text messages, or other 
electronic-medium address must include in such communication or 
attempt to communicate a clear and conspicuous statement describing 
a reasonable and simple method by which the consumer can opt out of 
further electronic communications or attempts to communicate by the 
debt collector to that address or telephone number. In addition, 
Sec.  1006.14(h)(1) provides that, in connection with the collection 
of any debt, a debt collector must not communicate or attempt to 
communicate with a person through a medium of communication if the 
person has requested that the debt collector not use that medium to 
communicate with the person. A consumer may also notify a debt 
collector in writing that the consumer wants the debt collector to 
cease further communication with the consumer, and pursuant to Sec.  
1006.6(c)(1), a debt collector must not communicate or attempt to 
communicate further with a consumer with respect to such debt.
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing proposed 
comment 14(b)(1)-1 as final comment 14(b)-1 with minor revisions to 
provide that ``placing a telephone call'' for purposes of Sec.  
1006.14(b) includes conveying a ringless voicemail but does not include 
sending an electronic message (e.g., a text message or an email) that 
may be received on a mobile telephone.\381\
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    \381\ Unlike proposed comment 14(b)(1)-1, final comment 14(b)-1 
does not refer to section 1031 of the Dodd-Frank Act because, as 
discussed elsewhere in this section-by-section analysis, the Bureau 
is not relying on its Dodd-Frank Act section 1031 authority to 
finalize any part of Sec.  1006.14.
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Proposed Provisions Not Finalized
    Identification and prevention of Dodd-Frank Act unfair act or 
practice. As noted above, proposed Sec.  1006.14(b)(1) set forth the 
prohibition regarding repeated or continuous telephone calls and 
telephone conversations, with proposed Sec.  1006.14(b)(1)(i) largely 
restating the text of the prohibition in FDCPA section 806(5). The 
Bureau proposed Sec.  1006.14(b)(1)(ii), in turn, to identify, for 
FDCPA debt collectors who were also covered by the Dodd-Frank Act, the 
conduct articulated in FDCPA section 806(5) as an unfair act or 
practice under section 1031 of the Dodd-Frank Act.\382\ As proposed, 
Sec.  1006.14(b)(1)(ii) provided that, to prevent the unfair act or 
practice, a debt collector must not exceed the bright-line telephone 
call frequency limits that were set forth in proposed Sec.  
1006.14(b)(2).\383\
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    \382\ 12 U.S.C. 5531(b), (c).
    \383\ See 84 FR 23274, 23309 (May 21, 2019).
---------------------------------------------------------------------------

    As discussed in the section-by-section analysis of Sec.  1006.1(c), 
while some commenters supported the Bureau's proposed use of its Dodd-
Frank Act section 1031 authority, a number of industry commenters 
expressed concern that the Bureau's proposed use of its Dodd-Frank Act 
section 1031 authority could--despite the stated limits of the proposal 
as only applying to FDCPA debt collectors--lead, if finalized, to 
provisions that relied on such authority, including the prohibitions on 
unfair, deceptive, and abusive acts and practices under section 1031 of 
the Dodd-Frank Act, being applied to first-party debt collectors. These 
commenters urged the Bureau to adopt proposed Sec.  1006.14(b)(1) using 
only its FDCPA authority. The Bureau understands commenters' concerns 
that conduct the Bureau deemed to be prohibited by the FDCPA and the 
Dodd-Frank Act when undertaken by FDCPA debt collectors could be 
construed also to be prohibited when undertaken by other entities 
collecting debts, even if they are not FDCPA debt collectors. In 
response to commenters' concerns, the Bureau notes, as discussed 
elsewhere in this Notice,\384\ that the FDCPA recognizes the special 
sensitivity of communications by FDCPA debt collectors relative to 
communications by creditors, and, therefore, the FDCPA provides 
protections for consumers receiving such communications from debt 
collectors but not creditors.
---------------------------------------------------------------------------

    \384\ See, e.g., the section-by-section analysis of Sec.  
1006.6(d)(3) through (5).
---------------------------------------------------------------------------

    Moreover, as noted above, and as is discussed in detail below, the 
Bureau has determined to finalize a rebuttable-presumption approach in 
Sec.  1006.14(b)(2), rather than a bright-line rule, regarding 
telephone call frequencies. As discussed in the section-by-section 
analysis of Sec.  1006.14(b)(2), whether the presumption of compliance 
or of a violation, as applicable, may be rebutted depends upon the 
relevant facts and circumstances. Furthermore, the final rule specifies 
non-exhaustive factors that, considered together with whether the 
frequency of a debt collector's telephone calls exceeded or was within 
the rule's specified frequencies, are relevant to determining whether a 
debt collector's conduct violated the prohibition in FDCPA section 
806(5) and final Sec.  1006.14(b)(1), including whether the debt 
collector had the intent to annoy, abuse, or harass the person at the 
called number. In light of this change, the Bureau has determined that 
it is not necessary to also identify the conduct described in FDCPA 
section 806(5) or Sec.  1006.14(b) as an unfair, deceptive, or abusive 
act or practice under section 1031 of the Dodd-Frank Act or to find 
that the telephone call frequencies will prevent such an unfair act or 
practice. Accordingly, the Bureau is not finalizing proposed Sec.  
1006.14(b)(1)(ii) and is renumbering the FDCPA standard in proposed 
Sec.  1006.14(b)(1)(i) as final Sec.  1006.14(b)(1).
    Effect of complying with telephone call frequencies. Proposed Sec.  
1006.14(b)(4) \385\ would have clarified that a debt collector who did 
not exceed the telephone call frequency limits described in proposed 
Sec.  1006.14(b)(2) complied with Sec.  1006.14(b)(1) and FDCPA section 
806(5) and did not, based on the frequency of its telephone calls, 
violate Sec.  1006.14(a), FDCPA section 806, or sections 1031 or 
1036(a)(1)(B) of the Dodd-Frank Act.\386\ Because the Bureau is not 
finalizing the proposed bright-line frequency limits for telephone 
calls, the Bureau is not finalizing proposed Sec.  1006.14(b)(4) 
regarding the effects of complying with those limits. As discussed in 
the section-by-section analysis of Sec.  1006.14(b)(1), however, the 
Bureau is incorporating similar concepts in newly adopted comments 
14(b)(1)-1 and -2 and as part of final Sec.  1006.14(b)(2).
---------------------------------------------------------------------------

    \385\ See 84 FR 23274, 23319 (May 21, 2019).
    \386\ 12 U.S.C. 5531, 5536(a)(1)(B).
---------------------------------------------------------------------------

14(b)(1) In General
    Proposed Sec.  1006.14(b)(1)(i) would have implemented the 
statutory prohibition in FDCPA section 806(5) by providing that, in 
connection with the collection of a debt, a debt collector must not 
place telephone calls or engage any person in telephone conversation 
repeatedly or continuously with intent to annoy, abuse, or harass any 
person at the called number.\387\ As discussed above, the Bureau is 
finalizing proposed Sec.  1006.14(b)(1)(i) renumbered as Sec.  
1006.14(b)(1). For the reasons discussed below, the Bureau is 
finalizing the text of Sec.  1006.14(b)(1)(i) as proposed but is 
adopting new comments 14(b)(1)-1 and -2 to clarify the interaction of 
final Sec.  1006.14(b)(1) and (2).\388\
---------------------------------------------------------------------------

    \387\ See 84 FR 23274, 23308 (May 21, 2019).
    \388\ In addition to the issues discussed in this section-by-
section analysis, the Bureau reiterates that, for the reasons 
discussed in the section-by-section analysis of Sec.  1006.14(b), 
the Bureau is finalizing the proposal to interpret FDCPA section 
806(5)'s prohibition against ``causing a telephone to ring'' to be a 
prohibition against ``placing telephone calls.''

---------------------------------------------------------------------------

[[Page 76805]]

    Consistent with FDCPA section 806(5), proposed Sec.  
1006.14(b)(1)(i) would have applied to telephone calls placed by a debt 
collector to any person, not just to the consumer. Thus, as proposed, 
Sec.  1006.14(b)(1)(i) would have applied to, among other things, 
telephone calls placed to obtain location information about a consumer 
as described in Sec.  1006.10. Federal government agency staff 
supported this approach. One individual commenter expressed concern 
that a consumer would be negatively affected if a debt collector placed 
numerous location information calls to the consumer's employer. A group 
of consumer advocates recommended that the Bureau limit location 
information calls to third parties to one telephone call attempt per 
third party per week, while another consumer advocate commenter 
recommended that location information calls to third parties be 
prohibited altogether. Some commenters, including individuals and a 
consumer advocate commenter, incorrectly stated that the proposal would 
permit ``unlimited'' telephone calls to third parties.
    In response to commenters' concerns, the Bureau notes that FDCPA 
section 806(5) protects ``any person'' from such conduct. Because FDCPA 
section 806(5) does not distinguish between a debt collector's conduct 
toward third parties and consumers, the Bureau is applying the same 
telephone call standards to all telephone calls placed by debt 
collectors in connection with the collection of a debt.\389\ Consistent 
with FDCPA section 804, the final rule places additional limits on 
telephone calls to third parties for the purpose of acquiring location 
information.\390\ The Bureau also notes that, as discussed in the 
section-by-section analysis of Sec.  1006.14(b)(2), a debt collector's 
presumption of compliance with Sec.  1006.14(b)(1) and FDCPA section 
806(5) may be rebutted, based on the facts and circumstances.
---------------------------------------------------------------------------

    \389\ Given the interplay between proposed Sec.  1006.14(b)(1) 
and (2), the application of proposed Sec.  1006.14(b)(1)(i) to any 
person would have meant that the proposed telephone call frequency 
limits in Sec.  1006.14(b)(2) also would have applied to telephone 
calls placed by a debt collector to any person. Likewise, the 
telephone call frequencies in final Sec.  1006.14(b)(2) apply to 
location information calls and balance a debt collector's potential 
need to obtain information about a consumer necessary to establish 
right party contact with the potentially harassing effect such calls 
may have directly on the third party, or indirectly on the consumer.
    \390\ See the section-by-section analysis of Sec.  1006.10. 
Pursuant to Sec.  1006.10(c), a debt collector communicating with 
any person other than the consumer for the purpose of acquiring 
location information about the consumer must not communicate more 
than once with such person unless requested to do so by such person, 
or unless the debt collector reasonably believes that the earlier 
response of such person is erroneous or incomplete and that such 
person now has correct or complete location information.
---------------------------------------------------------------------------

    Some industry commenters asked the Bureau to define the term 
telephone conversation that appears in Sec.  1006.14(b)(1). A group of 
consumer advocates suggested the term should include any time the 
consumer answers the debt collector's telephone call, even if the debt 
is not discussed. The term telephone conversation in final Sec.  
1006.14(b)(1) comes directly from FDCPA section 806(5) and has the same 
meaning as it does in the statute. To be clear, however, the term is 
not synonymous with a debt collection communication, as defined in 
FDCPA section 803(2) and implemented in final Sec.  1006.2(d). A debt 
collection communication occurs if information regarding a debt is 
conveyed directly or indirectly to any person through any medium. If a 
debt collector leaves a voicemail for a consumer that includes details 
about the debt, the debt collector has engaged in a debt collection 
communication with the consumer but has not had a telephone 
conversation. Likewise, if a consumer answers a debt collector's 
telephone call and, before anything else is said, asks the debt 
collector to call back in 10 minutes, the debt collector has engaged in 
a telephone conversation with the consumer but may not have had a debt 
collection communication.
    Several industry commenters also raised hypothetical questions 
asking whether particular types of telephone calls would count as 
``placed'' for purposes of Sec.  1006.14(b)(1) and, in turn, for 
purposes of the proposed telephone call frequency limits in Sec.  
1006.14(b)(2). Elsewhere in Sec.  1006.14(b), the Bureau is adopting 
new commentary clarifying how to count placed telephone calls. That 
commentary further clarifies when a debt collector has placed a 
telephone call or engaged in a telephone conversation for purposes of 
Sec.  1006.14(b).\391\
---------------------------------------------------------------------------

    \391\ See the section-by-section analysis of final Sec.  
1006.14(b)(4).
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau is finalizing the text 
of proposed Sec.  1006.14(b)(1)(i) as final Sec.  1006.14(b)(1). The 
Bureau is also adding new comments 14(b)(1)-1 and -2 to clarify the 
effect of complying with Sec.  1006.14(b)(1).\392\
---------------------------------------------------------------------------

    \392\ As discussed in the section-by-section analysis of Sec.  
1006.14(b), the Bureau is renumbering proposed comment 14(b)(1)-1 as 
comment 14(b)-1.
---------------------------------------------------------------------------

    Specifically, comment 14(b)(1)-1 provides that a debt collector who 
complies with final Sec.  1006.14(b)(1) and FDCPA section 806(5)'s 
specific prohibition also complies with final Sec.  1006.14(a) and 
FDCPA section 806's general prohibition solely with respect to the 
frequency of its telephone calls. The comment further clarifies that 
the debt collector nevertheless could violate Sec.  1006.14(a) and 
FDCPA section 806 if the natural consequence of another aspect of its 
telephone calls, unrelated to frequency, is to harass, oppress, or 
abuse any person in connection with the collection of a debt. Comment 
14(b)(1)-2 provides an illustrative example.
14(b)(2) Telephone Call Frequencies; Presumptions of Compliance and of 
a Violation
    FDCPA section 806 \393\ prohibits a broad range of debt collection 
communication practices that harm consumers and others. Section 
806(5),\394\ in particular, prohibits debt collectors from causing a 
telephone to ring or engaging a person in telephone conversation 
repeatedly or continuously with intent to annoy, abuse, or harass. 
Proposed Sec.  1006.14(b)(2) would have set forth bright-line frequency 
limits for debt collection telephone calls.\395\ Proposed Sec.  
1006.14(b)(2) provided that, subject to exclusions in proposed Sec.  
1006.14(b)(3), a debt collector violates the FDCPA section 806(5) 
prohibition implemented in proposed Sec.  1006.14(b)(1)(i) and the 
unfair act or practice under section 1031 of the Dodd-Frank Act the 
Bureau proposed to identify in Sec.  1006.14(b)(1)(ii) by exceeding the 
telephone call frequency limits in proposed Sec.  1006.14(b)(2). 
Specifically, proposed Sec.  1006.14(b)(2)(i) provided that, subject to 
exclusions, a debt collector must not place a telephone call to a 
person \396\ more than seven times within seven consecutive days in 
connection with the collection of a particular debt. Proposed Sec.  
1006.14(b)(2)(ii) provided that, subject to exclusions, a debt 
collector must not place a telephone call to a person in connection 
with the collection of a particular debt within a period of seven 
consecutive days after having had a telephone conversation with that 
person in connection with the collection of such debt (with the date of 
the telephone conversation being the first

[[Page 76806]]

day of the seven-consecutive-day period).\397\
---------------------------------------------------------------------------

    \393\ 15 U.S.C. 1692d.
    \394\ 15 U.S.C. 1692d(5).
    \395\ See 84 FR 23274, 23309 (May 21, 2019).
    \396\ Proposed Sec.  1006.14(b)(2) would have applied not only 
to debt collection calls placed to consumers who owe or are alleged 
to owe debt, but to any person (with certain exceptions described 
below). See the section-by-section analysis of Sec.  1006.14(b)(1) 
for further discussion on this aspect of the proposal.
    \397\ For ease of reference in this part of the section-by-
section analysis, the Bureau sometimes refers to the limit in 
proposed Sec.  1006.14(b)(2)(i) as the ``proposed seven telephone 
call weekly frequency limit,'' the limit in proposed Sec.  
1006.14(b)(2)(ii) as the ``proposed one telephone conversation 
weekly frequency limit,'' and the two limits together as the 
``proposed telephone call frequency limits.''
---------------------------------------------------------------------------

    The Bureau requested comment on all aspects of proposed Sec.  
1006.14(b)(2), including on whether the Bureau should adopt a 
rebuttable-presumption approach in lieu of the proposed bright 
lines,\398\ and if so, whether the Bureau should retain any of the 
exclusions described in proposed Sec.  1006.14(b)(3).
---------------------------------------------------------------------------

    \398\ The Bureau requested comment on different variations, such 
as adopting only a rebuttable presumption of a violation or only a 
rebuttable presumption of compliance. In the proposal, the 
rebuttable-presumption alternative was discussed in the section-by-
section analyses of proposed Sec.  1006.14(b)(2) and Sec.  
1006.14(b)(4).
---------------------------------------------------------------------------

    The Bureau received thousands of comments from a variety of 
stakeholders about the proposed telephone call frequency limits, 
including about the merits of a bright-line rule versus a rebuttable-
presumption approach and about the specific proposed limits. Commenters 
addressed both the proposed seven telephone call weekly frequency limit 
and the proposed one telephone conversation weekly frequency limit. 
Notably, commenters voiced stronger criticisms of the proposed seven 
telephone call weekly frequency limit, with most commenters opposing it 
because in their view it was either too high (i.e., too permissive) or 
too low (i.e., too restrictive).
    In light of feedback, and for the reasons discussed below, the 
Bureau is finalizing proposed Sec.  1006.14(b)(2) to retain the 
proposed telephone call frequencies but to replace the bright-line rule 
with an approach under which a debt collector who places telephone 
calls or engages in telephone conversations: (1) Within those 
frequencies has a rebuttable presumption of compliance with FDCPA 
section 806(5) and Sec.  1006.14(b)(1); and (2) in excess of one or 
both of those frequencies has a rebuttable presumption of a violation 
of FDCPA section 806(5) and Sec.  1006.14(b)(1).
Comments Regarding Bright-Line Rule
    Commenters spanning a wide spectrum of stakeholders--including debt 
collectors, industry trade groups, consumer advocates, and a group of 
State Attorneys General--conceptually supported a bright-line rule. A 
variety of reasons were cited by the different commenters, including 
that FDCPA section 806(5) is vague, courts have not consistently 
interpreted the provision, industry needs more clarity and certainty, 
and a bright-line limit will provide relief to consumers. One consumer 
advocate commented that a bright-line rule ran counter to the Bureau's 
observations elsewhere in the proposal about the importance of context 
in determining whether a particular contact is abusive or harassing, 
but nonetheless found merit in the Bureau seeking to develop a bright-
line rule on the number of permitted telephone calls. The SBA suggested 
that more exceptions were needed for a bright-line limit to work, 
particularly for law firms trying to negotiate settlements.
    Some industry commenters opposed a bright-line rule conceptually 
because they asserted that it would depart from the statutory language 
in FDCPA section 806(5), which contains an express intent requirement. 
They commented that FDCPA jurisprudence has established that there is 
no bright-line number of telephone calls to demonstrate whether a debt 
collector had the intent to harass and that courts have found that 
placing more than seven telephone call attempts in seven days is not 
harassing or abusive. These commenters described how case law has 
established factors to consider when determining whether a debt 
collector had the requisite intent, such as the pattern and frequency 
of telephone calls, the time between calls, the presence or absence of 
abusive language on those calls, the location to which those calls were 
placed, and whether the debt collector called back after the recipient 
hung up.
    One industry trade group commenter took a different approach, 
acknowledging that using a bright-line 
``number[hyphen]of[hyphen]calls'' surrogate to determine either the 
debt collector's awareness of natural consequences or the debt 
collector's intent may be appropriate if the telephone number is known 
by the debt collector to belong to the consumer. This may be the case 
if the debt collector had prior contact with the consumer at that 
number or if the consumer is identified in a voicemail greeting. 
However, this commenter asserted that, if a telephone number is not 
known to belong to the consumer, and especially if the debt collector 
has several possible numbers for the consumer provided either by the 
creditor or a prior debt collector or obtained through the debt 
collector's own location efforts, then the proposed bright-line rule is 
at odds with the statutory mandate because there would be no intent to 
annoy, abuse, or harass.
    Some industry commenters found the proposed bright-line rule to be 
too inflexible and noted a preference for a multi-factor approach to 
telephone call frequencies. These commenters were concerned that the 
bright-line approach would limit a debt collector's ability to reach 
consumers at different times and on different dates, and that it would 
hinder communication particularly in the context of settlement 
negotiations, loss mitigation discussions, and litigation. A credit 
union commenter expressed concern that a bright-line approach ignored 
the nature and content of the telephone conversation, which the 
commenter asserted is more instructive as to whether successive 
telephone calls have the effect of harassment, oppression, or abuse.
    Several industry commenters advocated for a rule that would make 
telephone calls within particular limits per se compliant but allow 
debt collectors to rebut the presumption that calls in excess of any 
call frequency limit violate the FDCPA. One of these commenters claimed 
that the proposal would have deemed non-harassing telephone calls in 
excess of the proposed frequency limits a per se violation and 
therefore would have been inconsistent with FDCPA section 806(5). 
Another commenter disputed that the Bureau properly could conclude that 
every telephone call above the proposed limits would be problematic. 
The commenter urged the Bureau to permit a debt collector to make 
additional telephone calls if the debt collector concludes that there 
is a compelling reason to do so and that doing so will not harm the 
consumer, provided that the debt collector appropriately documents the 
basis for its decision.
    A group of consumer advocates commented that a bright-line rule is 
generally in the best interest of consumers. However, the group also 
pointed out that setting the limits on a per-debt basis, as proposed, 
would insulate from liability a debt collector who was collecting on 
seven accounts even if the debt collector made the maximum allowable 49 
calls per week, every week, with the intent to annoy, abuse, or harass. 
These commenters urged the Bureau to provide in the rule that complying 
with the telephone call frequency limits would create only a rebuttable 
presumption of compliance with Sec.  1006.14(b)(1) and FDCPA section 
806(5).\399\
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    \399\ This commenter also argued that the telephone call 
frequency limits in proposed Sec.  1006.14(b)(2) should not create a 
safe harbor under the general prohibition in proposed Sec.  
1006.14(a) or FDCPA section 806, because it would be possible to 
violate these general prohibitions even while complying with the 
telephone call frequency limits. As support, the commenter pointed 
to rapid succession calling. Comments about the interplay between 
proposed Sec.  1006.14(a) and (b) are addressed in the section-by-
section analysis of final Sec.  1006.14(b)(1).

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[[Page 76807]]

    The same group of consumer advocates expressed concern that under 
the proposed bright-line rule, debt collectors who placed telephone 
calls within the specific proposed frequency limits would not be liable 
even if they placed those calls in rapid succession. The group also 
noted that debt collectors could target their successive telephone 
calls on weekends or holidays, which might be more likely to harass 
consumers. Another consumer advocate commented that it was less likely 
that a debt collector would use all of its permissible telephone calls 
on the same day if the frequency limit for weekly telephone calls was 
lower than what the Bureau proposed (this commenter suggested an 
alternative limit of three), but cautioned that, if a debt collector 
made seven telephone calls in one day, it would often be perceived as 
harassment by the consumer. A few industry commenters stated that it 
would be unlikely for debt collectors to make rapid succession 
telephone calls under a bright-line rule because that would use up the 
limited number of weekly telephone call attempts available to debt 
collectors. One commenter asserted that debt collectors would 
strategically space their telephone calls throughout the seven-day 
period to establish contact with the consumer. A nonprofit commenter, 
writing on behalf of a variety of stakeholders, expressed concern that 
imposing a bright-line limit on telephone calls and providing a safe 
harbor for compliance under that limit might encourage debt collectors 
to place the maximum permissible telephone call attempts, perhaps more 
than they would have placed without such a limit in place.
Comments Regarding Proposed Seven Telephone Call Weekly Frequency Limit
    Some consumer and industry commenters supported the proposed seven 
telephone call weekly frequency limit in proposed Sec.  
1006.14(b)(2)(i).\400\ A debt buyer commenter stated the belief that 
the proposed limit would strike an appropriate balance by enabling 
consumers who demonstrate a willingness to pay their debts to connect 
by telephone with a representative to achieve a voluntary repayment 
schedule and thus avoid legal collection efforts. Industry commenters 
wrote that the proposed limit would provide a debt collector with 
multiple opportunities to connect with the consumer and give the debt 
collector time to work through multiple telephone numbers. Other 
commenters, including some consumers, believed the proposed limit would 
prevent harassment. Some industry commenters thought the proposed limit 
would reduce unnecessary litigation. Others urged the Bureau not to 
impose a lower limit than proposed because doing so, they asserted, 
would mean less opportunity for consumers to work out a payment plan 
and might lead to unintended harmful impacts on consumers and the 
economy if it were to hamper the efficiency of the debt collection 
process.
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    \400\ In some instances, where commenters addressed the proposed 
telephone call frequency limits, it was not clear whether they were 
addressing the proposed seven telephone call weekly frequency limit, 
the proposed one telephone conversation weekly frequency limit, or 
both proposed limits. Where it was not clear which proposed limit 
the commenter was addressing, generally the comments are summarized 
in the section-by-section analysis describing the proposed seven 
telephone call weekly frequency limit.
---------------------------------------------------------------------------

    In contrast, as noted above, a significant number of commenters 
opposed the proposed seven telephone call weekly frequency limit. Many 
commenters argued that the proposed limit was too high (i.e., too 
permissive). Many others argued that it was too low (i.e., too 
restrictive).
    A diverse group of stakeholders criticized the proposed seven 
telephone call weekly frequency limit as too permissive to provide 
meaningful consumer protection. Thousands of consumers opposed the 
proposed seven telephone call weekly frequency limit because it would, 
in their view, allow debt collectors to harass consumers by calling 
them up to seven times per week, per debt. Other commenters criticized 
the proposed limit as applied to a consumer with multiple debts in 
collection, observing, for example, that the proposed limit would have 
permitted debt collectors to call a consumer with eight medical debts 
56 times per week, or a consumer with five overdue bills 35 times per 
week.
    Commenters, including consumers, consumer advocates, legal aid 
providers, members of Congress, State Attorneys General, academic 
institutions, an FTC Commissioner, and local governments, expressed 
concern that the proposed limit would lead to an excessive number of 
telephone calls. Some commenters believed this proposed limit would 
encourage debt collectors to engage in FDCPA-prohibited behavior. For 
example, a group of State Attorneys General noted that the proposal 
acknowledged that debt collectors are aware that many consumers have 
multiple debts in collection and are receiving telephone calls from 
other debt collectors and thus may place additional telephone calls 
with intent to annoy, abuse, or harass.
    Some commenters raised the concern that, for a consumer with five 
debts being collected by the same debt collector, the permissible call 
volume for that debt collector would surpass the threshold for 
potential violations of FDCPA section 806(5). These commenters 
explained that courts have found as few as three to six telephone calls 
per week to be harassing and cited to existing frequency limits in 
Massachusetts, Washington State, and New York City as models for the 
Bureau. Some commenters discussed how technology advances may make 
consumers' experience of receiving repeated telephone calls more 
harassing. They noted that consumers often carry their mobile 
telephones with them, making frequent calls less necessary and more 
harassing; that the use of cloud-based services to link devices means 
that one message can notify a consumer multiple times; and that dialers 
can lead to repeated and annoying telephone calls.
    Commenters, including legal aid providers, consumer advocates, and 
consumers, among others, described a plethora of ways that the proposed 
seven telephone call weekly frequency limit would negatively impact 
consumers. Some commenters claimed the number of potential telephone 
calls would cause various social and emotional effects, such as 
overwhelming stress; anxiety; emotional distress, withdrawal, and 
social isolation; harms to one's social well-being and mental health; 
and physical health problems, including susceptibility to disease as a 
result of chronic stress and sleep disruptions. Some commenters cited 
lower work productivity as an effect of the number of potential 
telephone calls, because consumers could not easily turn off their 
mobile telephones to avoid telephone calls due to their need to remain 
reachable to work colleagues and family. Commenters also stated that 
the number of potential telephone calls would negatively affect certain 
subsets of consumers. Some expressed concern that the number of 
potential telephone calls would lead to consumers being pressured or 
coerced into paying even if their income is exempt from garnishment 
under Federal law--especially seniors and disabled individuals who are 
particularly vulnerable to abusive debt collection practices and who 
may be unaware of such protection. One local government commenter 
asserted that the proposed limit would disproportionately affect lower-
income and minority consumers. Several commenters explained that

[[Page 76808]]

lower-income consumers often have limited telephone plans, meaning that 
a high number of telephone calls may cause their plans to trigger a 
maximum limit or fill their voicemail boxes.
    Some commenters argued that there is little to no evidence that 
debt collectors' ability to collect would be negatively impacted if the 
proposed limit was set at a number less than seven. Several consumer 
and nonprofit commenters asserted that a high number of telephone calls 
does not result in increased collections, with one commenter noting 
that a consumer's ability to pay will not increase regardless of how 
frequently the debt collector contacts the consumer. A State Attorney 
General and a nonprofit commenter suggested that the number of 
telephone calls that would be permitted under the proposed limit could 
result in consumers disengaging or being too stressed to answer the 
telephone, which would frustrate, rather than facilitate, debt 
resolution. One commenter noted how the Bureau of the Fiscal Service of 
the U.S. Department of Treasury conducted a pilot program focused on 
servicing defaulted student loans; the program found that borrowers 
answered less than 2 percent of telephone calls, which the commenter 
argued shows the ineffectiveness of repeated calls. An FTC Commissioner 
commented that, with each successive telephone call after the first, 
the value decreases to the consumer because the consumer is less likely 
to answer and receive information, yet the value increases to the debt 
collector because it causes undue stress to the alleged debtor; thus, 
by the time a sixth or seventh call comes in, harassing rather than 
informing seems to be the marginal utility.
    Consumer, legal aid provider, and consumer advocate commenters 
asserted that the proposed seven telephone call weekly frequency limit 
would increase telephone call volume from the status quo, particularly, 
as some noted, for location information calls. Some commenters 
acknowledged that the proposal would appear to limit or decrease 
telephone call volume for consumers with one debt but noted that 
telephone call volume would likely increase overall for consumers with 
multiple debts in collection.
    Relatedly, some commenters focused their criticism on how the 
proposed seven telephone call weekly frequency limit would not have 
covered the cumulative number of communications, particularly 
electronic communications, and how the proposed limit was structured as 
a per-debt limit, not a per-person limit. Some commenters expressed the 
view that allowing up to seven telephone calls per week per debt would 
be excessive and permit harassing tactics in the absence of additional 
limits on electronic communications. A group of State legislators and 
several consumer advocate commenters identified the number of telephone 
calls for student loan and medical debt that would be permitted under 
the proposal as particularly concerning. Others explained that it is 
common for seniors in particular to have several medical debts placed 
with the same debt collector, and that it is common for a debt 
collection agency to collect numerous separate accounts for the same 
consumer. A legal aid provider noted that consumers seeking its 
assistance with debt collection issues usually have more than one debt, 
which multiplies the number of telephone calls they receive daily. The 
commenter asserted that this situation increases the chance that any 
one debt collector will say or do something untruthful or threatening, 
which in turn increases the probability that consumers will act hastily 
and not understand their rights.
    Commenters suggested a variety of lower limits for permissible 
telephone call frequency. A large number of consumer commenters urged 
specific limits, such as two or three telephone call attempts per 
consumer, per week.\401\ Consumer advocate and nonprofit commenters 
also recommended the Bureau limit debt collectors to three telephone 
call attempts per consumer, per week. Other suggestions included: Seven 
attempts per week, per type of debt (i.e., medical, credit card); three 
cumulative attempts across all communication media per week, per 
consumer; and three attempts per week, per debt. One nonprofit and one 
local government commenter urged the Bureau to follow the limits 
discussed in the Small Business Review Panel Outline.\402\ A local 
government agency commenter noted the local government has operated for 
decades under a limit of two contacts about a debt per seven-day 
calendar period.
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    \401\ Over a thousand commenters supported a limit of one 
telephone conversation per week and two telephone call attempts per 
consumer (not per debt). Other commenters supported limiting 
telephone call attempts to three per week, per consumer, or to one 
telephone conversation and three attempts per week, per consumer 
(not per debt).
    \402\ The Small Business Review Panel Outline described a 
proposal under consideration that would have limited a debt 
collector's weekly contact attempts with consumers by any 
communication medium. The proposal under consideration would have 
specifically limited debt collectors to three contact attempts per 
unique communication medium and six total contact attempts before 
confirming consumer contact; and to two contact attempts per unique 
communication medium and three total contact attempts after 
confirming consumer contact. See Small Business Review Panel 
Outline, supra note 36, at 25-26.
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    Industry trade groups and other industry commenters generally 
opposed the proposed seven telephone call weekly frequency limit, 
arguing it was too restrictive. The Bureau received hundreds of 
comments from industry stakeholders who expressed concern that the 
proposed telephone call frequency limits were too constraining. 
Hundreds of creditor and collections industry commenters stated that 
reaching consumers by telephone is very difficult because most 
consumers have several telephone numbers and are often unavailable to 
speak. They wrote that the proposed limit would make it harder to 
connect with consumers and asserted that consumers would face various 
unintended consequences, including failure to reach workable repayment 
plans, additional interest and fees, negative credit reporting, and 
debt collection litigation. Separately, many accounts receivable 
management industry commenters stated that limiting communication would 
harm consumers because consumers fare best when they know their full 
financial situation and all available options.
    Industry commenters asserted that, based on their experience, the 
proposed limit would not have permitted enough telephone call attempts 
to establish contact with consumers. Some commenters argued that the 
Bureau should not limit telephone call attempts because debt collectors 
must attempt to contact multiple numbers at various times of the day in 
order to establish right party contact, while other commenters 
requested that the proposed limit be increased for the same reasons. 
One industry trade group commenter, citing a 2016 survey of its 
members, noted that certain debt categories have an average of more 
than six telephone numbers per account and that student loans have an 
average of four telephone numbers per account. Another industry trade 
group commenter, representing debt collectors for student loans, among 
other members, cited data from one of its members that it takes 20 
attempts on average to reach a consumer. A debt collector commented 
that it typically receives one to two telephone numbers from the 
creditor from which its debts are purchased and three to five new 
telephone numbers when trying to locate a consumer, meaning that it 
takes approximately 50 to 75 telephone calls to reach a single 
consumer. One commenter explained that, because consumers can always 
request that a debt collector stop calling, there is no need for a 
limit on weekly telephone

[[Page 76809]]

calls. A debt collector commenter suggested limiting only actual 
communications and not attempts, noting that debt collectors often have 
multiple telephone numbers to work through.
    Industry stakeholders and other commenters expressed various 
concerns about the proposed seven telephone call weekly frequency limit 
and stated it could have negative impacts on consumers. Some asserted 
that it would be overly burdensome; explained that a different approach 
may be needed based on the type of consumer, debt, or account status; 
and suggested the limit should account for smartphone technology and 
call blocking rules that have increased blocked calls from legitimate 
financial service providers. Some commenters expressed concern that the 
proposed limit would increase debt collectors' costs or more broadly 
have a negative impact on the economy, especially for small businesses. 
Commenters asserted that the limit would lengthen the debt resolution 
process and provide fewer opportunities to resolve debts in the manner 
best suited for the situation and, as a result, increase interest, 
fees, and penalties for consumers. Commenters wrote that consumers 
would be unable to obtain critical information about their accounts in 
collections, including when they ask a debt collector to call them back 
at a different, more convenient time or after they gather more 
information. Commenters also stated that consumers would experience 
increases in litigation, credit reporting, and wage garnishment and 
offsets. Commenters explained that the proposed limit would negatively 
affect access to credit and increase the cost of credit for all 
consumers. They also argued that the proposed limit would lead to an 
increase in letters, text messages, and emails, even though some 
consumers may prefer telephone calls to other communication media.
    Some industry commenters argued that the Bureau lacked data and 
other evidence to support the proposed seven telephone call weekly 
frequency limit. Some urged the Bureau to study more thoroughly the 
number of telephone call attempts that would be necessary to ensure 
that effective communication is not needlessly hindered.
    Some commenters requested that the Bureau impose different limits 
on telephone call frequency to address different circumstances. For 
example, some commenters argued that the proposed telephone call 
frequency limits should not apply once litigation or other civil action 
is initiated (or, as the SBA urged, specifically while a settlement is 
being negotiated) to enable communication between consumers and 
attorneys to resolve the matter quickly before going to court. These 
commenters explained that a debtor may need to consult with someone 
else before agreeing to a repayment plan and may need additional 
telephone calls with the debt collector during the week. One debt 
collector commenter suggested an alternative frequency limit of 15 
telephone call attempts per consumer, per debt, which the commenter 
wrote was based on an internal data analysis. An industry trade group 
pointed to specific circumstances necessitating additional calls, such 
as resolving a dishonored check or correcting a deficiency in loan 
consolidation or rehabilitation paperwork. Some commenters also 
identified reverse mortgages and student loans as specific markets that 
would be negatively affected by the proposed limit.
    Several commenters challenged the Bureau's exercise of FDCPA 
authority to impose the proposed telephone call frequency limits.\403\ 
Commenters focused on what they believed was the failure of the 
proposed telephone call frequency limits to properly reflect the FDCPA 
section 806(5) ``intent'' standard. Some noted that there are a number 
of reasons why debt collectors would make such telephone calls, most of 
which are not intended to intimidate or pressure the consumer. Another 
commenter argued that Congress considered and rejected telephone call 
frequency limits when it passed the FDCPA.
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    \403\ Some industry commenters also criticized the Bureau's 
proposed use of unfairness authority under Dodd-Frank Act section 
1031 to impose the proposed telephone call frequency limits. As 
discussed in the section-by-section analysis of Sec.  1006.14(b), 
commenters raised several concerns about how the proposal, if 
finalized, could be applied to first-party debt collectors. A few 
commenters, moreover, challenged the Bureau's proposed 
identification of an unfair practice and the necessity of imposing 
telephone call frequency limits to prevent the identified unfair 
practice. As noted earlier, the Bureau is finalizing Sec.  
1006.14(b)(1) through (4) pursuant to its authority under the FDCPA 
only and not section 1031(b) of the Dodd-Frank Act.
---------------------------------------------------------------------------

Comments Regarding Proposed One Telephone Conversation Weekly Frequency 
Limit
    Many commenters, including comments from approximately 500 credit 
unions, expressed support for the proposed one telephone conversation 
weekly frequency limit. Some commenters stated agreement with the 
Bureau's reasoning in the proposal that a debt collector who has been 
able to engage in a telephone conversation with a consumer about a debt 
generally has less reason to communicate with the consumer within the 
following week and expressed the belief that the proposed limit would 
permit regular communication while also preventing harassment. An 
industry commenter noted that, if there is a legitimate reason for 
another telephone call, proposed Sec.  1006.14(b)(3) provided for 
several reasonable exceptions. A consumer advocate commenter noted that 
the proposed limit was intuitive because it would permit a weekly 
reminder to consumers who owe a debt, but nevertheless stated a belief 
that the limit would be problematic when coupled with the proposed 
seven telephone call weekly frequency limit.
    Many commenters, including a group of consumer advocates, supported 
the proposed one telephone conversation weekly frequency limit but 
expressed the view that imposing such a limit on a per-debt basis would 
be too permissive because it could result in harassment for consumers 
who have multiple debts in collection.\404\ Some commenters noted that 
the proposed one telephone conversation weekly frequency limit is 
particularly concerning in the context of medical debt and student loan 
debt, where there are often several debts collected by the same debt 
collector.
---------------------------------------------------------------------------

    \404\ Some commenters cited the CFPB Debt Collection Consumer 
Survey as support for this argument, noting that the Consumer Survey 
found that the majority of consumers who had been contacted about 
repaying a debt in the prior year had been contacted about more than 
one debt, with 57 percent contacted about two to four debts, and 15 
percent contacted above five or more debts. Others cited the same 
fact without citing the Consumer Survey.
---------------------------------------------------------------------------

    In contrast, a number of industry commenters expressed concern with 
the proposed one telephone conversation weekly frequency limit. They 
asserted that the proposed limit would undermine the proposal's purpose 
of assisting consumers in making better-informed decisions about debts 
they owe or allegedly owe and would instead harm consumers by causing 
them to miss information and opportunities to avoid negative 
consequences. Several industry commenters explained that, for debt 
collectors, consistency in communications and good customer service is 
essential to providing the best solutions. Others noted that, after 
successful communication has been established with a consumer, limiting 
continued communication is not in the best interest of the consumer or 
the debt collector. One industry trade group commenter cautioned that 
the proposed one telephone conversation weekly frequency limit would 
result in higher rates of delinquency, which in turn would cause 
creditors to tighten

[[Page 76810]]

underwriting and lend less money generally. Another commenter noted 
that the proposed limit would lead to increased credit reporting and 
litigation.
    Commenters identified a number of situations for which they 
believed more frequent communication would be particularly important. 
Industry trade group commenters cited the examples of a consumer 
working out a debt modification or forbearance and of debts involving 
motor vehicles if there is a risk of repossession. Several industry 
commenters described the scenario of a consumer asking for more time to 
pay or promising to pay but the consumer did not follow through. Some 
commenters pointed to if consumers are at risk of foreclosure or 
engaged in loss mitigation.
    In the proposal, the Bureau sought comment on the alternative of 
limiting only the total number of telephone calls a debt collector 
could place about a debt during a defined time period, regardless of 
whether the debt collector had engaged in a conversation with that 
person about that debt during the relevant period. At least one 
commenter supported this alternative approach of limiting the total 
number of telephone calls, but not conversations, while another 
commenter supported the inverse--limiting actual conversations, but not 
the total number of telephone calls.
    A small number of commenters addressed how the proposal generally 
would have counted a consumer-initiated conversation as the debt 
collector's one permissible telephone call for the next seven 
consecutive days. A group of consumer advocates supported this aspect 
of the proposal, asking the Bureau to specify that the proposed one 
telephone conversation weekly frequency limit applies regardless of 
whether the debt collector or consumer initiated the conversation. On 
the other hand, an industry trade group requested that the Bureau 
exempt consumer-initiated calls from the proposed one telephone 
conversation weekly frequency limit. See the section-by-section 
analysis of Sec.  1006.14(b)(4) for more detail on how these comments 
are addressed.
    Commenters also addressed the exclusions in proposed Sec.  
1006.14(b)(3) in the context of the proposed one telephone conversation 
weekly frequency limit. The Bureau discusses comments relating to the 
proposed exclusions in more detail in the section-by-section analysis 
of Sec.  1006.14(b)(3) below.
    Some commenters suggested alternative time periods for the proposed 
one telephone conversation weekly frequency limit. A group of nonprofit 
commenters suggested a limit of one telephone call every two weeks, 
explaining that a biweekly limit would decrease the overall frequency 
of telephone calls directed toward consumers, while still allowing debt 
collectors the opportunity to collect payment based on a timeframe 
whereby the consumer is more likely to have the funds to pay the debt. 
Other comments suggesting alternative time periods are described under 
the subheading Comments Regarding Proposed Seven Telephone Call Weekly 
Frequency Limit above.
The Final Rule
    The Bureau is not finalizing the proposed telephone call frequency 
limits, which would have imposed bright-line rules regarding telephone 
calls. Rather, final Sec.  1006.14(b)(2) includes telephone call 
frequencies as part of a more flexible rebuttable-presumption 
framework.
    Final Sec.  1006.14(b)(2)(i) provides that, subject to the 
exclusions in Sec.  1006.14(b)(3), a debt collector is presumed to 
comply with Sec.  1006.14(b)(1) and FDCPA section 806(5) if the debt 
collector places a telephone call to a particular person in connection 
with the collection of a particular debt neither: (1) More than seven 
times within seven consecutive days; nor (2) within a period of seven 
consecutive days after having had a telephone conversation with the 
person in connection with the collection of such debt (with the date of 
the telephone conversation being the first day of the seven-
consecutive-day period).\405\ Section 1006.14(b)(2)(ii) provides that, 
subject to the exclusions in Sec.  1006.14(b)(3), a debt collector is 
presumed to violate Sec.  1006.14(b)(1) and FDCPA section 806(5) if a 
debt collector places a telephone call to a particular person in 
connection with the collection of a particular debt in excess of either 
of the telephone call frequencies described in Sec.  1006.14(b)(2)(i). 
Comments 14(b)(2)(i)-1 and 14(b)(2)(ii)-1 include examples illustrating 
when a debt collector has a presumption of compliance or of a 
violation, respectively. Comments 14(b)(2)(i)-2 and 14(b)(2)(ii)-2 
clarify how the presumptions can be rebutted and include non-exhaustive 
lists of factors that may rebut the respective presumptions. More 
detail on the operation of the rebuttable-presumption framework and the 
rebuttal factors described in the commentary is provided below.
---------------------------------------------------------------------------

    \405\ A debt collector who places no telephone calls during this 
time period would similarly be presumed to comply with the telephone 
call frequency limits under Sec.  1006.14(b)(2)(i), and in fact 
would comply with them, for such time period.
---------------------------------------------------------------------------

    Rebuttable-presumption approach generally; rationale for change 
from proposed bright-line rule. The Bureau proposed Sec.  1006.14(b)(2) 
to specify a bright-line rule for telephone call frequencies that would 
have violated FDCPA section 806 and 806(5) and Regulation F, with 
narrow exceptions in proposed Sec.  1006.14(b)(3). As noted earlier, 
FDCPA section 806 prohibits a broad range of debt collection 
communication practices that harm consumers and others, and section 
806(5) in particular prohibits debt collectors from making telephone 
calls or engaging a person in telephone conversation repeatedly or 
continuously with intent to annoy, abuse, or harass. FDCPA section 
806(5) does not identify a specific number of telephone calls or 
telephone conversations within any particular timeframe that would 
violate the statute. In the FTC Staff Commentary on the FDCPA, the FTC 
noted, among other interpretations, that `` `[c]ontinuously' means 
making a series of telephone calls, one right after the other'' and `` 
`[r]epeatedly' means calling with excessive frequency under the 
circumstances.'' \406\ Since the FDCPA was enacted in 1977, courts 
interpreting FDCPA section 806(5) have not developed a consensus or 
bright-line test for telephone call frequency that would violate that 
provision. Moreover, while several States and localities have imposed 
numerical limits on debt collection contacts, the limits vary, and most 
jurisdictions have not established any numerical limits.\407\ 
Technological developments also have intensified the consumer-
protection concerns underlying FDCPA section 806(5), as described in 
the proposal.\408\
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    \406\ See 53 FR 50097, 50105 (Dec. 13, 1988).
    \407\ See 84 FR 23274, 23309 (May 21, 2019).
    \408\ See id. at 23309-10 (describing the development of the 
predictive dialer).
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    In light of these developments, numerous problems with telephone 
call frequency persist. As the proposal described, frequent telephone 
calls are a consistent source of consumer-initiated litigation and 
consumer complaints to Federal and State regulators, and consumers' 
lawsuits allege injuries such as feeling harassed, stressed, 
intimidated, or threatened, and sometimes allege adverse impacts on 
employment.\409\ In addition, from 2011 through 2018, the Bureau and 
the FTC received over 100,000 complaints about repeated debt collection 
telephone

[[Page 76811]]

calls.\410\ As described in the FDCPA 2020 Annual Report, during 2019, 
consumers submitted complaints about communication tactics used when 
collecting debts, and the majority of complaints about communication 
tactics concerned communication over the telephone. Common categories 
of complaints about communication tactics were frequent or repeated 
calls (55 percent) and continued contact attempts despite requests to 
stop contact (29 percent).\411\
---------------------------------------------------------------------------

    \409\ See id. at 23310.
    \410\ See id. Citing the Bureau's FDCPA Annual Reports published 
from 2012 through 2019 and the Bureau's consumer complaint database 
generally, the proposal described how some consumers describe being 
called multiple times per day, every day of the week, for weeks or 
months at a time and how some consumers report that repeated calls 
make them feel upset, stressed, intimidated, hounded, or weary, or 
that such calls interfere with their health or sleep or--when debt 
collection voicemails fill their inboxes--their ability to receive 
other important messages. The proposal noted certain caveats about 
the counts of consumer complaints. See id. at 23310 n.287.
    \411\ 2020 FDCPA Annual Report, supra note 9, at 15 (see Line 4 
of Table 1).
---------------------------------------------------------------------------

    Consumers' experiences with, and complaints about, repeated or 
continuous debt collection telephone calls do not necessarily establish 
that the conduct in each instance would have violated FDCPA section 
806(5).\412\ But they do suggest, as described in the proposal, a 
widespread consumer protection problem that has persisted for 40 years 
notwithstanding the FDCPA's existing prohibitions and case-by-case 
enforcement by the FTC and the Bureau as well as private FDCPA 
actions.\413\ To address this persistent harm, the Bureau proposed 
Sec.  1006.14(b)(2) as described above.
---------------------------------------------------------------------------

    \412\ For example, consumers may complain about telephone calls 
they do not want to receive, but this does not necessarily mean that 
the debt collector who placed the calls had the intent to annoy, 
harass, or abuse necessary to establish a violation of FDCPA section 
806(5), or that the telephone calls had the natural consequence of 
harassing, oppressing, or abusing the consumer in violation of FDCPA 
section 806.
    \413\ See 84 FR 23274, 23310 n.292 (May 21, 2019) (detailing 
examples of FTC complaints alleging FDCPA section 806(5) violations 
based on frequency of telephone calls to consumers).
---------------------------------------------------------------------------

    The proposed telephone call frequency limits accounted for a number 
of competing considerations, as described in the proposal. On the one 
hand, even a small number of debt collection calls may have the natural 
consequence of causing a consumer to experience harassment, oppression, 
or abuse, and therefore, assuming the debt collector is aware of this 
effect, the debt collector's placement of even a small number of such 
calls to that consumer may indicate that the debt collector has the 
requisite intent to annoy, abuse, or harass.\414\ At the same time, 
debt collectors have a legitimate interest in reaching consumers 
because communicating with consumers is central to their ability to 
recover amounts owed to creditors, and too greatly restricting debt 
collectors' and consumers' ability to communicate with one another 
could prevent debt collectors from establishing right-party contact and 
resolving debts, even when doing so is in the interests of both 
consumers and debt collectors.\415\ The Bureau also considered whether 
debt collectors' reliance on making repeated telephone calls to 
establish contact with consumers could be reduced by other aspects of 
the proposal designed to address legal uncertainty regarding how and 
when debt collectors may communicate with consumers \416\ and regarding 
how debt collectors may use electronic communication media.\417\ In 
view of all these considerations, the Bureau proposed to draw the line 
at which a debt collector places telephone calls repeatedly or 
continuously with the intent to annoy, abuse, or harass any person at 
the called number (and the line at which such calls have the natural 
consequence of harassing, oppressing, or abusing any person) at seven 
telephone calls in a seven-day period about a particular debt. The 
proposal would have allowed debt collectors to call up to seven times 
per week across multiple telephone numbers (e.g., a home landline, 
mobile, work), and to leave a limited-content message each time, and it 
would have not placed a specific numerical limit on how many letters, 
emails, and text messages debt collectors could send.
---------------------------------------------------------------------------

    \414\ See id. at 23311-12. The proposal described how in the 
Bureau's Debt Collection Consumer Survey, nearly 90 percent of 
respondents who said they were contacted more than three times per 
week indicated that they were contacted too often; 74 percent of 
respondents who said they were contacted one to three times per week 
indicated that that they were contacted too often; and 22 percent of 
respondents who said that they were contacted less than once per 
week indicated that even this level of contact was too often. The 
Bureau notes, however, that a consumer reporting that a debt 
collector called too frequently does not necessarily establish that 
the debt collector called in violation of the FDCPA.
    \415\ See id. at 23312. In the proposal, the Bureau described 
feedback from small entity representatives that consumers who do not 
communicate with a debt collector may have negative information 
furnished to consumer reporting agencies or may face additional fees 
or a collection lawsuit, which has financial or opportunity costs. 
The Bureau also noted that as much as some consumers might prefer to 
avoid speaking to debt collectors, many consumers benefit from 
communications that enable them to promptly resolve a debt through 
partial or full payment or an acknowledgement that the consumer does 
not owe some or all of the alleged debt.
    \416\ Id. In the proposal, the Bureau described how, for 
example, debt collectors who leave voicemails for consumers 
currently face a dilemma about whether to risk liability under FDCPA 
sections 806(6) and 807(11) by omitting disclosures required under 
those sections, or to risk liability under FDCPA section 805(b) by 
including the disclosures and potentially disclosing a debt to a 
third party who might overhear the message. The Bureau proposed 
Sec.  1006.2(j) to address that dilemma by defining a limited-
content message that debt collectors may leave for consumers without 
violating FDCPA sections 805(b), 806(6), or 807(11). The Bureau 
wrote that permitting such messages should ensure that debt 
collectors can leave voicemails with a return call number for a 
consumer to use at the consumer's convenience, which may help reduce 
the need for debt collectors to place repeated telephone calls to 
contact consumers. As described in more detail in the section-by-
section analysis for Sec.  1006.2(j), the Bureau is finalizing Sec.  
1006.2(j) with a few changes to the scope of the definition--
limiting the definition of limited-content message to voicemail 
messages that are not knowingly left with third parties--as well as 
to the required and optional content.
    \417\ Id. The Bureau's proposals in Sec. Sec.  1006.6(d)(3) and 
1006.42 were designed to clarify that debt collectors may 
communicate electronically with consumers who prefer to communicate 
that way. Further, the Bureau did not propose to subject email, text 
messages, or other electronic communications to numerical frequency 
limits. See the discussion of electronic communications in the 
section-by-section analysis of Sec.  1006.14(a) and (b).
---------------------------------------------------------------------------

    The Bureau similarly balanced a variety of policy considerations in 
proposing the one telephone conversation weekly frequency limit, as 
described in the proposal. The Bureau considered both the legitimate 
interests of consumers and debt collectors in resolving debts and the 
potentially harmful effects on consumers of repeated or continuous 
telephone calls after a telephone conversation. A debt collector who 
already has engaged in a telephone conversation with a consumer about a 
debt may have less of a need to place additional telephone calls to 
that consumer about that debt within the next seven days than a debt 
collector who has yet to reach a consumer. As a result, a debt 
collector who has already conversed with a consumer may be more likely 
to intend to annoy, abuse, or harass the consumer by placing additional 
telephone calls within one week after a telephone conversation. At the 
same time, a consumer who has spoken by telephone to a debt collector 
about a debt may be more likely than a consumer who has not spoken by 
telephone to a debt collector about a debt to experience annoyance, 
abuse, or harassment if the debt collector places additional, unwanted 
telephone calls to the consumer about that debt again within the next 
seven days.\418\
---------------------------------------------------------------------------

    \418\ See 84 FR 23274, 23316-17 (May 21, 2019). The Bureau 
explained further that a consumer may experience, and a debt 
collector may intend to cause, such annoyance, abuse, or harassment 
from a second telephone conversation within one week even if the 
consumer, rather than the debt collector, initiated the first 
telephone conversation. Therefore, under the proposal, if a consumer 
initiated a telephone conversation with the debt collector, that 
telephone conversation generally would have counted as the debt 
collector's one permissible telephone conversation for the next 
week, subject to certain exclusions in proposed Sec.  1006.14(b)(3).

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[[Page 76812]]

    In the proposal, the Bureau sought comment on a rebuttable-
presumption approach as an alternative to a bright-line rule where: (1) 
A debt collector who places telephone calls at or below the frequency 
limits presumptively would comply with Sec.  1006.14(b)(1); (2) a debt 
collector who exceeds the frequency limits presumptively would violate 
Sec.  1006.14(b)(1); and (3) the presumptions could be rebutted based 
on the facts and circumstances of a particular situation. The Bureau 
explained that it did not propose the rebuttable-presumption approach 
because the benefits of such an approach were unclear. The Bureau 
stated its preliminary view that most, if not all, of the circumstances 
that might require a debt collector to exceed the proposed telephone 
call frequency limits could be addressed by specific exceptions to a 
bright-line rule; and the Bureau wrote that a well-defined, bright-line 
rule with specific exceptions could provide needed flexibility without 
sacrificing the clarity of a bright-line rule. The Bureau noted that a 
bright-line rule may also promote predictability and reduce the risk 
and uncertainty of litigation.\419\
---------------------------------------------------------------------------

    \419\ See id. at 23311, 23319-20.
---------------------------------------------------------------------------

    The comments from thousands of stakeholders, evidencing a range of 
viewpoints on the issue of telephone call frequency limits, reflect the 
inherent challenges in trying to craft a rule for telephone call 
frequencies that appropriately balances consumer protection with the 
interests of debt collectors and consumers in efficient operation of 
the debt collection process. The Bureau proposed to draw a bright line, 
reasoning that the certainty and predictability of telephone call 
frequency limits outweighed the benefits of a more flexible approach, 
such as a rebuttable-presumption rule. After considering the robust 
comments on the proposal, the Bureau now has decided to adopt a 
different approach.
    As described earlier, consumer advocates, State Attorneys General, 
legal aid providers, consumers, and various other stakeholders strongly 
opposed the proposed telephone call frequency limits, arguing that the 
proposed bright-line rule would insufficiently protect consumers. They 
cited various scenarios in which seven or fewer telephone calls within 
a week could still annoy, harass, or abuse consumers and indicate the 
debt collector's intent to do so. One scenario commenters highlighted 
was rapid succession calling, in which a debt collector places a series 
of telephone calls in rapid succession over the course of just a few 
minutes as a potential way of harassing, annoying, or abusing a 
consumer, even if the cumulative number of telephone calls did not 
exceed the proposed seven telephone call weekly frequency limit. 
Commenters also argued, for example, that consumers could be harassed, 
annoyed, or abused if a debt collector placed up to seven telephone 
calls over the course of a week even after the consumer had indicated 
the consumer did not want to be contacted again or did not owe the debt 
in question.\420\ The consistent theme in these comments was that the 
proposed telephone call frequency limits still left room for consumers 
to be annoyed, harassed, or abused depending on the circumstances of 
the telephone calls.
---------------------------------------------------------------------------

    \420\ This scenario would be a violation of the cease-
communication provision in final Sec.  1006.6(c)(1).
---------------------------------------------------------------------------

    At the same time, debt collectors, industry trade groups, and other 
industry commenters provided a variety of arguments for why a bright-
line rule for telephone call frequencies would be potentially 
detrimental to consumers and unworkable from an operational 
perspective. They asserted that various types of telephone calls 
warranted a more permissive approach, such as telephone calls required 
by applicable law (e.g., to alert the consumer of loss-mitigation 
options) or placed as part of active litigation. Others argued that the 
rule should permit debt collectors to place telephone calls that would 
enable the consumer to avoid imminent, demonstrable negative 
consequences, such as an impending foreclosure or automobile 
repossession. Having considered these comments, the Bureau has decided 
that the proposed bright-line rule may not have adequately accounted 
for situations in which the purpose, context, and effect of certain 
telephone calls may reflect not an intent to harass, annoy, or abuse 
the consumer, but rather an intent to help the consumer avoid a 
negative outcome or an intent to comply with law. Although the Bureau 
did propose a handful of exclusions from the telephone call frequency 
limits,\421\ the Bureau recognizes that it is difficult to anticipate 
all scenarios that would merit exclusion or more lenient treatment and 
has decided that the proposal's list of exclusions was insufficient.
---------------------------------------------------------------------------

    \421\ See the section-by-section analysis of Sec.  
1006.14(b)(3).
---------------------------------------------------------------------------

    The Bureau also recognizes the arguments made by stakeholders about 
the weight of the evidence the Bureau used to justify the proposed 
telephone call frequency limits and the particular legal authorities on 
which the Bureau proposed to rely. Consumer advocates and other 
commenters challenging the proposed telephone call frequency limits 
cited, among other sources, language in the proposal's preamble, Bureau 
and FTC consumer complaint data, certain judicial decisions, and some 
State and local laws to argue for stricter limits. On the other hand, 
industry commenters challenged the Bureau's basis for setting the 
limits in the proposal by citing different case law, internal data 
analyses in some cases, and other sources. Moreover, as discussed 
above, under the proposal the Bureau would have interpreted the FDCPA 
to set bright-line limits at the specified levels; the Bureau also 
proposed that such limits were necessary to prevent an identified 
unfair practice under section 1031 of the Dodd-Frank Act, premises 
which were challenged by some stakeholders.
    As discussed above, there are competing considerations inherent in 
crafting a workable telephone call frequency standard that adequately 
protects consumers. During this rulemaking process, telephone call 
frequency limits generated strong reaction from stakeholders who 
possess different and reasonably held views on what the limits should 
be, or whether there even should be limits at all. And as noted above, 
case law is unsettled on the question of how FDCPA section 806(5) draws 
the line at permissible telephone call frequency,\422\ which is

[[Page 76813]]

reinforced by the fact that commenters cited different opinions to 
buttress their respective positions on the proposed limits.\423\
---------------------------------------------------------------------------

    \422\ See, e.g., Rigby v. Crosscheck Servs., LLC, No. 19-cv-36-
jdp, 2020 WL 1492893, at *5-6 (W.D. Wis. Mar. 27, 2020) (concluding 
that it was a genuine issue of fact whether a debt collector 
intended to annoy, abuse, or harass the consumer by placing a total 
of 76 telephone calls over a period of four-and-a-half months, 
sometimes repeatedly within the span of a few minutes, and when the 
debt collector was asked to pause or stop the calls on three 
occasions); Bruner v. AllianceOne Receivables Mgmt., Inc., No. 15 C 
9726, 2017 WL 770993, at *2-3 (N.D. Ill. Feb. 28, 2017) (finding 
that 11 telephone calls made over six weeks ``plausibly indicates 
intent to harass or annoy'' under the circumstances). But see, e.g., 
Martin v. Allied Interstate, LLC, 192 F. Supp. 3d 1296, 1307 (S.D. 
Fla. 2016) (finding that 19 telephone calls over a month, the 
majority unanswered, without more--e.g., where derogatory language 
was used during the call--is not sufficient to sustain a claim of 
harassment under FDCPA section section 806(5)); Carman v. CBE Grp., 
Inc., 782 F. Supp. 2d 1223, 1229, 1232 (D. Kan. 2011) (granting 
summary judgment on FDCPA section 806(5) claim in debt collector's 
favor even though the debt collector called the debtor 149 times 
during two months, because there was ``no evidence of an 
unacceptable pattern of calls'').
    \423\ One Federal district court opinion cited by a group of 
consumer advocates urging the Bureau to impose stricter telephone 
call frequency limits illustrates this point. The court allowed an 
FDCPA section 806(5) claim to proceed based on a consumer's receipt 
of 15 telephone calls over a three-week period. See Ambroise v. Am. 
Credit Adjusters, LLC, No. 15-22444-CIV-ALTONAGA/O'Sullivan, 2016 WL 
6080454, at *3 (S.D. Fla. Mar. 22, 2016). The court, however, noted 
that while the telephone call frequency ``weighs in favor of 
granting the maximum statutory damages,'' it could not conclude 
``the violations were intentional or particularly egregious,'' 
pointing to (among other things) how the debt collector did not make 
any additional telephone calls after the consumer told the debt 
collector to stop calling. For this reason, the court declined to 
allow recovery of the statutory maximum for damages. Id.
---------------------------------------------------------------------------

    The Bureau has reconsidered the bright-line rule approach and has 
decided to finalize instead a rebuttable-presumption approach to 
telephone call frequency. The rebuttable-presumption framework provides 
additional flexibility, as well as enhanced consumer protections in 
certain respects. The telephone call frequencies remain as proposed--
i.e., seven telephone calls and one conversation per week, per debt--
but, under the final rule, the debt collector is only presumed to 
comply with or violate Sec.  1006.14(b)(1) and FDCPA section 806(5) 
based on those frequency levels. As discussed below, the commentary 
being adopted in the final rule clarifies the operation of the 
rebuttable presumption and includes lists of non-exhaustive factors 
that stakeholders may use to rebut the presumptions, along with 
examples.
    The Bureau has determined that the rebuttable-presumption framework 
better balances the competing considerations regarding telephone call 
frequency. As the Bureau noted in the proposal, a rebuttable-
presumption approach does not provide the same level of predictability 
or litigation-risk reduction as a bright-line rule. But the final rule 
does provide greater certainty than the status quo. The Bureau is 
adopting a standard that anchors the telephone call frequency limits at 
specified levels--seven telephone calls per week, per debt, and one 
conversation per week, per debt--while permitting variances from those 
frequency levels when stakeholders can prove that specific factual 
circumstances merit them. Moreover, the detailed commentary being 
adopted in the final rule clarifying the operation of the rebuttable 
presumption and including examples will inform judicial analysis of 
line-drawing questions in applying FDCPA section 806(5). More broadly, 
the Bureau is now persuaded that the additional flexibility afforded by 
the rebuttable-presumption approach outweighs the enhanced certainty 
and clarity that would have been provided by the proposed bright-line 
rule. The final rule also contains certain enhanced consumer 
protections. For example, the proposed bright-line rule would not have 
addressed circumstances in which debt collectors engage in rapid 
succession calling while still complying with the proposed seven 
telephone call weekly frequency limit. This final rule addresses this 
conduct.\424\
---------------------------------------------------------------------------

    \424\ The final rule contains a presumption of compliance under 
final Sec.  1006.14(b)(2)(i) which the commentary clarifies may be 
rebutted where there is evidence of rapid succession calling. See 
comment 14(b)(2)(i)-2.i. The Bureau notes that, in addition to 
commenters raising concerns about rapid succession calling, various 
judicial decisions have recognized this practice as a potential 
basis for an FDCPA section 806(5) violation. See, e.g., Neu v. 
Genpact Servs., LLC, No. 11-CV-2246 W(KSC), 2013 WL 1773822, at *4-5 
(S.D. Cal. Apr. 25, 2013) (holding that 150 telephone calls in 51 
days raised a triable issue of fact as to the debt collector's 
intent to harass and observing that ``[a] reasonable trier of fact 
could find that [calling the consumer six times in one day] alone, 
apart from the sheer volume of calls placed by [the debt collector], 
is sufficient to find that [the debt collector] had the `intent to 
annoy, abuse or harass'''); Arteaga v. Asset Acceptance, LLC, 733 F. 
Supp. 2d 1218, 1228 (E.D. Cal. 2010) (``Calling a debtor numerous 
times in the same day, or multiple times in a short period of time, 
can constitute harassment under the FDCPA.'').
---------------------------------------------------------------------------

    Notwithstanding the final rule's shift to a rebuttable-presumption 
approach, the Bureau is retaining the specific numeric frequency limits 
that it proposed. The Bureau determines as a general matter that the 
FDCPA case law, the high volume of consumer complaints in this area, 
the evidence described in the Bureau's FDCPA Reports, technological 
developments, and other policy considerations described in this 
section-by-section analysis and in the proposal support a regulatory 
intervention that clarifies the limits on telephone call frequency. In 
addition, as discussed in the proposal, when Congress conferred FDCPA 
rulemaking authority on the Bureau through the Dodd-Frank Act in 2010, 
it relied, in part, on consumers' experiences with repeated or 
continuous debt collection telephone calls to observe that case-by-case 
enforcement of the FDCPA had not ended the consumer harms that the 
statute was designed to address.\425\
---------------------------------------------------------------------------

    \425\ See 84 FR 23274, 23310 (May 21, 2019). The proposal 
described how in a 2010 report prepared in connection with the 
Restoring American Financial Stability Act of 2010 (the Senate's 
predecessor bill to the Dodd-Frank Act), the Senate Committee on 
Banking, Housing, and Urban Affairs cited consumer complaints to the 
FTC about, among other things, debt collectors ``bombarding [them] 
with continuous calls'' to conclude that abusive debt collection 
practices had continued to proliferate since the FDCPA's passage. S. 
Rep. No. 111-176, at 19 (2010). In connection with that finding, 
among others, Congress granted the Bureau the authority to prescribe 
rules with respect to the activities of FDCPA debt collectors. 15 
U.S.C. 1692l. The Bureau also cites these Dodd-Frank Act legislative 
history and FDCPA provisions in response to commenters who argued 
that the FDCPA legislative history does not support the imposition 
of the telephone call frequency limits proposed by the Bureau.
---------------------------------------------------------------------------

    Relatedly, the Bureau declines to change the specific levels for 
the telephone call frequency in Sec.  1006.14(b)(2) in response to 
certain commenters' suggestions to set lower or higher limits. As noted 
above, a common suggestion by commenters urging stricter limits was 
three telephone call attempts per week, per consumer. Conversely, 
industry commenters urged the Bureau to adopt more permissive limits, 
such as 15 telephone calls per week, per debt. The Bureau has 
determined that the specific levels proposed as telephone call 
frequency limits--seven telephone calls and one conversation, per debt, 
in each seven-consecutive-day period--are reasonable policy judgments 
in view of the existing evidence and the competing considerations 
discussed above (and in the proposal), within a rebuttable-presumption 
framework. The final rule allows rebuttal of the presumption of 
compliance or of a violation, respectively, even if the debt collector 
places telephone calls at or below, or in excess of, the telephone call 
frequency levels. Consequently, the rebuttable-presumption framework 
addresses many of the policy concerns animating the requests for higher 
or lower limits under a bright-line rule.\426\
---------------------------------------------------------------------------

    \426\ Although the Bureau's adoption of a rebuttable-presumption 
framework using the same proposed frequency levels could, as some 
commenters asserted, lead to an increase in letters, text messages, 
and emails for consumers who may have preferred telephone calls, the 
general prohibition against harassing, oppressive, or abusive 
conduct in Sec.  1006.14(a) and FDCPA section 806 would protect 
consumers from undue increases in debt collectors' use of such 
communication media, and the Bureau has clarified in newly adopted 
commentary to Sec.  1006.14(a) that the general prohibition 
addresses communications and attempted communications involving 
other types of media. See comments 14(a)-1 and -2.
---------------------------------------------------------------------------

    The Bureau recognizes that many commenters--particularly consumer 
advocates, State Attorneys General, and consumers--criticized the 
proposal for imposing limits on a per-debt, rather than per-person, 
basis. The per-debt approach is unchanged in the final rule. The 
section-by-section analysis of Sec.  1006.14(b)(4) discusses the 
Bureau's reasoning for finalizing the per-debt approach as proposed.

[[Page 76814]]

    The Bureau also is not finalizing any of the variations of the 
rebuttable-presumption approach on which the Bureau sought comment in 
the proposal, such as finalizing only a presumption of compliance or 
violation (but not both), or finalizing a safe harbor for telephone 
calls below the specified frequency paired with a presumption of a 
violation for telephone calls above the specified frequency (or the 
opposite). The Bureau believes these variations would add needless 
complexity to the framework without clear benefits, in comparison to 
the rebuttable-presumption approach adopted in the final rule. Further, 
any variation that includes a per se rule as an element of the 
framework would suffer from the same disadvantages as commenters 
identified with the proposed bright-line rule.
Rebuttable Presumption of Compliance
    As noted above, Sec.  1006.14(b)(2)(i) provides for a rebuttable 
presumption of compliance. Under Sec.  1006.14(b)(2)(i), subject to the 
exclusions in Sec.  1006.14(b)(3), a debt collector is presumed to 
comply with Sec.  1006.14(b)(1) and FDCPA section 806(5) if the debt 
collector places a telephone call to a particular person in connection 
with the collection of a particular debt neither: (1) More than seven 
times within seven consecutive days; nor (2) within a period of seven 
consecutive days after having had a telephone conversation with the 
person in connection with the collection of such debt. The date of the 
telephone conversation is the first day of the seven-consecutive-day 
period.
    The final rule includes new commentary to clarify various aspects 
of the telephone call frequency provisions and the rebuttable-
presumption framework.\427\ Comment 14(b)(2)(i)-1 describes the 
rebuttable presumption of compliance and emphasizes that, to have the 
presumption of compliance, the debt collector's telephone call 
frequencies must not exceed the limits set in either prong of Sec.  
1006.14(b)(2)(i). The comment also includes three examples illustrating 
the application of the rule and the circumstances in which the debt 
collector would be presumed to comply with Sec.  1006.14(b)(1) and 
FDCPA section 806(5).
---------------------------------------------------------------------------

    \427\ While the final rule retains aspects of the proposed 
commentary for Sec.  1006.14(b)(2), including some similar examples, 
the commentary has been revised to such a degree in light of the 
rebuttable-presumption approach that this section-by-section 
analysis does not describe particular differences from the proposed 
language and instead just focuses on the final content.
---------------------------------------------------------------------------

    Comment 14(b)(2)(i)-2 clarifies how the presumption of compliance 
can be rebutted and includes a non-exhaustive list of factors that may 
rebut the presumption of compliance. The comment first clarifies that, 
to rebut a presumption of compliance, it must be proven that a debt 
collector who did not place a telephone call in excess of either of the 
telephone call frequencies described in Sec.  1006.14(b)(2)(i) 
nevertheless placed a telephone call or engaged a person in telephone 
conversation repeatedly or continuously with intent to annoy, abuse, or 
harass any person at the called number. This language in the comment 
generally tracks the language of FDCPA section 806(5). Comment 
14(b)(2)(i)-2 also explains that, for purposes of determining whether 
the presumption of compliance has been rebutted, it is assumed that 
debt collectors intend the natural consequence of their actions. The 
Bureau has included this language to clarify how the rebuttable 
presumption relates to the ``natural consequence'' language in FDCPA 
section 806 and the intent requirement in FDCPA section 806(5). The 
Bureau notes that some commenters criticized the proposed telephone 
call frequency limits as not incorporating the FDCPA section 806(5) 
intent requirement. In the proposal, the Bureau cited judicial 
decisions to support the interpretation that debt collectors generally 
intend the natural consequence of their actions.\428\ The Bureau finds 
the two opinions cited in the proposal persuasive because one logically 
harmonizes the ``natural consequence'' language in FDCPA section 806 
with the intent requirement in FDCPA section 806(5),\429\ while the 
other recognizes ``perhaps the oldest rule of evidence'' applied across 
areas of law--that a person ``is presumed to intend the natural and 
probable consequences of [that person's] acts.'' \430\ Accordingly, the 
Bureau has incorporated this concept in comment 14(b)(2)(i)-2.\431\
---------------------------------------------------------------------------

    \428\ See 84 FR 23274, 23312 n.304 (May 21, 2019) (citing Litt 
v. Portfolio Recovery Assocs. LLC, 146 F. Supp. 3d 857, 873 (E.D. 
Mich. 2015); United States v. Falstaff Brewing Corp., 410 U.S. 526, 
570 n.22 (1973) (Marshall, J., concurring in result)).
    \429\ See Litt, 146 F. Supp. 3d at 873 (``[W]hile the general 
proscription of Sec.  1692d does not use the word `intent,' such a 
requirement is inferred from the necessity to establish that the 
natural tendency of the conduct is to embarrass, upset or frighten a 
debtor. If the natural tendency of certain conduct is to embarrass, 
upset or frighten, then one who engages in such conduct can be 
presumed to have intended the natural consequences of his acts.'').
    \430\ Falstaff, 410 U.S. at 570 n.22 (Marshall, J., concurring 
in result).
    \431\ In the proposal, the Bureau posited that the alternative 
rebuttable-presumption approach could allow a consumer to show that 
the debt collector knew or should have known that the proposed 
telephone call frequency limits would have the natural consequence 
of harassing, oppressing, or abusing the consumer. However, the 
Bureau declines to specify a more particularized intent standard 
under Sec.  1006.14(b)(2), such as ``know or have reason to know'' 
because the Bureau believes doing so would entail significant legal 
and practical complexity. The Bureau also has concern that imposing 
a more particularized intent standard could lead to evasion if debt 
collectors could then try to disclaim an intent to harass, annoy, or 
abuse the consumer after the fact by attesting to their lack of 
intent.
---------------------------------------------------------------------------

    Comment 14(b)(2)(i)-2 also clarifies that the non-exhaustive list 
of factors in comments 14(b)(2)(i)-2.i through .iv may be considered 
either individually or in combination with one another or with other, 
non-specified factors. The comment further clarifies that the factors 
may be viewed in light of any other relevant facts and circumstances 
and therefore may apply to varying degrees. The Bureau notes that the 
factors included in comments 14(b)(2)(i)-2.i through .iv are generally 
aligned with circumstances cited by courts as relevant to the 
determination of whether FDCPA section 806(5) has been violated.\432\
---------------------------------------------------------------------------

    \432\ See, e.g., Davis v. Diversified Consultants, Inc., 36 F. 
Supp. 3d 217, 228 (D. Mass. 2014) (``[T]here are no bright-line 
rules as to what constitutes harassment or what demonstrates intent 
to annoy. Instead, such findings have been based on a consideration 
of multiple factors. For example, in determining whether the intent 
requirement is met, courts often look to the volume, frequency, and 
persistence of calls, to whether defendant continued to call after 
plaintiff requested it cease, and to whether plaintiff actually owed 
the alleged debt.''); Valle v. Nat'l Recovery Agency, No. 8:10-cv-
2775-T-23MAP, 2012 WL 1831156, at *1 (M.D. Fla. May 18, 2012) 
(``Factors often examined in assessing a claimed violation of 
Section 1692d and Section 1692d(5) include (1) the volume and 
frequency of attempts to contact the debtor, (2) the volume and 
frequency of contacts with the debtor, (3) the duration of the debt 
collector's attempted communication and collection, (4) the debt 
collector's use of abusive language, (5) the medium of the debt 
collector's communication, (6) the debtor's disputing the debt or 
the amount due, (7) the debtor's demanding a cessation of the 
communication, (8) the debt collector's leaving a message, (9) the 
debt collector's calling at an unreasonable hour, (10) the debt 
collector's calling the debtor at work, (11) the debt collector's 
threatening the debtor, (12) the debt collector's lying to the 
debtor, (13) the debt collector's impersonating an attorney or a 
public official, (14) the debt collector's contacting a friend, co-
worker, employee, employer, or family member, and (15) the debt 
collector's simulating or threatening legal process.'').
---------------------------------------------------------------------------

    Comment 14(b)(2)(i)-2.i clarifies that the frequency and pattern of 
telephone calls the debt collector places to a person, including the 
intervals between them, is a factor that may rebut the presumption of 
compliance. The comment further clarifies the considerations relevant 
to this factor include whether the debt collector placed telephone 
calls to a person in rapid succession (e.g., two unanswered telephone 
calls to the same telephone number within five minutes) or in a

[[Page 76815]]

highly concentrated manner (e.g., seven telephone calls to the same 
telephone number within one day). Comment 14(b)(2)(i)-2.i then provides 
an example illustrating application of this factor. The Bureau has 
included this factor because many commenters raised the pattern and 
frequency of telephone calls as relevant to determining intent under 
FDCPA section 806(5), and courts have often cited this factor as well, 
as described above. The Bureau believes that the frequency and pattern 
of the telephone calls, including the intervals between them, are 
indicative of both the intent of the debt collector and the natural 
consequence on the person called. The Bureau has also included specific 
language in the comment to address concerns raised by commenters about 
debt collectors engaging in rapid succession calling or placing 
telephone calls in a concentrated matter on days that may be less 
convenient for some consumers (such as Sundays or holidays).\433\ 
Application of this factor is not limited to rapid succession or highly 
concentrated calling, however, and is dependent on all of the relevant 
facts and circumstances that may indicate an intent on the part of the 
debt collector to harass, annoy, or abuse the consumer.
---------------------------------------------------------------------------

    \433\ Courts evaluating FDCPA section 806(5) claims sometimes 
have focused on rapid succession calling as well, as noted in some 
of the cases cited earlier in this section-by-section analysis. The 
FTC Staff Commentary on the FDCPA, while not binding on the Bureau, 
also provides support for interpreting FDCPA section 806(5) to 
prohibit rapid succession calling under the ``continuously'' prong. 
See 53 FR 50097, 50105 (Dec. 13, 1988).
---------------------------------------------------------------------------

    Comment 14(b)(2)(i)-2.ii clarifies that the frequency and pattern 
of any voicemails the debt collector leaves for a person, including the 
intervals between them, is another factor that may rebut the 
presumption of compliance. The comment notes that the considerations 
relevant to this factor include whether the debt collector left 
voicemails for a person in rapid succession (e.g., two voicemails 
within five minutes left at the same telephone number) or in a highly 
concentrated manner (e.g., seven voicemails left at the same telephone 
number within one day). The Bureau included this factor for similar 
reasons to those underlying inclusion of the factor in comment 
14(b)(2)(i)-2.i.
    Comment 14(b)(2)(i)-2.iii clarifies that another factor that may 
rebut the presumption of compliance is the content of a person's prior 
communications with the debt collector. The comment explains that among 
the considerations relevant to this factor are whether the person 
previously informed the debt collector, for example, that the person 
did not wish to be contacted again about the particular debt, that the 
person refused to pay the particular debt, or that the person did not 
owe the particular debt. The comment clarifies that this factor also 
includes a consumer's cease communication notification described in 
Sec.  1006.6(c) and a consumer's request under Sec.  1006.14(h) that 
the debt collector not use telephone calls to communicate or attempt to 
communicate with the consumer. The comment also clarifies that the 
amount of time elapsed since any such prior communications may be 
relevant to this factor. The Bureau has included this factor based on 
concerns raised by commenters that a debt collector could annoy, 
harass, or abuse consumers by continuing to place telephone calls even 
after the person informed the debt collector about the person's desire 
not to be contacted again about the particular debt or that the 
consumer does not owe or refuses to pay the particular debt. Although 
the number of additional telephone calls at issue would not exceed the 
telephone call frequencies, in view of the prior conversation, 
especially a recent prior conversation, the person may be more likely 
to find the additional telephone calls annoying, harassing, or abusive. 
Moreover, the Bureau believes that in this circumstance it generally 
would be more likely that the debt collector intended to annoy, harass, 
or abuse the person.\434\
---------------------------------------------------------------------------

    \434\ The Bureau notes the comment it received from a credit 
union pointing out that the nature and content of a conversation may 
be instructive as to whether successive calls may harass, annoy, or 
abuse consumers.
---------------------------------------------------------------------------

    Comment 14(b)(2)(i)-2.iv clarifies that a factor that may be used 
to rebut the presumption of compliance is the debt collector's conduct 
in prior communications or attempts to communicate with the person. The 
comment explains that among the considerations relevant to this factor 
are whether, during a prior communication or attempt to communicate 
with a person, the debt collector, for example, used obscene, profane, 
or otherwise abusive language (see Sec.  1006.14(d)), used or 
threatened to use violence or other criminal means to harm the person 
(see Sec.  1006.14(c)), or called at an unusual or inconvenient time or 
place (see Sec.  1006.6(b)(1)). The comment also clarifies that the 
amount of time elapsed since any such prior communications or attempts 
to communicate may be relevant to this factor. The Bureau has included 
this factor for similar reasons as comment 14(b)(2)(i)-2.iii. The 
Bureau believes that, if a debt collector previously used obscene 
language or threatened violence during a debt collection telephone 
call, or called at an inconvenient place or time, and thereby violated 
another rule provision (and the FDCPA itself), then the person 
receiving the subsequent telephone calls may be more likely to find 
they are annoying, harassing, or abusive. The Bureau also believes that 
by placing the subsequent telephone calls, it generally would be more 
likely that the debt collector intended to annoy, harass, or abuse the 
person.
    Comment 14(b)(2)(i)-3, which is substantively unchanged from 
proposed comment 14(b)(2)-2, addresses misdirected telephone calls. The 
comment explains that, for purposes of the telephone call frequencies 
in Sec.  1006.14(b)(2)(i), if within a period of seven consecutive 
days, a debt collector attempts to communicate with a particular person 
by placing telephone calls to a particular telephone number, and the 
debt collector then learns that the telephone number is not that 
person's number, the telephone calls that the debt collector made to 
that number are not considered to have been telephone calls placed to 
that person during that seven-day period for purposes of Sec.  
1006.14(b)(2)(i). The comment also provides an example illustrating 
application of the rule. As the Bureau wrote in the proposal, a person 
is unlikely to be harassed by debt collection calls that are placed to 
a telephone number that belongs to someone else.\435\
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    \435\ A small number of comments discussed whether the Bureau 
should provide additional clarification about how a debt collector 
determines that a telephone number is not associated with a 
particular person. A compliance consulting firm commented that the 
Bureau should let company policy dictate the determination, while 
another commenter believed that the Bureau should give additional 
clarification. Consumer advocate commenters urged the Bureau to 
require debt collectors to check the telephone number against the 
FCC's Reassigned Number Database or one of the commercial databases 
that is already available to see if it has been reassigned since the 
debt collector last verified that it belonged to the consumer. The 
Bureau declines to mandate any particular method by which a debt 
collector must learn that the telephone number is not associated 
with a particular person within the meaning of the comment.
---------------------------------------------------------------------------

Rebuttable Presumption of a Violation
    As noted above, Sec.  1006.14(b)(2)(ii) provides that a debt 
collector is presumed to violate Sec.  1006.14(b)(1) and FDCPA section 
806(5) if the debt collector places a telephone call to a particular 
person in connection with the collection of a particular debt in excess 
of either of the telephone call frequencies described in

[[Page 76816]]

Sec.  1006.14(b)(2)(i). The telephone call frequencies are subject to 
the exclusions in Sec.  1006.14(b)(3). Comment 14(b)(2)(ii)-1 provides 
two examples illustrating the rule.
    Comment 14(b)(2)(ii)-2 clarifies how the presumption of a violation 
can be rebutted and includes a non-exhaustive list of factors that may 
rebut the presumption of a violation. The comment clarifies that, to 
rebut the presumption of a violation, it must be proven that a debt 
collector who placed a telephone call in excess of either of the 
frequencies described in Sec.  1006.14(b)(2)(i) nevertheless did not 
place a telephone call or engage any person in telephone conversation 
repeatedly or continuously with intent to annoy, abuse, or harass any 
person at the called number. The comment clarifies that, for purposes 
of determining whether a presumption of a violation has been rebutted, 
it is assumed that debt collectors intend the natural consequence of 
their actions. The comment notes that comments 14(b)(2)(ii)-2.i through 
.iv provide a non-exhaustive list of factors that may rebut the 
presumption of a violation.\436\ The comment explains that the factors 
may be considered either individually or in combination with one 
another or other non-specified factors.\437\ The comment also clarifies 
that the factors may be viewed in light of any other relevant facts and 
circumstances and therefore may apply to varying degrees.\438\
---------------------------------------------------------------------------

    \436\ While the Bureau believes that telephone calls placed 
under these four circumstances generally would not reflect an intent 
on the part of the debt collector to harass, annoy, or abuse the 
consumer, it is possible that there could be factual circumstances 
where such a telephone call is placed with that intent. Therefore, 
the Bureau is including such telephone calls within the rebuttable 
presumption rather than excluding them from the telephone call 
frequencies altogether under final Sec.  1006.14(b)(3).
    \437\ As suggested by commenters, there may be other 
circumstances where it may be proven that a debt collector who 
placed telephone calls in excess of either of the telephone call 
frequencies described in Sec.  1006.14(b)(2)(i) nevertheless did not 
place a telephone call or engage any person in telephone 
conversation repeatedly or continuously with intent to annoy, abuse, 
or harass any person at the called number. Because the list of 
factors identified in comments 14(b)(2)(ii)-2.i through .iv is not 
exhaustive, other factors may be considered, if warranted by the 
relevant facts and circumstances.
    \438\ The language in comment 14(b)(2)(ii)-2, including how debt 
collectors are assumed to intend the natural consequence of their 
actions and how the factors may apply to varying degrees, parallels 
the language in comment 14(b)(2)(i)-2 describing the rebuttable 
presumption of compliance. This reflects how operation of the two 
presumptions under the rule--but not the factors themselves--is 
intended to be the same.
---------------------------------------------------------------------------

    Comment 14(b)(2)(ii)-2.i clarifies that one factor that may rebut 
the presumption of a violation is whether a debt collector placed a 
telephone call to comply with, or as required by, applicable law. The 
comment provides an example in which a debt collector placed one 
telephone call above the applicable telephone call frequency limit to 
inform the consumer of available loss mitigation options in compliance 
with the Bureau's mortgage servicing rules under Regulation X, 12 CFR 
1024.39(a). The comment clarifies that the debt collector's compliance 
with applicable law is a factor that may rebut the presumption of a 
violation. The Bureau includes this factor because telephone calls 
placed to comply with or as required by applicable law generally would 
not reflect an intent on the part of the debt collector to harass, 
annoy, or abuse a consumer. Numerous commenters cited compliance with 
applicable law as a basis for excluding a telephone call from the 
proposed bright-line telephone call frequency limits pursuant to Sec.  
1006.14(b)(3). The Bureau is not excluding this category of telephone 
calls from the frequency limits entirely, however, because, as stated 
in the proposal, the Bureau understands that legally required 
communications infrequently are delivered over the telephone, in 
contrast to by mail or other means.
    Comment 14(b)(2)(ii)-2.ii describes that another factor that may 
rebut the presumption of a violation is whether a debt collector placed 
a telephone call that was directly related to active litigation 
involving the collection of a particular debt. The comment provides an 
example in which an additional telephone call beyond the applicable 
telephone call frequency was placed to complete a court-ordered 
communication with the consumer about the debt, or as part of 
negotiations to settle active debt collection litigation regarding the 
debt. The comment explains that the direct relationship between the 
additional telephone call and the active debt collection litigation is 
a factor that may rebut the presumption of a violation.\439\ The Bureau 
has included this factor because these types of telephone calls may 
enable communication between consumers and debt collectors to resolve a 
debt collection matter during litigation and, depending on the facts 
and circumstances, may not reflect an intent on the part of the debt 
collector to harass, annoy, or abuse the consumer.
---------------------------------------------------------------------------

    \439\ Commenters, including the SBA, suggested that the proposed 
telephone call frequency limits should not apply once litigation or 
other civil action is initiated (or specifically while a settlement 
is being negotiated). This factor responds to the commenters' 
suggestion.
---------------------------------------------------------------------------

    Comment 14(b)(2)(ii)-2.iii clarifies that another factor that may 
rebut the presumption of a violation is whether a debt collector placed 
a telephone call in response to a consumer's request for additional 
information when the exclusion in Sec.  1006.14(b)(3)(i) for telephone 
calls made with the consumer's prior consent given directly to the debt 
collector did not apply. The comment includes an example in which, 
during a telephone conversation, the consumer tells the debt collector 
that the consumer would like more information about the amount of the 
debt but that the consumer cannot talk at that moment, and the consumer 
ends the telephone call before the debt collector can seek prior 
consent under Sec.  1006.14(b)(3)(i) to call back with the requested 
information.\440\ The fact that the debt collector placed the 
additional call in response to the consumer's request is a factor that 
may rebut the presumption of a violation. The Bureau has included this 
factor based on consideration of circumstances in which the debt 
collector places a telephone call in response to the consumer's 
request, and thus may be placing the call without intent to harass, 
annoy, or abuse the consumer, but where the exclusion under Sec.  
1006.14(b)(3)(i) does not apply because the debt collector has not 
obtained the consumer's consent.
---------------------------------------------------------------------------

    \440\ This factor addresses concerns raised by some commenters 
that the proposed seven telephone call weekly frequency limit would 
harm consumers by preventing a debt collector from calling a 
consumer back, at the consumer's request, at a different, more 
convenient, time or after they gather more information; and 
ultimately lead to increases in litigation, negative credit 
reporting, and wage garnishment and offsets.
---------------------------------------------------------------------------

    Comment 14(b)(2)(ii)-2.iv clarifies that a factor that may rebut 
the presumption of a violation is whether a debt collector placed a 
telephone call to convey information to the consumer that, as shown 
through evidence, would provide the consumer with an opportunity to 
avoid a demonstrably negative effect relating to the collection of the 
particular debt, where the negative effect was not in the debt 
collector's control, and where time was of the essence.\441\ Comment 
14(b)(2)(ii)-2.iv.A provides the following example: A debt collector 
and consumer engage in a lengthy conversation regarding settlement 
terms; the call drops toward the end of the conversation; and the debt 
collector immediately places an additional telephone call to complete

[[Page 76817]]

the conversation. As explained in the comment, the fact that the debt 
collector placed the telephone call to permit the debt collector and 
the consumer to complete the conversation about settlement terms, which 
provides the consumer an opportunity to avoid a demonstrably negative 
effect that was not in the debt collector's control (i.e., having to 
repeat a substantive conversation with a potentially different 
representative of the debt collector) and where time was of the essence 
(i.e., to prevent the delay of settlement negotiations by seven days), 
is a factor that may rebut the presumption of a violation.
---------------------------------------------------------------------------

    \441\ This factor addresses concerns raised by some commenters 
that the proposed seven telephone call weekly frequency limit would 
provide fewer opportunities to resolve debts in manner best suited 
for the situation, and as a result, would increase interest, fees, 
and penalties for consumers.
---------------------------------------------------------------------------

    Comment 14(b)(2)(ii)-2.iv.B provides an example in which: A 
consumer previously entered into a payment plan with the debt collector 
regarding a debt; the conditions for the payment plan were set by the 
creditor; among those conditions is that only the creditor, in its sole 
discretion, may approve waivers of late fees; the debt collector learns 
on a Monday that the consumer's payment failed to process, and the 
applicable grace period is set to expire the next day; and the debt 
collector places a telephone call to the consumer on that Monday to 
remind the consumer that a late fee will be applied by the creditor for 
non-payment unless the consumer makes the payment by the next day. As 
explained in the comment, the fact that the debt collector placed the 
telephone call to alert the consumer to the pending penalty, giving the 
consumer an opportunity to avoid a demonstrably negative effect that 
was not in the debt collector's control and where time was of the 
essence, is a factor that may rebut the presumption of a violation.
    Comment 14(b)(2)(ii)-2.iv.C provides a counterexample to the first 
two scenarios in which: On a Monday, a debt collector placed a 
telephone call to a consumer to offer a ``one-time only'' discount on 
the payment of a debt; the debt collector stated that the offer would 
expire the next day; yet, in fact, the debt collector could have 
offered the same or a similar discount through the end of the month. 
The comment explains that because the negative effect on the consumer 
was in the debt collector's control, the discount offer is not a factor 
that may rebut the presumption of a violation.
    The Bureau has included the rebuttal factor described in comment 
14(b)(2)(ii)-2.iv and the illustrative examples in comments 
14(b)(2)(ii)-2.iv.A through .C based on consideration of comments to 
the proposal. As noted earlier in this section-by-section analysis, 
industry commenters presented a variety of fact patterns that they 
believed called for exclusions because the consumer would avoid harm or 
potentially would benefit from the communication. However, the Bureau 
declines to include categorical exclusions for these types of telephone 
calls. Because the rebuttal factors are non-exhaustive, the Bureau need 
not address each scenario raised by commenters; the question of whether 
the presumption can be rebutted in a given case ultimately depends on 
the circumstances. Furthermore, the Bureau has included language and 
structured the examples in this comment to emphasize the factor's 
limitations: That evidence must show that the additional telephone call 
provided the consumer with an opportunity to avoid a demonstrably 
negative effect; that the negative effect was not in the debt 
collector's control; and that time was of the essence. The Bureau 
concludes that cabining the factor in this manner is necessary for 
clarity and to avoid circumvention.
14(b)(3) Certain Telephone Calls Excluded From the Telephone Call 
Frequencies
    Proposed Sec.  1006.14(b)(3) would have excluded four types of 
telephone calls from the telephone call frequency limits in proposed 
Sec.  1006.14(b)(2).\442\ Specifically, proposed Sec.  1006.14(b)(3)(i) 
would have excluded telephone calls made to respond to a request for 
information from the person whom the debt collector is calling; 
proposed Sec.  1006.14(b)(3)(ii) would have excluded telephone calls 
made with such person's prior consent given directly to the debt 
collector; proposed Sec.  1006.14(b)(3)(iii) would have excluded 
telephone calls that do not connect to the dialed number; and proposed 
Sec.  1006.14(b)(3)(iv) would have excluded telephone calls placed to a 
person described in proposed Sec.  1006.6(d)(1)(ii) through (vi).\443\ 
For the reasons discussed below, the Bureau is not finalizing the 
proposed Sec.  1006.14(b)(3)(i) exclusion for telephone calls made to 
respond to a request for information from the person whom the debt 
collector is calling. The Bureau is finalizing the other proposed 
exclusions as Sec.  1006.14(b)(3)(i) through (iii), with certain 
revisions discussed below.
---------------------------------------------------------------------------

    \442\ See 84 FR 23274, 23317-19 (May 21, 2019).
    \443\ Persons described in proposed Sec.  1006.6(d)(1)(ii) 
through (vi) include the consumer's attorney, a consumer reporting 
agency, the creditor, the creditor's attorney, and the debt 
collector's attorney.
---------------------------------------------------------------------------

Proposed Provision Not Finalized
    Proposed Sec.  1006.14(b)(3)(i) would have excluded from the 
frequency limits telephone calls that a debt collector places to a 
person to respond to a request for information from that person.\444\ 
Proposed comment 14(b)(3)(i)-1 would have clarified that, once a debt 
collector responds to a person's request for information, the exception 
in proposed Sec.  1006.14(b)(3)(i) would not apply to subsequent 
telephone calls placed by the debt collector to the person, unless the 
person makes another request for information. Proposed comment 
14(b)(3)(i)-2 provided an example of the rule.
---------------------------------------------------------------------------

    \444\ See 84 FR 23274, 23318 (May 21, 2019).
---------------------------------------------------------------------------

    Industry commenters requested clarification on a variety of issues 
related to the proposed Sec.  1006.14(b)(3)(i) exclusion. For example, 
commenters asked the Bureau to define ``request for information''; 
questioned whether certain scenarios fit within the exception; asked 
how specific the consumer's request for information must be; and asked 
how many follow-up telephone call attempts are permitted under the 
proposed exclusion.\445\ A group of consumer advocate commenters 
recommended that the exclusion not apply if debt collectors placed 
telephone calls in response to requests for information that consumers 
submitted through other communication media.
---------------------------------------------------------------------------

    \445\ However, one industry commenter stated it was not 
necessary to clarify how to determine whether a debt collector makes 
a particular telephone call in response to a request for 
information, as opposed to for some other purpose, or how to 
determine whether the debt collector has responded to a request for 
information.
---------------------------------------------------------------------------

    The Bureau is not providing the requested clarifications or making 
the recommended changes because the Bureau is not finalizing proposed 
Sec.  1006.14(b)(3)(i). After considering the comments, the Bureau 
recognizes that a telephone call that a debt collector places to a 
person to respond to a request for information from that person usually 
also fits under the exclusion for prior consent in proposed Sec.  
1006.14(b)(3)(ii). Therefore, in an effort to streamline the final 
rule, the Bureau is not finalizing proposed Sec.  1006.14(b)(3)(i) and 
instead is expanding the examples in the commentary to the prior 
consent exclusion, renumbered as final Sec.  1006.14(b)(3)(i), to 
describe a scenario in which a person, through a request for 
information, also provides prior consent for a debt collector to place 
additional telephone calls, and the debt collector then places 
telephone calls to the

[[Page 76818]]

person to respond to a request for information from that person.\446\ 
The Bureau also is specifying in comment 14(b)(2)(ii)-2.iii that, in 
the unlikely event that a person's request for information from a debt 
collector does not meet the requirements of the prior consent exclusion 
in final Sec.  1006.14(b)(3)(i), the fact that a debt collector placed 
a telephone call in response to a consumer's request for additional 
information is a factor that may be used by a debt collector to rebut a 
presumption of a violation under Sec.  1006.14(b)(2)(ii).\447\
---------------------------------------------------------------------------

    \446\ See the section-by-section analysis of Sec.  
1006.14(b)(3)(i) for more information on the exclusion for telephone 
calls placed with a person's prior consent.
    \447\ See the section-by-section analysis of Sec.  1006.14(b)(2) 
for more information on the telephone call frequencies and the 
factors that may rebut the presumption of a violation.
---------------------------------------------------------------------------

Scope of Exclusions
    Industry commenters and the SBA asked the Bureau to exclude 
additional types of telephone calls from the proposed Sec.  
1006.14(b)(2) telephone call frequency limits.\448\ For example, 
industry commenters requested that the Bureau add an exclusion for 
telephone calls required by, or made to comply with, applicable law, as 
well as telephone calls related to litigation.\449\ Industry commenters 
also requested exclusions for other types of telephone calls such as 
telephone calls that would be ``beneficial'' to the consumer; telephone 
calls placed to a consumer after a consumer does not follow through 
with an agreed-upon payment or the consumer's payment is declined; 
telephone calls placed before a debt collector has established contact 
with a person; and ringless voicemails. The SBA requested that the 
Bureau exclude all telephone calls placed by small entity debt 
collectors from the proposed Sec.  1006.14(b)(2) telephone call 
frequency limits.
---------------------------------------------------------------------------

    \448\ The Bureau specifically requested comment on this topic. 
See also the section-by-section analysis of Sec.  1006.14(b)(2) for 
further discussion of comments relating to potential exclusions from 
the proposed telephone call frequency limits.
    \449\ The SBA requested an exclusion for telephone calls made 
while a debt collector is trying to negotiate a settlement.
---------------------------------------------------------------------------

    The Bureau declines to add additional exclusions to Sec.  
1006.14(b)(3). As discussed in the section-by-section analysis of Sec.  
1006.14(b)(3)(i) through (iii), the Bureau is finalizing three of the 
proposed exclusions. These exclusions cover telephone calls placed with 
a person's prior consent (Sec.  1006.14(b)(3)(i)), telephone calls that 
do not connect to the dialed number (Sec.  1006.14(b)(3)(ii)), and 
telephone calls placed to certain professional persons (Sec.  
1006.14(b)(3)(iii)). The Bureau is excluding these categories of 
telephone calls from the Sec.  1006.14(b)(2)(i) telephone call 
frequencies because the Bureau concludes that such telephone calls are 
not placed by debt collectors with intent to annoy, abuse, or harass a 
person and generally do not have the natural consequence of harassing, 
oppressing, or abusing any person.\450\
---------------------------------------------------------------------------

    \450\ The Bureau is finalizing certain limits on telephone calls 
placed with a person's prior consent so that such telephone calls do 
not have the natural consequence of harassing, oppressing, or 
abusing the person who consented to the additional telephone calls. 
See the section-by-section analysis of Sec.  1006.14(b)(3)(i).
---------------------------------------------------------------------------

    As discussed in the section-by-section analysis of Sec.  
1006.14(b)(2), the Bureau is finalizing a rebuttable-presumption 
approach instead of the proposed telephone call frequency limits. The 
rebuttable-presumption approach inherently acknowledges that there are 
individual circumstances, beyond the categorical exclusions identified 
in Sec.  1006.14(b)(3), in which telephone calls exceeding the final 
Sec.  1006.14(b)(2)(i) frequencies are not placed with the intent to 
annoy, abuse, or harass, and do not have the natural consequence 
harassing, oppressing, or abusing any person. The rebuttable-
presumption approach will provide debt collectors with many of the 
flexibilities that they sought from the requested exclusions, while 
also allowing for consideration of the particular facts and 
circumstances surrounding a telephone call that exceeds the final Sec.  
1006.14(b)(2)(i) frequencies.
    Depending on the facts and circumstances, the Bureau's rebuttable-
presumption approach to telephone call frequencies may, in fact, 
provide more flexibility to debt collectors with respect to other 
scenarios for which commenters requested exclusions, such as telephone 
calls that would be beneficial to the consumer and telephone calls 
placed to a consumer after a consumer does not follow through with an 
agreed upon payment or the consumer's payment is declined. More 
specifically, as described in comment 14(b)(2)(ii)-2.iv, another factor 
that may be used to rebut a presumption of a violation is whether a 
debt collector placed a telephone call to convey information to the 
consumer that, as shown through evidence, would provide the consumer 
with an opportunity to avoid a demonstrably negative effect relating to 
the collection of the particular debt, where the negative effect was 
not in the debt collector's control, and where time was of the essence.
    Regarding other specific requests for exclusions, industry 
commenters explained that the proposed Sec.  1006.14(b)(2) telephone 
call frequency limits are in tension with the Bureau's mortgage 
servicing rules' live contact and early intervention requirements in 
Regulation X, 12 CFR part 1024. Another industry commenter identified 
tension with the U.S. Department of Housing and Urban Development's 
Home Equity Conversion Mortgage program regulations, 24 CFR part 206, 
and State servicing laws that require a servicer to attempt to contact 
a borrower when a loan is initially called due and payable. Industry 
commenters also explained that, during litigation, attorneys may be 
directed to notify the consumer of scheduling matters, to coordinate 
the date for a hearing or mediation, or to respond to settlement 
discussions. Industry commenters also stated that court rules may 
require parties to confer prior to scheduling a hearing. Industry 
commenters noted that it may be necessary to have multiple, time-
sensitive discussions during settlement negotiations, and while the 
proposed consent exclusion would seem to address this concern, debt 
collectors may forget to request consent from a consumer to place 
additional telephone calls.
    The Bureau understands that very few legally required 
communications must be delivered by telephone. However, the Bureau also 
acknowledges that legally required communications delivered by 
telephone may facilitate consumer engagement and reach consumers more 
quickly than if other communication media are used. As discussed in 
more detail in the section-by-section analysis of Sec.  1006.14(b)(2), 
the telephone calls that commenters describe could be covered by two 
factors that a debt collector may use to rebut a presumption of a 
violation of Sec.  1006.14(b)(1), including: Whether a debt collector 
placed a telephone call to comply with, or as required by, applicable 
law, as discussed in comment 14(b)(2)(ii)-2.i; and whether a debt 
collector placed a telephone call that was directly related to active 
litigation involving the collection of a particular debt, as discussed 
in comment 14(b)(2)(ii)-2.ii.\451\
---------------------------------------------------------------------------

    \451\ See the section-by-section analysis of Sec.  
1006.14(b)(2).
---------------------------------------------------------------------------

    The Bureau also declines to add an exclusion for telephone calls 
placed before a debt collector has established contact with a person. 
FDCPA section 806(5) prohibits a debt collector from causing a 
telephone to ring or engaging any person in a telephone call

[[Page 76819]]

repeatedly or continuously with intent to annoy, abuse, or harass any 
person at the called number, without regard to whether the debt 
collector has previously established contact with that person. At the 
same time, as described in the section-by-section analysis of Sec.  
1006.14(b)(2), the Bureau recognizes that debt collectors have a 
legitimate interest in reaching consumers, and that communicating with 
consumers is central to debt collectors' ability to recover amounts 
owed to creditors. The Bureau expects that the flexibility provided by 
the rebuttable-presumption approach to telephone call frequencies, 
discussed in the section-by-section analysis of Sec.  1006.14(b)(2), as 
well as debt collectors' ability to leave limited-content messages, 
discussed in the section-by-section analysis of Sec.  1006.2(j), will 
enable debt collectors to reach consumers in a timely manner without 
introducing additional consumer harms.
    The Bureau declines to add an exclusion for ringless voicemails for 
the reasons discussed in the section-by-section analysis of Sec.  
1006.14(b).
    In response to the SBA's request to exclude small entities from the 
Sec.  1006.14(b)(2)(i) telephone call frequencies, the Bureau notes 
that the final rule applies to debt collectors, as that term is used in 
the FDCPA. Small entities are only excluded from the definition of debt 
collector to the extent they meet the criteria for one of the specific 
exclusions from the general definition.\452\
---------------------------------------------------------------------------

    \452\ See the section-by-section analysis of Sec.  1006.2(i).
---------------------------------------------------------------------------

Exclusions Under Rebuttable-Presumption Approach
    A few industry commenters asked the Bureau to maintain the proposed 
Sec.  1006.14(b)(3) exclusions even if the final rule adopted a 
rebuttable-presumption approach. One commenter explained that 
maintaining the exclusions would aid courts in determining whether the 
debt collector has rebutted the presumption of a violation when excess 
telephone calls fall under one or more of the proposed Sec.  
1006.14(b)(3) exclusions.
    As discussed in the section-by-section analysis of Sec.  
1006.14(b)(2), the Bureau is implementing a rebuttable-presumption 
approach in this final rule and finalizing three of the proposed 
exclusions. Telephone calls placed by a debt collector that are 
excluded under Sec.  1006.14(b)(3) do not count toward the telephone 
call frequencies in Sec.  1006.14(b)(2)(i) that determine whether a 
debt collector is presumed to comply with or violate Sec.  
1006.14(b)(1) and FDCPA section 806(5). Therefore, telephone calls 
excluded under Sec.  1006.14(b)(3) will not be used to determine 
whether a debt collector has rebutted a presumption of a violation 
under Sec.  1006.14(b)(2)(ii).\453\
---------------------------------------------------------------------------

    \453\ See the section-by-section analysis of, and commentary to, 
Sec.  1006.14(b)(2)(i) and (ii) for a non-exhaustive list of factors 
that may be used to rebut presumptions of compliance with, and 
violation of, Sec.  1006.14(b)(1) and FDCPA section 806(5).
---------------------------------------------------------------------------

14(b)(3)(i)
    Proposed Sec.  1006.14(b)(3)(ii) would have excluded from the 
proposed telephone call frequency limits in Sec.  1006.14(b)(2) 
telephone calls that a debt collector places to a person with the 
person's prior consent given directly to the debt collector.\454\ Under 
the proposal, a debt collector would have been permitted to place as 
many telephone calls as necessary before reaching the consumer, but 
once the debt collector reached the consumer, further telephone calls 
would not have been covered by the prior consent exclusion. Proposed 
comment 14(b)(3)(ii)-1 would have referred to the commentary to 
proposed Sec.  1006.6(b)(4)(i) for guidance concerning a person giving 
prior consent directly to a debt collector, and proposed comment 
14(b)(3)(ii)-2 provided an example of the rule. For the reasons 
discussed below, the Bureau is revising the proposed prior consent 
exclusion, renumbered as Sec.  1006.14(b)(3)(i), to limit the duration 
of prior consent to no more than seven consecutive days.
---------------------------------------------------------------------------

    \454\ See 84 FR 23274, 23318 (May 21, 2019).
---------------------------------------------------------------------------

    One industry commenter recommended that the Bureau limit the number 
of telephone calls permitted per day and per week under the Sec.  
1006.14(b)(3) exclusions, including the prior consent exclusion, while 
another industry commenter opposed such limits. Some industry 
commenters explained that it is not necessary to limit telephone calls 
made under the prior consent exclusion because consumers can withdraw 
consent at any time. One industry commenter recommended that the 
proposed Sec.  1006.14(b)(2) telephone call frequency limits reset when 
a consumer asks a debt collector to call back at another time. Industry 
commenters also requested clarification about what constitutes prior 
consent, whether certain scenarios fit within the exclusion, and how to 
document prior consent. Consumer advocate commenters requested that the 
Bureau limit the prior consent exclusion to one additional telephone 
call and expressed concern that debt collectors could otherwise 
pressure consumers into providing blanket consent for unlimited 
additional telephone calls over an unspecified period of time.
    In general, the Bureau believes that a person can determine when 
additional telephone calls from, or telephone conversations with, a 
debt collector would not be harassing, and that a debt collector who 
has a person's prior consent to place additional telephone calls does 
not place such calls with intent to annoy, abuse, or harass the person. 
In the proposal, the prior consent exclusion would have lasted until 
the debt collector reached the person who consented to the additional 
telephone calls. Therefore, if the debt collector were unable to reach 
the person, the person's prior consent to additional telephone calls 
would have lasted indefinitely. The Bureau recognizes that the debt 
collector's additional telephone calls, placed indefinitely, may have 
the natural consequence of which is to harass, oppress, or abuse the 
person in connection with the collection of a debt.
    The Bureau considered limiting the number of telephone calls a debt 
collector may place under the prior consent exclusion, as suggested by 
consumer advocate commenters, but concluded that such an approach would 
be impractical, given that it often takes debt collectors multiple 
telephone calls to reach a person. Instead, the Bureau is amending 
proposed Sec.  1006.14(b)(3)(ii), renumbered as Sec.  1006.14(b)(3)(i), 
to limit the duration of prior consent to no more than seven 
consecutive days, which is the same time period to which the telephone 
call frequencies in Sec.  1006.14(b)(2)(i) apply. Specifically, final 
Sec.  1006.14(b)(3)(i) provides that telephone calls placed to a person 
do not count toward the Sec.  1006.14(b)(2)(i) telephone call 
frequencies if they are placed with such person's prior consent given 
directly to the debt collector and within a period no longer than seven 
consecutive days after receiving the prior consent.\455\ In addition, 
as explained in new comment 14(b)(3)(i)-2, a person's seven-
consecutive-day prior consent described in Sec.  1006.14(b)(3)(i) will 
expire sooner, if any of the following occurs prior to the conclusion 
of the seven-consecutive-day period: (1) The person consented to the 
additional telephone calls for a shorter time period and such time 
period has ended; (2) the person revokes such prior consent; or (3) the 
debt collector has a

[[Page 76820]]

telephone conversation with the person regarding the particular debt.
---------------------------------------------------------------------------

    \455\ The date the debt collector receives prior consent counts 
as the first day of the seven-consecutive-day period.
---------------------------------------------------------------------------

    In response to commenters' requests for clarification about what 
constitutes prior consent, the Bureau is amending proposed comment 
14(b)(3)(ii)-1, renumbered as comment 14(b)(3)(i)-1. The comment 
continues to refer to Sec.  1006.6(b)(4)(i) and its associated 
commentary for guidance about giving prior consent directly to a debt 
collector, but it also clarifies that nothing in Sec.  1006.14(b)(3)(i) 
regarding prior consent for telephone call frequencies permits a debt 
collector to communicate, or attempt to communicate, with a consumer as 
prohibited by Sec. Sec.  1006.6(b) and 1006.14(h).
    Industry commenters raised a variety of hypothetical scenarios and 
asked whether the consent exclusion would apply to specific fact 
patterns. The Bureau is revising proposed comment 14(b)(3)(ii)-2, 
renumbered as comment 14(b)(3)(i)-3.i through .iii, to address how the 
consent exclusion applies in a number of scenarios raised by 
commenters. For example, the Bureau is adding an illustrative example 
in comment 14(b)(3)(i)-3.iii that describes a situation in which a 
consumer provides prior consent to receive additional telephone calls 
by sending an email to the debt collector requesting additional 
information.
    Industry commenters also asked about how to document a consumer's 
prior consent. The Bureau declines to prescribe a specific manner in 
which debt collectors could document a consumer's prior consent. 
However, as discussed in the section-by-section analysis of Sec.  
1006.100(a), debt collectors must retain records created in the 
ordinary course of business that evidence compliance with the FDCPA and 
Regulation F, as well as records created in the ordinary course of 
business that evidence that the debt collector refrained from conduct 
prohibited by the FDCPA and the regulation.\456\
---------------------------------------------------------------------------

    \456\ See comment 100(a)-1 for examples of evidence a debt 
collector could retain. Comment 100(a)-2 explains that a debt 
collector need not create and maintain additional records, for the 
sole purpose of evidencing compliance, that the debt collector would 
not have created in the ordinary course of its business in the 
absence of the record retention requirement set forth in Sec.  
1006.100(a). Comment 100(a)-3 explains that records may be retained 
by any method that reproduces the records accurately (including 
computer programs) and that ensures that the debt collector can 
easily access the records (including a contractual right to access 
records possessed by another entity).
---------------------------------------------------------------------------

14(b)(3)(ii)
    Proposed Sec.  1006.14(b)(3)(iii) would have excluded from the 
frequency limits telephone calls that a debt collector places to a 
person that do not connect to the dialed number (e.g., that result in a 
busy signal or are placed to an out-of-service number).\457\ Proposed 
comments 14(b)(3)(iii)-1 and -2 provided examples of telephone calls 
that do and do not connect to the dialed number. For the reasons 
discussed below, the Bureau is finalizing the exclusion as proposed, 
but renumbered as Sec.  1006.14(b)(3)(ii) and with certain revisions to 
the proposed commentary.
---------------------------------------------------------------------------

    \457\ See 84 FR 23274, 23318 (May 21, 2019).
---------------------------------------------------------------------------

    Some industry commenters expressed support for the proposed 
exclusion for telephone calls that do not connect to the dialed number, 
and no commenters opposed the proposed exclusion. As described above, 
one industry commenter recommended that the Bureau place limits on the 
number of telephone calls permitted per day and per week under the 
Sec.  1006.14(b)(3) exclusions, while another industry commenter 
opposed such limits. Several industry commenters raised hypothetical 
questions regarding the operation of the proposed exclusion, such as 
whether it would cover telephone calls to a full voicemail, dropped 
telephone calls, telephone calls to a disconnected number, and 
forwarded telephone calls.
    The Bureau determines that a person is unlikely to know about, and 
is not harassed by, a debt collector's telephone call in response to 
which the debt collector receives a busy signal or a message indicating 
that the dialed number is not in service. Similarly, a debt collector 
who places several telephone calls to a person in response to which the 
debt collector receives a busy signal or out-of-service notification 
likely places additional telephone calls to the person in an effort to 
contact the person and not with the intent to annoy, abuse, or harass 
the person. For these reasons, the Bureau is finalizing the proposed 
exclusion for telephone calls that do not connect to the dialed number, 
without additional limits.
    The Bureau is finalizing proposed comment 14(b)(3)(iii)-1, with 
revisions and renumbered as comment 14(b)(3)(ii)-1, in response to a 
number of the hypothetical questions raised by commenters regarding the 
operation of the exclusion. With respect to such questions, the Bureau 
is addressing only the most likely scenarios, as follows. First, 
commenters asked about debt collectors placing telephone calls to a 
disconnected telephone number. As in the proposal, final comment 
14(b)(3)(ii)-1 covers such scenarios by explaining that a debt 
collector's telephone call does not connect to the dialed number if, 
for example, the debt collector receives a busy signal or an indication 
that the dialed number is not in service.
    Final comment 14(b)(3)(ii)-1 also clarifies a number of situations 
in which a telephone call connects to the dialed number. First, the 
comment specifies that a telephone call that is answered, even if it 
subsequently drops, has connected to the dialed number. The Bureau 
understands that dropped telephone calls pose unique challenges to debt 
collectors. Although such calls do not fit under the exclusion for 
telephone calls not connected to the dialed number, dropped calls may 
be addressed by other provisions in this final rule. For example, if a 
debt collector, at the outset of the telephone call, seeks consent to 
place additional telephone calls to a person if the telephone call 
disconnects, the telephone call placed by the debt collector following 
a disconnection would be excluded from the Sec.  1006.14(b)(2)(i) 
telephone call frequencies pursuant to the prior consent exclusion in 
final Sec.  1006.14(b)(3)(i). Moreover, if a debt collector does not 
seek consent, or the telephone call disconnects before a debt collector 
receives a person's prior consent, a debt collector who places another 
telephone call to the person shortly after the disconnection may be 
able to rebut the presumption of a violation under Sec.  
1006.14(b)(2)(ii), depending on the facts and circumstances surrounding 
the follow-up telephone call.\458\
---------------------------------------------------------------------------

    \458\ As discussed in the section-by-section analysis of Sec.  
1006.14(b)(2)(ii), one factor for rebutting the presumption of a 
violation as described in comment 14(b)(2)(ii)-2.iv is whether a 
debt collector placed a telephone call to convey information to the 
consumer that, as shown through evidence, would provide the consumer 
with an opportunity to avoid a demonstrably negative effect relating 
to the collection of the particular debt, where the negative effect 
was not in the debt collector's control, and where time was of the 
essence.
---------------------------------------------------------------------------

    Second, commenters presented variations of the scenario where a 
debt collector places a telephone call to a consumer and then hears 
nothing. In this scenario, if the telephone call is connected to the 
dialed number, even if the debt collector hears only silence, the 
telephone call does not meet the Sec.  1006.14(b)(3)(ii) exclusion 
criteria. If a debt collector is unsure whether the telephone call 
connected to the dialed number, the debt collector should treat the 
telephone call as connected to the dialed number and count the 
telephone call toward the Sec.  1006.14(b)(2)(i) frequencies.
    Lastly, final comment 14(b)(3)(ii)-1 clarifies that a debt 
collector's telephone

[[Page 76821]]

call connects to the dialed number if the telephone call is connected 
to a voicemail or other recorded message, even if the debt collector is 
unable to leave a voicemail. In situations where a debt collector is 
unable to leave a voicemail, the debt collector's telephone call may 
have caused the consumer's telephone to ring or may otherwise leave 
evidence of the telephone call. The same is not true of telephone calls 
that do not connect to the dialed number. The comment also specifies 
that a telephone call has connected to the dialed number if the 
telephone call is connected to a voicemail or other recorded message 
even if the call did not cause the telephone to ring.
    Based on feedback, another likely scenario involves a debt 
collector placing a telephone call that is forwarded to another 
telephone number. Although not clarified in commentary, the Bureau 
believes that, in this situation, the exclusion for unconnected 
telephone calls in final Sec.  1006.14(b)(3)(ii) would not apply 
because the forwarded telephone call is handled by the dialed number; 
thus, the telephone call connects to the dialed number.
14(b)(3)(iii)
    Proposed Sec.  1006.14(b)(3)(iv) would have excluded from the 
frequency limits telephone calls that a debt collector places to the 
consumer's attorney, a consumer reporting agency, the creditor, the 
creditor's attorney, or the debt collector's attorney (i.e., the 
persons described in proposed and final Sec.  1006.6(d)(1)(ii) through 
(vi)).\459\
---------------------------------------------------------------------------

    \459\ See 84 FR 23274, 23318 (May 21, 2019).
---------------------------------------------------------------------------

    As discussed in the proposal, debt collectors may have non-
harassing reasons for calling these persons more often than the Sec.  
1006.14(b)(2)(i) telephone call frequencies. For example, during 
litigation, a debt collector may need to speak frequently with its own 
attorneys, as well as with the creditor's or the consumer's attorneys. 
Telephone calls to these persons also are highly unlikely to have the 
natural consequence of harassing, oppressing, or abusing them for 
purposes of the FDCPA and final rule.
    A consumer advocate and industry commenter supported this proposed 
exclusion. As described above, one industry commenter recommended that 
the Bureau place limits on the number of telephone calls permitted per 
day and per week under the Sec.  1006.14(b)(3) exclusions, while 
another industry commenter opposed such limits. The Bureau concludes 
that additional limits are not necessary because these telephone calls 
are not placed by debt collectors with intent to annoy, abuse, or 
harass a person, and are highly unlikely to have the natural 
consequence of which is to harass, oppress, or abuse a person for 
purposes of the FDCPA and final rule. The Bureau therefore is 
finalizing proposed Sec.  1006.14(b)(3)(iv) with minor grammatical 
changes and renumbered as Sec.  1006.14(b)(3)(iii).
14(b)(4) Definition
    Proposed Sec.  1006.14(b)(5) would have defined the term particular 
debt for purposes of proposed Sec.  1006.14(b) to mean each of a 
consumer's debts in collection, except for student loan debts.\460\ 
With respect to student loan debts, the Bureau proposed the term 
particular debt to mean all debts that a consumer owes or allegedly 
owes that were serviced under a single account number at the time the 
debts were obtained by the debt collector. The Bureau also proposed to 
clarify how the telephone call frequency limits in proposed Sec.  
1006.14(b)(2) would apply when a consumer has multiple debts being 
collected by the same debt collector at the same time.\461\ For the 
reasons discussed below, the Bureau is finalizing proposed Sec.  
1006.14(b)(5) with one minor grammatical change and renumbered as Sec.  
1006.14(b)(4). The Bureau is also revising the proposed commentary and 
adding additional examples of the rule.
---------------------------------------------------------------------------

    \460\ See id. at 23320.
    \461\ The Bureau proposed this clarification because most 
consumers with at least one debt in collection have multiple debts 
in collection. See CFPB Debt Collection Consumer Survey, supra note 
16, at 13, table 1; see also Bureau of Consumer Fin. Prot., Consumer 
credit reports: A study of medical and non-medical collections, at 
20 (Dec. 2014), https://files.consumerfinance.gov/f/201412_cfpb_reports_consumer-credit-medical-and-non-medical-collections.pdf (CFPB Medical Debt Report) (reporting that most 
consumers with one collections tradeline have multiple collections 
tradelines).
---------------------------------------------------------------------------

Per-Debt Versus Per-Person Telephone Call Frequencies
    Industry commenters generally supported the proposed per-debt 
approach to telephone call frequencies. The Bureau received hundreds of 
comments from the credit and collections industry stating that a per-
debt approach is consistent with current debt collection practices and 
provides flexibility to use account-specific approaches and strategies 
for different types of debts, different account balances, and debts in 
different stages of collection. Some industry commenters explained that 
different clients have different data privacy requirements for the 
collection of their debts. Industry commenters warned that current 
system capabilities may not be able to support per-person telephone 
call frequencies because the systems are not set up to consolidate 
information about different debts owed by the same consumer, and any 
system changes would result in extensive reprogramming and training 
costs. Consumer and consumer advocate commenters argued that debt 
collectors' systems should be able to consolidate account information 
for each consumer, and that debt collectors should be able to identify 
all debts a consumer owes and discuss them at the same time to prevent 
harassment through excessive telephone calls placed to consumers with 
multiple debts in collection.
    Some industry commenters cautioned that, if the Bureau adopted a 
per-person approach to telephone call frequencies, debt collectors' 
calling practices would be too restricted when collecting on multiple 
debts owed by the same consumer. These industry commenters warned that 
the market would respond by selling different debts to different debt 
collectors or staging and prolonging debt collection--both outcomes 
that, they asserted, would harm consumers.
    On the other hand, consumer, consumer advocate, State Attorneys 
General, State legislator, and local government commenters, among 
others, generally urged the Bureau to adopt a per-person approach.\462\ 
Some commenters argued that the proposed per-debt approach permits an 
unreasonably high number of telephone calls and weakens the FDCPA's 
consumer protections. Citing data from the CFPB Debt Collection 
Consumer Survey showing that 75 percent of people with one debt in 
collection have multiple debts in collection,\463\ some of these 
commenters argued that the proposed per-debt approach would allow debt 
collectors to harass consumers with multiple debts by potentially 
placing hundreds of telephone calls per week. Some commenters 
identified the ineffectiveness of repeated telephone calls as another 
reason to adopt a per-person approach.\464\ A State Attorney

[[Page 76822]]

General commenter stated that debt collectors in a particular State 
that limits telephone call frequency to three telephone calls per week 
per consumer have not been hindered in their ability to collect debt 
responsibly. A number of commenters also argued that the consumer 
benefits of the proposed limit of one telephone conversation per week 
will become illusory with a per-debt approach because consumers with 
multiple debts in collection will continue to receive telephone calls 
about other debts from debt collectors.
---------------------------------------------------------------------------

    \462\ The Bureau also received a large number of comments from 
consumers advocating for a per-person approach.
    \463\ See CFPB Debt Collection Consumer Survey, supra note 16, 
at 13, table 1.
    \464\ One commenter supported this assertion by pointing to a 
pilot program focused on servicing defaulted student loans where the 
Bureau of the Fiscal Service at the U.S. Department of the Treasury 
placed more than 21,000 telephone calls in an attempt to initiate a 
dialogue regarding the borrower's debt. Borrowers answered the 
telephone calls less than 2 percent of the time. U.S. Dep't of 
Treasury, Report on Initial Observations from the Fiscal-Federal 
Student Aid Pilot for Servicing Defaulted Student Loan Debt, at 3 
(July 2016), https://www.treasury.gov/connect/blog/Documents/student-loan-pilot-report-july-2016.pdf.
---------------------------------------------------------------------------

    Some industry commenters believed that consumers would be 
overwhelmed and confused if, under a per-person approach, debt 
collectors were forced to discuss multiple debts in a single telephone 
call with a consumer. Consumer and consumer advocate commenters, among 
others, rejected this assertion, arguing instead that the proposed per-
debt approach would overwhelm consumers financially and emotionally. 
Specifically, these commenters predicted that the proposed per-debt 
approach would cause an increased use of mobile telephone minutes and 
data; result in emotional harms such as chronic stress, shame, and 
anxiety; and manifest physically in the form of stress to the immune 
system and elevated blood pressure.
    The Bureau understands that, if a consumer has multiple debts in 
collection, either from one creditor or from multiple creditors, 
sometimes a single debt collector will attempt to collect some or all 
of them. Debt collectors in this situation typically make distinct 
efforts to collect each debt rather than, for example, asking the 
consumer about all debts during a single telephone call. Although some 
commenters argued that addressing all debts in one telephone call could 
be more consumer-protective and decrease telephone call frequency, 
there are legitimate reasons why debt collectors segregate debts. For 
example, larger debt collectors often collect multiple debts owed by 
the same consumer to different creditors, and many creditors require 
these debt collectors to work each account separately (e.g., a large 
collection firm may have a dedicated group of collectors exclusively 
working a particular credit card brand). Creditors impose these 
requirements, among other reasons, to direct and monitor more closely 
the activities and legal compliance of debt collectors working their 
accounts to avoid reputational harm to themselves. A consumer's debts 
also may enter collection at different times and thus be at different 
stages of the collections process, such that the different debts may be 
eligible for different types of settlement offers. The Bureau also 
recognizes that some consumers may not be able or prepared to discuss 
more than one debt during a single telephone call or may find it 
overwhelming, confusing, or simply too time consuming to discuss 
multiple debts, with different terms and offers, during a single 
telephone call. Debt collection conversations could become even more 
complicated if, for example, a consumer wanted to dispute one or some, 
but not all, of the debts.
    As discussed in the proposal, the Bureau considered proposing a 
per-person approach to the telephone call frequencies, but was 
concerned that creditors could sidestep a per-person limit by placing 
debts with debt collectors who collect for only one or a limited number 
of creditors or by assigning only a single debt to any one debt 
collector; or that debt collectors could sequence collection of a 
consumer's debts, thereby prolonging the collections process for some 
debts. Industry commenters affirmed the likelihood of these outcomes if 
the Bureau were to adopt a per-person approach. So, while technology 
that would enable debt collectors to consolidate information about 
different debts owed by the same consumer, including across different 
creditor-clients, may exist, a per-person approach may not actually 
alter the overall telephone call frequency experienced by consumers who 
have multiple debts in collection and may raise other concerns. For 
this reason, the Bureau declines to adopt a per-consumer approach and 
is finalizing the per-debt approach as proposed.
Aggregating Student Loan Debts
    As noted, the Bureau proposed the term particular debt to mean, for 
student loan debts, all debts that a consumer owes or allegedly owes 
that were serviced under a single account number at the time the debts 
were obtained by the debt collector.
    One industry commenter specifically supported this proposal and 
also recommended that the Bureau adopt the same rule for all debts that 
are aggregated by a creditor and serviced under a single account-number 
before assignment to a debt collector. The Bureau declines to do so 
because the Bureau understands that debts other than student loan debts 
are often not serviced under the same account number, and therefore 
such an approach would provide little consumer benefit.
    Other industry commenters generally urged the Bureau to adopt a 
per-debt rule for all debts, including student loan debts. These 
commenters argued that all debt types should be treated the same in 
order to not confuse the consumer and to ensure that the debt collector 
can adequately provide accurate information to the consumer. They 
stated that because most debtors have more than one debt in collection, 
aggregating certain debts but not others will cause confusion, and that 
during some conversations with a debt collector, a consumer will need 
to distinguish between multiple debts. The Bureau also declines to 
adopt this approach. With respect to the collection of multiple student 
loan debts that were serviced under a single account number at the time 
the debts were obtained by a debt collector, the debt collector and 
consumer generally interact as if there were only a single debt. 
Multiple student loan debts are often serviced under a single account 
number and billed on a single, combined account statement; have a 
single total amount due; and require a single payment from the 
consumer. As a result, many consumers already experience multiple 
student loan debts as a single debt, and the Bureau concludes that 
adopting such an approach in the final rule is unlikely to confuse 
consumers or cause consumers to get inaccurate information.
    Some industry commenters also cautioned that the proposal to 
aggregate student loans could be problematic for a debt collector who 
is collecting on both Federal and private student loan debt. For 
example, the commenters noted that current regulations governing loans 
held by the Department of Education prohibit the sharing of information 
with any other debt collector database as well as the sharing of 
information with other debt collectors who may be attempting to contact 
the borrower. The commenters also explained that it would be unworkable 
for debt collectors to combine student loans that were originated with 
different lenders, and have different loan agreements, loan types, 
origination dates, fees, interest rates, and default dates. The Bureau 
believes that these commenters may have misunderstood the proposal. 
Because Federal and private student loans, and loans originated by 
different lenders, would not be serviced under the same account number 
at the time the debts were obtained by a debt collector, a debt 
collector would not be required to treat

[[Page 76823]]

those student loan debts as a single debt.
    Some commenters stated that the proposed approach was open to abuse 
by the industry. These commenters were concerned that lenders and 
servicers would assign different account numbers to student loan debts 
to prevent aggregation if the student loan debts were to end up in 
collection later on. One commenter suggested instead that the Bureau 
measure telephone call frequency by accounts as that term is described 
for purposes of the student loan servicing market in Sec.  1090.106 of 
the Defining Larger Participants of Certain Consumer Financial Product 
and Service Markets regulation (Larger Participant Rule), rather than 
by particular debt.\465\
---------------------------------------------------------------------------

    \465\ Section 1090.106 describes an individual account as one 
where a financial institution is serving a specific borrower for a 
specific stream of fees from a creditor.
---------------------------------------------------------------------------

    The Bureau believes that it is unlikely that its proposed approach 
will be exploited in the ways these commenters described. Whether a 
debt collector is required to aggregate student loan debts depends on 
whether the servicer serviced the student loans under the same account 
number at the time they were obtained by a debt collector. Servicers 
have little incentive to incur the cost of replacing their efficient 
practice of servicing multiple student loan debts under a single 
account number and billing such debts on a single, combined account 
statement that has a single total amount due and requires a single 
payment from the consumer, with the less efficient practice of billing 
each student loan debt individually, just so a possible future debt 
collector could place telephone calls in accordance with the Sec.  
1006.14(b)(2)(i) telephone call frequencies with respect to each 
individual student loan debt. In addition, the Bureau declines to use 
accounts as that term is described in Sec.  1090.106 of the Larger 
Participant Rule. In the Larger Participant Rule, an individual account 
is one for which a financial institution is serving a specific borrower 
for a specific stream of fees from a creditor. As discussed in the 
preamble to the Larger Participant Rule, if a servicer is paid one fee 
by a lender for servicing both Federally insured loans and private 
education loans for a particular student, there would only be one 
account for the borrower for purposes of determining whether the 
servicer is considered a larger participant of the student loan 
servicing market.\466\ If implemented as described in the Larger 
Participant Rule, such an approach could require certain debt 
collectors to aggregate Federal and private student loan debt 
information, which, as commenters noted, may be prohibited by Federal 
law.
---------------------------------------------------------------------------

    \466\ 78 FR 73383, 73388 (Dec. 6, 2013).
---------------------------------------------------------------------------

    Other commenters suggested that, instead of aggregating one type of 
debt, the Bureau should lower the telephone call frequencies and apply 
such frequencies on a per-person basis. As discussed in the section-by-
section analysis of Sec.  1006.14(b)(2), the Bureau is not finalizing 
the proposed telephone call frequency limits. Instead, the Bureau is 
finalizing a rebuttable-presumption approach to telephone call 
frequencies. The rebuttable-presumption approach contemplates that 
there may be circumstances in which telephone call frequencies below 
the limits proposed in Sec.  1006.14(b)(2) may violate Sec.  
1006.14(b)(1) and FDCPA section 806(5).\467\
---------------------------------------------------------------------------

    \467\ See the section-by-section analysis of Sec.  1006.14(b)(2) 
for a more thorough discussion of the telephone call frequencies.
---------------------------------------------------------------------------

    For all these reasons, the Bureau is finalizing the proposed 
approach to aggregate student loan debts serviced under a single 
account number at the time the debts were obtained by a debt collector.
Aggregating Medical Debts
    Commenters, including consumer advocate commenters, expressed 
concern about potential excessive telephone call volume with respect to 
the collection of medical debts specifically. One commenter explained 
that it is not uncommon for a single medical appointment to result in 
bills from multiple providers, each of which could end up in 
collections if the patient is unable to pay. The commenter stated that 
the per-debt approach to telephone call frequencies would increase the 
likelihood that a single medical emergency would result in dozens of 
telephone calls each week, which the Bureau has recognized has a 
deleterious effect on consumer well-being. Commenters often cited a 
fact pattern in which a debt collector places 56 telephone calls to an 
alleged debtor in a week because the debt collector is collecting on 
eight medical debts stemming from the same medical incident. However, 
these commenters generally did not advocate for aggregation of medical 
debt. Instead, they advocated for a per-person approach to telephone 
call frequencies for all debt.
    Some industry commenters asserted that healthcare providers do not 
typically maintain a rolling total of charges for a general service and 
instead individually bill each visit, which is further itemized by each 
provider, facility, and service performed or good provided. The 
commenters explained that a consumer's medical debt from one creditor 
may have numerous unique account numbers. Another industry commenter 
identified the need to maintain compliance with State and Federal 
medical privacy laws, although the commenter did not identify specific 
challenges that the proposal or alternatives would create.
    According to the CFPB Debt Collection Consumer Survey, medical debt 
is the most common type of past-due bill or payment for which consumers 
reported debt collectors contacted them. More than half of consumers 
who said they were contacted about a debt in collection noted that it 
was related to medical debt.\468\ The Bureau recognizes that consumers 
do not have control over how medical debt is billed to them and 
acknowledges that, under current medical debt billing practices, one 
medical event can result in multiple debts for a consumer.
---------------------------------------------------------------------------

    \468\ See CFPB Debt Collection Consumer Survey, supra note 16, 
at 21, figure 2.
---------------------------------------------------------------------------

    However, the Bureau also recognizes that there are significant 
operational challenges with aggregating medical debt. As discussed 
above, the Bureau has identified concerns with implementing a per-
person approach to the Sec.  1006.14(b)(2)(i) telephone call 
frequencies generally. In addition, in contrast to some student loans, 
medical debts from one creditor may have numerous unique account 
numbers. Therefore, the Bureau declines to aggregate medical debts by 
account number for purposes of the telephone call frequencies in Sec.  
1006.14(b)(2)(i). However, as discussed below, the Bureau is committed 
to monitoring this issue closely after the final rule is implemented 
and, if necessary, will reconsider how the Sec.  1006.14(b)(2)(i) 
telephone call frequencies apply to medical debts.
    The Bureau also emphasizes that consumers can control when, how, 
and even if debt collectors can contact them. Section 1006.6(b)(1) 
prohibits a debt collector from, among other things, 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 addition, Sec.  
1006.14(h)(1) provides that, in connection with the collection of any 
debt, a debt collector must not

[[Page 76824]]

communicate or attempt to communicate with a person through a medium of 
communication, including telephone calls, if the person has requested 
that the debt collector not use that medium to communicate with the 
person. A consumer may also notify a debt collector in writing that the 
consumer wants the debt collector to cease further communication with 
the consumer with respect to a debt, and pursuant to Sec.  
1006.6(c)(1), a debt collector must not communicate or attempt to 
communicate further with the consumer with respect to that debt.
    For the reasons discussed above, the Bureau is renumbering Sec.  
1006.14(b)(5) as Sec.  1006.14(b)(4) and finalizing it generally as 
proposed. The Bureau is making one minor grammatical amendment. 
Specifically, the Bureau is replacing the article ``the'' preceding the 
phrase ``debt collector'' with ``a'' to account for circumstances in 
which a debt collector collecting student loan debts is not the same 
debt collector that obtained such debts from the entity servicing the 
student loans. Final Sec.  1006.14(b)(4) thus provides that the term 
particular debt means each of a consumer's debts in collection, except 
that, in the case of student loan debts, the term means all student 
loan debts that a consumer owes or allegedly owes that were serviced 
under a single account number at the time the debts were obtained by a 
debt collector. The Bureau expects to monitor the market in response to 
the final rule. If substantial evidence develops that debt collectors 
who are placing telephone calls in compliance with the per-debt 
telephone call frequencies are nonetheless harassing consumers, the 
Bureau could potentially revisit the per-debt approach to telephone 
call frequencies for all or certain types of debts, such as medical 
debts, in a future rulemaking.
    The Bureau also is revising commentary to proposed Sec.  
1006.14(b)(5) in response to requests for clarification from several 
industry commenters. Some of these commenters asked whether particular 
types of calls would count toward the proposed telephone calling 
limits, while others asked how to aggregate or otherwise count such 
calls. A number of commenters offered suggestions for resolving such 
hypotheticals while others did not.
    In response to commenters' questions, the Bureau is amending 
proposed comment 14(b)(5)-1, renumbered as comment 14(b)(4)-1, to 
include additional examples to illustrate the rule. The Bureau also is 
adding comments 14(b)(4)-1.i and .ii to explain if a debt collector has 
placed a telephone call for purposes of counting the telephone call 
frequency under Sec.  1006.14(b)(2)(i)(A) and if a debt collector has 
engaged in a telephone conversation for purposes of determining whether 
subsequent telephone calls meet the telephone call frequency under 
Sec.  1006.14(b)(2)(i)(B).
    As provided in comment 14(b)(4)-1.i, if a debt collector places a 
telephone call to a person and initiates a conversation or leaves a 
voicemail about one particular debt, the debt collector counts the 
telephone call as a telephone call in connection with the collection of 
the particular debt, subject to the exclusions in Sec.  1006.14(b)(3). 
If a debt collector places a telephone call to a person and initiates a 
conversation or leaves a voicemail about more than one particular debt, 
the debt collector counts the telephone call as a telephone call in 
connection with the collection of each such particular debt, subject to 
the exclusions in Sec.  1006.14(b)(3). If a debt collector places a 
telephone call to a person but neither initiates a conversation about a 
particular debt nor leaves a voicemail that refers to a particular 
debt, or if the debt collector's telephone call is unanswered, the debt 
collector counts the telephone call as a telephone call in connection 
with the collection of at least one particular debt, unless an 
exclusion in Sec.  1006.14(b)(3) applies.
    As provided in comment 14(b)(4)-1.ii, if a debt collector and a 
person discuss one particular debt during a telephone conversation, the 
debt collector has engaged in a telephone conversation in connection 
with the collection of the particular debt, regardless of which party 
initiated the discussion about the particular debt, subject to the 
exclusions in Sec.  1006.14(b)(3). If a debt collector and a person 
discuss more than one particular debt during a telephone conversation, 
the debt collector has engaged in a telephone conversation in 
connection with the collection of each such particular debt, regardless 
of which party initiated the discussion about the particular debts, 
subject to the exclusions in Sec.  1006.14(b)(3). If no particular debt 
is discussed during a telephone conversation between a debt collector 
and a person, the debt collector counts the conversation as a telephone 
conversation in connection with the collection of at least one 
particular debt, unless an exclusion in Sec.  1006.14(b)(3) applies.
    Final comment 14(b)(4)-2 provides examples of the rules for 
counting telephone calls under various scenarios.
14(h) Prohibited Communication Media \469\
---------------------------------------------------------------------------

    \469\ As noted above, Sec.  1006.14(c) through (g) generally 
mirror the statute, with minor wording and organizational changes 
for clarity and therefore are not further discussed in this section-
by-section analysis.
---------------------------------------------------------------------------

14(h)(1) In General
    The Bureau proposed Sec.  1006.14(h)(1) to prohibit a debt 
collector from communicating or attempting to communicate with a 
consumer through a medium of communication if the consumer has 
requested that the debt collector not use that medium to communicate 
with the consumer.\470\ Pursuant to its authority under FDCPA section 
814(d) to write rules with respect to the collection of debts by debt 
collectors, the Bureau proposed Sec.  1006.14(h)(1) as an 
interpretation of FDCPA section 806, which prohibits a debt collector 
from engaging in any conduct the natural consequence of which is to 
harass, oppress, or abuse any person in connection with the collection 
of a debt. For the reasons discussed below, the Bureau is adopting this 
proposed interpretation and finalizing Sec.  1006.14(h)(1) largely as 
proposed, while revising it to apply to a ``person,'' as defined under 
Sec.  1006.2(k).
---------------------------------------------------------------------------

    \470\ 84 FR 23274, 23321-22 (May 21, 2019).
---------------------------------------------------------------------------

    Consumer commenters supported the proposal to permit a consumer to 
limit the communication media used by a debt collector, and consumer 
advocate, government, and industry commenters generally supported 
proposed Sec.  1006.14(h)(1) as offering consumers more control over 
communications received from debt collectors.
    Consumer advocates agreed that a debt collector should be required 
to stop calling specific telephone numbers and sending email, text 
messages, or other electronic communications upon the consumer's 
request. Describing proposed Sec.  1006.14(h)(1) as a critical consumer 
protection, one consumer advocate stated that clarifying this right 
under the FDCPA will ensure that consumers are not harassed while also 
allowing them to communicate with debt collectors without requesting 
that the debt collector stop all communication, thus preventing 
unnecessary debt collection lawsuits from being filed. Consumer 
advocates also stated that the Bureau's interpretation is consistent 
with FDCPA section 806, specifically FDCPA section 806(5) where some 
courts have found consumers stated a claim for violations of the FDCPA 
when debt collectors continued to call after being asked to stop. Other 
consumer advocates

[[Page 76825]]

suggested that consumers would benefit greatly from being able to 
specify contact through various communications media, allowing 
consumers the ability to stop telephone calls, for example, or other 
types of communication without stopping all communications.
    A group of State Attorneys General agreed that consumers should be 
able to put any limitations on the use of new technology that they 
desire, and that, because consumers already have an absolute right to 
demand that debt collection communications cease, they should have the 
right to place any lesser limitations on communication, such as 
limitations on medium or frequency of communication. Additionally, one 
academic commenter explained that people are sensitive to communication 
methods and that, even when internet access is reliable, many people 
may prefer to communicate in person, by telephone, or by letter, 
including some people with mental illness, who may struggle with 
electronic communication due to confusion about how to use it or 
concerns about safety and privacy.
    A number of industry commenters generally agreed with proposed 
Sec.  1006.14(h)(1) on the basis that consumer requests must be 
respected when it comes to their preferred methods of communication. 
One industry commenter stated that the proposal would allow a debt 
collector to communicate with a consumer while also providing adequate 
consumer safeguards by prohibiting the debt collector from 
communicating with the consumer through communication media that the 
consumer requested the debt collector not use. And one trade group 
commenter supported proposed Sec.  1006.14(h)(1) and agreed it is 
consistent with FDCPA section 806.
    Some industry commenters opposed the proposal in Sec.  
1006.14(h)(1) as needlessly restrictive and difficult to implement and 
stated that it would offer few, if any, countervailing consumer 
benefits. One industry commenter stated that proposed Sec.  
1006.14(h)(1) would limit a debt collector on how best to communicate 
with consumers who may have a preference of one communication method 
over another. One trade group commenter suggested that proposed Sec.  
1006.14(h)(1) impermissibly expands the scope of the FDCPA.
    The Bureau determines that Sec.  1006.14(h)(1) affords various 
consumer benefits and protections. Since the enactment of the FDCPA, 
the possible media through which communications generally are conducted 
has expanded beyond telephone, mail, and in-person conversations to 
include various mobile and portable technologies that were not 
contemplated in 1977. For example, with the advent of the mobile 
telephone, a person may receive a telephone call at any time or place. 
As the Bureau's Consumer Survey indicated, consumers have varied but 
strong preferences about the media that debt collectors use to 
communicate with them.\471\ Once a person has requested that a debt 
collector not use a specific medium of communication to communicate 
with that person, the Bureau believes that the natural consequence of 
further communications or attempts to communicate from the debt 
collector to that person using that same medium likely is harassment, 
oppression, or abuse of that person. Consistent with this 
interpretation, the Bureau understands that some debt collectors 
currently refrain from communicating with a person through a medium 
that the person has requested the debt collector not use to communicate 
with that person, including, for example, specific telephone numbers 
that a person has asked the debt collector not to call.
---------------------------------------------------------------------------

    \471\ See CFPB Debt Collection Consumer Survey, supra note 16, 
at 36-37.
---------------------------------------------------------------------------

    Accordingly, the Bureau is finalizing Sec.  1006.14(h)(1) as 
proposed and revising it to apply to a ``person.'' Consistent with its 
authority under FDCPA section 814(d) to write rules with respect to the 
collection of debts by debt collectors, and because the Bureau is 
adopting Sec.  1006.14(h)(1) as an interpretation of FDCPA section 806, 
which prohibits a debt collector from engaging in any conduct the 
natural consequence of which is to harass, oppress, or abuse ``any 
person'' in connection with the collection of a debt, the Bureau is 
finalizing Sec.  1006.14(h)(1) to apply to a person, as defined under 
Sec.  1006.2(k), and not to limit it as proposed to a consumer as 
defined under Sec.  1006.6(a).
    One consumer advocate suggested that the rule should provide that a 
consumer's demand to stop any one communication medium should stop all 
communications, unless the consumer affirmatively specifies otherwise, 
while a group of consumer advocates similarly suggested that one opt-
out request (e.g., in response to an email) be applied to all types of 
communications from the creditor, debt collector, and debt buyer for a 
given debt. Two industry commenters, on the other hand, requested that 
the Bureau clarify that a consumer's request to no longer receive 
communications through one medium is not to be treated as a blanket 
cease communication request for purposes of Sec.  1006.6(c).
    In response to commenters' requests, the Bureau notes that, as 
discussed in the section-by-section analysis of Sec.  1006.6(c), FDCPA 
section 805(c), as implemented by Sec.  1006.6(c), provides that, 
subject to certain exceptions, if a consumer notifies a debt collector 
in writing that the consumer refuses to pay a debt or that the consumer 
wishes the debt collector to cease further communication with the 
consumer, the debt collector shall not communicate further with the 
consumer with respect to such debt.\472\ Separately, the Bureau is 
finalizing Sec.  1006.14(h)(1) as an interpretation of FDCPA section 
806, which, in relevant part, prohibits a debt collector from engaging 
in any conduct the natural consequence of which is to harass, oppress, 
or abuse any person in connection with the collection of a debt.\473\ 
Therefore, whereas Sec.  1006.6(c)(1) would prohibit a debt collector, 
subject to certain exceptions, from all further communications or 
attempts to communicate with a consumer regarding a particular debt, 
Sec.  1006.14(h)(1) would prohibit a debt collector from communications 
or attempts to communicate with a person through a medium of 
communication that the person has requested the debt collector not use 
to communicate with the person for all debts. Although these provisions 
are distinct in their reliance on separate FDCPA authorities (FDCPA 
sections 805(c) versus 806), in principle they are similar in that they 
both afford an individual greater control over the communications 
received from a debt collector. However, final Sec.  1006.14(h)(1) is 
narrower than final Sec.  1006.6(c)(1) in that, depending on the 
request by the person, final Sec.  1006.14(h)(1) prohibits a debt 
collector from communicating or attempting to communicate with that 
person only through a specific communication medium or media and does 
not constitute a broader communication restriction, whereas final Sec.  
1006.6(c)(1) prohibits a debt collector from all further communications 
or attempts to communicate with a consumer.
---------------------------------------------------------------------------

    \472\ See 15 U.S.C. 1692c(c). See the section-by-section 
analysis of Sec.  1006.6(c) for additional discussion.
    \473\ See 15 U.S.C. 1692d.
---------------------------------------------------------------------------

    One industry commenter requested that the Bureau adopt a safe 
harbor for up to seven days to allow a debt collector's systems 
reasonable time to update a consumer request pursuant to proposed Sec.  
1006.14(h)(1). For reasons similar to those discussed in the section-
by-section analysis of

[[Page 76826]]

Sec.  1006.6(c)(1), this final rule does not specify the period of time 
afforded a debt collector to update its systems to reflect a person's 
request under Sec.  1006.14(h)(1). However, depending upon the 
circumstances, FDCPA section 813(c)'s bona fide error defense to civil 
liability may apply where, notwithstanding the maintenance of 
procedures reasonably adapted to avoid any such error, a debt collector 
communicates or attempts to communicate with a person through a medium 
of communication after the person has requested that the debt collector 
not use that medium but before the debt collector has implemented the 
person's request.\474\
---------------------------------------------------------------------------

    \474\ See the section-by-section analysis of Sec.  1006.6(c)(1).
---------------------------------------------------------------------------

    A group of consumer advocates stated that the Bureau should require 
all consumer requests to stop a debt collector's communications through 
a particular medium be noted in the debt collector's file and 
transferred to the creditor or a subsequent debt collector, and in 
turn, should provide that future debt collectors would be obligated to 
honor the consumer's request. Similarly, one local government commenter 
requested that the Bureau require a debt collector selling or otherwise 
transferring a debt to another debt collector to share any instructions 
by the consumer opting out of any medium of communication. One trade 
group commenter suggested that, if a consumer requested a previous debt 
collector not use a particular medium, the subsequent debt collector 
should be granted a safe harbor until the consumer communicates that 
preference.
    The proposal would not have required a debt collector to transfer 
such information to a creditor or subsequent debt collector, and 
neither does this final rule.\475\ A debt collector thus would not be 
bound by a request that a person had submitted to a prior debt 
collector under Sec.  1006.14(h). While this approach may require a 
person to again request that a medium of communication not be used if 
an account is transferred from one debt collector to another, the 
Bureau believes that, as described in the section-by-section analysis 
of Sec.  1006.6(e), a person who objects to one debt collector's use of 
a medium of communication might not object to another debt collector's 
use of that same medium.
---------------------------------------------------------------------------

    \475\ See the section-by-section analysis of Sec.  1006.6(b)(1).
---------------------------------------------------------------------------

    A group of consumer advocates requested that the Bureau address how 
consumers will learn of their right to ask debt collectors not to use 
certain communication media, suggesting that the Bureau require debt 
collectors to orally notify consumers in each debt collection call 
about the right to opt out of receiving telephone calls. Similarly, one 
local government commenter stated the Bureau should ensure that debt 
collectors clearly and conspicuously convey to consumers that they have 
the option to not only opt out of electronic communications, but that 
they can choose not to receive any telephone calls or telephone calls 
to a particular number.
    The Bureau determines that consumers, without additional 
disclosures, currently make such requests of debt collectors and will 
likely continue to do so. In addition, the procedures in Sec.  
1006.6(e) require a debt collector to disclose to a consumer the 
ability to opt out of electronic communications to a particular email 
address, telephone number, or other electronic-medium address. 
Accordingly, the Bureau declines to include an additional disclosure 
requirement related to Sec.  1006.14(h).
    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.14(h)(1) to provide that, in connection with the collection of any 
debt, a debt collector must not communicate or attempt to communicate 
with a person through a medium of communication if the person has 
requested that the debt collector not use that medium to communicate 
with the person.
    The Bureau also proposed commentary to Sec.  1006.14(h)(1). 
Proposed comment 14(h)(1)-1 referred to comment 2(d)-1 for examples of 
communication media. The Bureau received no comments on proposed 
comment 14(h)(1)-1 and is finalizing it largely as proposed, with 
certain revisions to include, similar to comment 6(b)(1)-1, that a debt 
collector may ask follow-up questions regarding preferred communication 
media to clarify statements by the person.
    Proposed comment 14(h)(1)-2 clarified that, within a medium of 
communication, a consumer may request that a debt collector not use a 
specific address or telephone number and provided an example. The 
Bureau received no comments on proposed comment 14(h)(1)-2 and is 
finalizing it largely as proposed, with certain revisions consistent 
with Sec.  1006.14(h)(1).
    Commenters requested clarification with respect to how a person may 
invoke the protections that would be afforded under proposed Sec.  
1006.14(h)(1). A number of consumer advocates requested that the Bureau 
clarify that a request pursuant to Sec.  1006.14(h)(1) may be made 
using any reasonable method, for example orally, whereas two industry 
commenters asked the Bureau to require that the request must be made in 
writing. The Bureau declines to adopt a writing requirement. While 
FDCPA section 805(c), as implemented by Sec.  1006.6(c), requires a 
consumer to notify a debt collector in writing, that provision applies 
only if a consumer wishes a debt collector to cease all communication; 
the Bureau concludes that a similar writing requirement is not 
necessary or warranted in the context of Sec.  1006.14(h)(1), which 
provides a person with the opportunity to make a narrower request 
regarding communication media. As discussed in the section-by-section 
analysis of Sec.  1006.6(c)(1), the Bureau declines to extend Sec.  
1006.6(c)(1) to oral requests but does clarify that, depending on the 
facts and circumstances, a consumer's oral request to, for example, 
``stop calling'' would constitute a request that the debt collector not 
use that medium of communication (e.g., telephone calls) to communicate 
with the consumer, and consistent with Sec.  1006.14(h)(1), the debt 
collector would thereafter be prohibited from placing telephone calls 
to the consumer.\476\ The Bureau is adopting new comment 14(h)(1)-3.i 
to provide an example illustrating this aspect of the rule.
---------------------------------------------------------------------------

    \476\ See the section-by-section analysis of Sec.  1006.6(c)(1).
---------------------------------------------------------------------------

    Additionally, the Bureau is adopting new comment 14(h)(1)-3.ii to 
provide an example illustrating a consumer's request to opt out in 
response to receipt of either the opt-out procedures described in final 
Sec.  1006.6(d)(4)(ii) or the opt-out notice in final Sec.  1006.6(e). 
Assuming that, in response to receipt of either the opt-out notice 
described in Sec.  1006.6(d)(4)(ii) or the opt-out instructions in 
Sec.  1006.6(e), a consumer requests to opt out of receiving electronic 
communications from a debt collector at a particular email address or 
telephone number, comment 14(h)(1)-3.ii clarifies that the consumer has 
requested that the debt collector not use that email address or 
telephone number to electronically communicate with the consumer for 
any debt. Thereafter, Sec.  1006.14(h)(1) prohibits the debt collector 
from electronically communicating or attempting to communicate with the 
consumer through that email address or telephone number.
14(h)(2) Exceptions
    The Bureau proposed Sec.  1006.14(h)(2) to provide two exceptions 
to the general

[[Page 76827]]

prohibition in proposed Sec.  1006.14(h)(1). Specifically, proposed 
Sec.  1006.14(h)(2)(i) provided that, notwithstanding the prohibition 
in Sec.  1006.14(h)(1), if a consumer opts out in writing of receiving 
electronic communications from a debt collector, a debt collector may 
reply once to confirm the consumer's request to opt out, provided that 
the reply contains no information other than a statement confirming the 
consumer's request. And proposed Sec.  1006.14(h)(2)(ii) provided that, 
if a consumer initiates contact with a debt collector using an address 
or a telephone number that the consumer previously requested the debt 
collector not use, the debt collector may respond once to that 
consumer-initiated communication. The Bureau proposed Sec.  
1006.14(h)(2) because a single communication from a debt collector of 
the types described likely would not have the natural consequence of 
harassing, oppressing, or abusing the consumer within the meaning of 
FDCPA section 806.\477\ One industry commenter supported the two 
proposed exceptions as helpful to both consumers and debt collectors 
and described them as designed to facilitate communications that are 
reasonable under the circumstances. For the reasons discussed below, 
the Bureau is finalizing Sec.  1006.14(h)(2)(i) and (ii) as proposed, 
with certain clarifications, and, in response to comments, is adopting 
an additional exception under Sec.  1006.14(h)(2)(iii) for legally 
required communication media.
---------------------------------------------------------------------------

    \477\ Proposed Sec.  1006.14(h)(2) also is consistent with the 
regulations implementing the CAN-SPAM Act, which permit senders to 
send a reply electronic message. See 16 CFR 316.5.
---------------------------------------------------------------------------

14(h)(2)(i)
    Proposed Sec.  1006.14(h)(2)(i) provided that, notwithstanding the 
prohibition in Sec.  1006.14(h)(1), if a consumer opts out in writing 
of receiving electronic communications from a debt collector, a debt 
collector may reply once to confirm the consumer's request to opt out, 
provided that the reply contains no information other than a statement 
confirming the consumer's request. One industry commenter explained 
that it is fairly common for businesses to send a consumer who opts out 
of email communication a confirmation message to indicate that the 
consumer's request has been honored; the commenter stated that debt 
collectors should be able to continue this practice. Other industry 
commenters requested that the Bureau clarify the reference to a 
consumer's written opt-out request in proposed Sec.  1006.14(h)(1)(i), 
given that proposed Sec.  1006.14(h)(1) does not contain a writing 
requirement. A group of consumer advocates requested that, in order to 
protect consumers who have opted out of a workplace communication 
medium, the Bureau clarify that the exception under proposed Sec.  
1006.14(h)(2)(i) does not apply if a debt collector knows or should 
know that the written opt-out request came from a workplace-provided 
communication channel, such as an employer-provided email address.\478\
---------------------------------------------------------------------------

    \478\ For special rules regarding employer-provided email 
addresses, see Sec.  1006.22(f)(3) and its associated commentary.
---------------------------------------------------------------------------

    In response to these comments, the Bureau is finalizing Sec.  
1006.14(h)(2)(i) as proposed, with certain clarifications and revisions 
consistent with final Sec.  1006.14(h)(1). The Bureau is striking the 
reference to ``in writing'' to clarify that a person's request to opt 
out of receiving electronic communications from a debt collector need 
not be in writing.\479\ Relatedly, consistent with the permission for a 
debt collector to reply once, a debt collector may send an electronic 
confirmation of the person's request to opt out. The Bureau believes 
that a single electronic communication from a debt collector to confirm 
a person's request to opt out of receiving electronic communications 
from a debt collector likely would not have the natural consequence of 
harassing, oppressing, or abusing the person within the meaning of 
FDCPA section 806. As finalized, Sec.  1006.14(h)(2)(i) also provides 
that the electronic confirmation may state that the debt collector will 
honor the person's request. Accordingly, final Sec.  1006.14(h)(2)(i) 
provides that, notwithstanding the prohibition in Sec.  1006.14(h)(1), 
if a person opts out of receiving electronic communications from a debt 
collector, a debt collector may send an electronic confirmation of the 
person's request to opt out, provided that the electronic confirmation 
contains no information other than a statement confirming the person's 
request and that the debt collector will honor it.
---------------------------------------------------------------------------

    \479\ As discussed in the section-by-section analysis of Sec.  
1006.6(e), the final rule requires a debt collector to provide, in 
each electronic communication, a clear and conspicuous statement 
describing a reasonable and simple method by which the consumer can 
opt out of further electronic communications or attempts to 
communicate by the debt collector to that address or telephone 
number. Nothing in Sec.  1006.6(e) prohibits a debt collector from 
accepting an opt-out request made orally.
---------------------------------------------------------------------------

14(h)(2)(ii)
    Proposed Sec.  1006.14(h)(2)(ii) provided that, if a consumer 
initiates contact with a debt collector using an address or a telephone 
number that the consumer previously requested the debt collector not 
use, the debt collector may respond once to that consumer-initiated 
communication. One industry commenter supported this proposed 
exclusion, explaining that it makes sense to allow a business to 
respond to a consumer-initiated communication using the same medium 
used by the consumer, even in circumstances where the consumer had 
previously chosen to opt out from that communication medium. Two trade 
group commenters suggested that, if a consumer contacts a debt 
collector using a medium that the consumer requested the debt collector 
not use, the consumer should be deemed to have waived the protections 
under proposed Sec.  1006.14(h)(1). One consumer commenter stated that 
the proposed exclusion for consumer-initiated communications should be 
modified to exclude employer-provided communication media, and a group 
of consumer advocates urged the Bureau to exclude addresses and 
telephone numbers that a debt collector knows or should know are 
employer-provided, unless the debt collector confirms with the consumer 
that it is permissible to use them again.
    The Bureau is finalizing Sec.  1006.14(h)(2)(ii) largely as 
proposed, with certain clarifications in response to comments and 
revisions consistent with final Sec.  1006.14(h)(1). As suggested by 
the commenter above, and consistent with new comment 6(b)(1)-2, the 
Bureau is revising Sec.  1006.14(h)(2)(ii) to permit a debt collector 
to respond once through the same medium of communication used by the 
person. The Bureau determines that a single communication from a debt 
collector in response to a communication initiated by a person using 
that medium of communication likely would not have the natural 
consequence of harassing, oppressing, or abusing the person within the 
meaning of FDCPA section 806. The Bureau concludes this is the case 
even with respect to employer-provided email addresses because, as 
explained in the section-by-section analysis of Sec.  1006.6(d)(4)(i), 
consumers are generally better positioned than debt collectors to 
determine if third parties have access to a particular email account 
used by a consumer, whether personal or employer provided.\480\ 
Accordingly, final Sec.  1006.14(h)(2)(ii) provides that, 
notwithstanding the prohibition in Sec.  1006.14(h)(1), if a person 
initiates contact with a debt

[[Page 76828]]

collector using a medium of communication that the person previously 
requested the debt collector not use, the debt collector may respond 
once through the same medium of communication used by the person.
---------------------------------------------------------------------------

    \480\ See the section-by-section analysis of Sec.  
1006.6(d)(4)(i).
---------------------------------------------------------------------------

14(h)(2)(iii)
    Proposed Sec.  1006.14(h)(2) did not include an exception for 
legally required communications; however, the Bureau requested comment 
on whether there are specific laws that require communication with a 
consumer through a specific medium, and if so, whether additional 
clarification is needed regarding the delivery of legally required 
communications through a specific medium of communication required by 
applicable law if the consumer has requested that the debt collector 
not use that medium to communicate with the consumer. Two industry 
commenters explained that court orders as well as certain Federal and 
State laws, including State laws relating to service of process and 
contracts, can require communication through a specific medium that 
could contradict a consumer's request that a debt collector not use 
that communication medium, including, for example, various notices 
under State laws that are required to be mailed and in some cases 
specifically by first-class or certified mail. These commenters 
requested the Bureau clarify that compliance with a conflicting law and 
or court order serve as a safe harbor or defense to a claim under the 
FDCPA. Another industry commenter specifically requested that the 
Bureau clarify how a debt collector who is also a mortgage servicer 
could comply with the periodic statement requirement for residential 
mortgage loans under Regulation Z.
    In light of these comments, the Bureau is adopting new Sec.  
1006.14(h)(2)(iii), which provides that, notwithstanding the 
prohibition in Sec.  1006.14(h)(1), 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.
    The Bureau is also adopting new comment 14(h)(2)-1 to provide an 
example illustrating the exception adopted under Sec.  
1006.14(h)(2)(iii). New comment 14(h)(2)-1 provides that, under Sec.  
1006.14(h)(2)(iii), 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. For example, assume that a debt 
collector who is also a mortgage servicer subject to the periodic 
statement requirement for residential mortgage loans under Regulation 
Z, 12 CFR 1026.41, is engaging in debt collection communications with a 
person about the person's residential mortgage loan. The person tells 
the debt collector to stop mailing letters to the person, and the 
person has not consented to receive statements electronically in 
accordance with 12 CFR 1026.41(c). Although the person has requested 
that the debt collector not use mail to communicate with the person, 
Sec.  1006.14(h)(2)(iii) permits the debt collector to mail the person 
periodic statements, because the periodic statements are required by 
applicable law.
Section 1006.18 False, Deceptive, or Misleading Representations or 
Means
    FDCPA section 807 generally prohibits a debt collector from using 
any false, deceptive, or misleading representations or means in 
connection with the collection of any debt and lists 16 non-exhaustive 
examples of such prohibited conduct.\481\ The Bureau proposed Sec.  
1006.18 to implement FDCPA section 807.\482\ Proposed Sec.  1006.18 
generally restated the statute with only minor wording changes for 
clarity, except for certain organizational changes and interpretations 
in proposed Sec.  1006.18(e) through (g).
---------------------------------------------------------------------------

    \481\ 15 U.S.C. 1692e.
    \482\ See 84 FR 23274, 23322-24 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau proposed to organize Sec.  1006.18 by grouping the 16 
non-exhaustive examples of prohibited false or misleading 
representations in FDCPA section 807 into categories of related 
conduct. Specifically, the Bureau proposed Sec.  1006.18(a) to 
implement the general prohibition in FDCPA section 807 against debt 
collectors using any false, deceptive, or misleading representation or 
means in connection with the collection of any debt. Proposed Sec.  
1006.18(b) restated FDCPA section 807's examples of false, deceptive, 
or misleading representations.\483\ Proposed Sec.  1006.18(c) restated 
FDCPA section 807's examples of false, deceptive, or misleading 
collection means.\484\ Proposed Sec.  1006.18(d) restated the catch-all 
prohibition against false representations or deceptive means as 
described in FDCPA section 807(10). Proposed Sec.  1006.18(e) addressed 
the disclosures required under FDCPA section 807(11). Finally, proposed 
Sec.  1006.18(f) addressed the use of assumed names by debt collectors' 
employees, and proposed Sec.  1006.18(g) addressed misrepresentations 
of meaningful attorney involvement in debt collection litigation.
---------------------------------------------------------------------------

    \483\ Proposed Sec.  1006.18(b)(1)(i) through (viii) would have 
implemented, respectively, paragraphs (1), (16), (3), (7), (6), 
(12), (13), and (15) of FDCPA section 807, and proposed Sec.  
1006.18(b)(2) would have implemented FDCPA section 807(2). The 
Bureau explained that restating the statutory language was not 
intended to suggest any particular interpretation of that language. 
For example, the omission of the words ``or imply'' from the 
introductory language to proposed Sec.  1006.18(b)(2) consistent 
with the statutory language in FDCPA section 807(2) was not intended 
to suggest that the Bureau would not regard implied false 
representations as violations of FDCPA section 807 or 807(2) or 
proposed Sec.  1006.18(b)(2).
    \484\ Proposed Sec.  1006.18(c)(1) through (4) would have 
implemented, respectively, paragraphs (5), (8), (9), and (14) of 
FDCPA section 807.
---------------------------------------------------------------------------

    A number of individual consumer commenters asked the Bureau to 
prohibit specific examples of false statements that debt collectors had 
made to the commenters, such as claims that the consumer would be 
deported or arrested for failing to pay a debt. While the final rule 
does not enumerate additional specific false statements, the Bureau 
notes that Sec.  1006.18's general prohibition on any false, deceptive, 
or misleading representation or means in connection with the collection 
of any debt prohibits the false statements described by commenters.
    The Bureau also received two overarching comments regarding 
proposed Sec.  1006.18. One industry commenter asked the Bureau to 
clarify that a debt collector who makes immaterial false statements 
orally does not violate Sec.  1006.18.\485\ This commenter suggested 
that the Bureau could develop a warning letter template that consumers 
could send to a debt collector to clarify any potential misstatements 
before suing the debt collector for violating the FDCPA's prohibition 
on false representations. This commenter further suggested that the 
Bureau provide a list of specific statements that debt collectors could 
use to inform consumers of the credit reporting status of their debts 
or of the effect of paying their debts without violating the FDCPA's 
prohibition on false representations.
---------------------------------------------------------------------------

    \485\ Other commenters addressed specific provisions within 
proposed Sec.  1006.18, and these comments are discussed below.
---------------------------------------------------------------------------

    The Bureau declines to adopt these suggestions. The FDCPA does not 
qualify the prohibition on false, deceptive, or misleading 
representations, and the Bureau did not propose to categorically 
interpret certain

[[Page 76829]]

types or methods of statements as compliant with Sec.  1006.18. A 
consumer's understanding of a statement generally depends both on the 
statement itself and on the facts and circumstances surrounding the 
statement. Similarly, although the Bureau encourages communication 
between consumers and debt collectors, the Bureau did not propose and 
does not support conditioning a consumer's access to the judicial 
system on the consumer sending a warning letter to a debt collector. 
Finally, the Bureau is not creating safe harbor statements regarding 
credit reporting. The Bureau concludes that safe harbors for general 
statements about credit reporting are unnecessary for simple statements 
about a debt collector's actions, and safe harbors may not be accurate 
or effective for complicated statements about the effects of paying a 
debt on a consumer's credit report, credit score, creditworthiness, or 
likelihood of receiving credit because these effects depend on the 
facts and circumstances of a particular case.\486\
---------------------------------------------------------------------------

    \486\ See Bureau of Consumer Fin. Prot., CFPB Bulletin 2013-08, 
Fair Debt Collection Practices Act and the Dodd-Frank Act (July 10, 
2013), https://files.consumerfinance.gov/f/201307_cfpb_bulletin_collections-consumer-credit.pdf.
---------------------------------------------------------------------------

    For these reasons, and pursuant to its authority under FDCPA 
section 814(d) to prescribe rules with respect to the collection of 
debts by debt collectors and to implement and interpret FDCPA section 
807, the Bureau is finalizing Sec.  1006.18 largely as proposed, except 
with respect to the provisions proposed in Sec.  1006.18(d) through (g) 
as discussed below.
18(d) False Representations or Deceptive Means
    FDCPA section 807(10) prohibits debt collectors from using any 
false representation or deceptive means to collect or attempt to 
collect any debt or to obtain information concerning a consumer. As 
noted above, proposed Sec.  1006.18(d) restated this catch-all 
prohibition. The Bureau is finalizing Sec.  1006.18(d) as proposed but, 
as discussed below, is adding new comment 18(d)-1 to address feedback 
received regarding the possibility of debt collectors employing 
deceptive means to collect debts using social media.
    The Bureau received a number of comments from government commenters 
and others expressing concern about the possibility of deception when 
debt collectors use social media to collect debts. The commenters 
explained that if, when debt collectors communicate or attempt to 
communicate with consumers using social media, debt collectors do not 
clearly indicate their identity and the fact that they are collecting a 
debt, consumers will not understand that they are communicating with a 
debt collector and will be vulnerable to deceptive conduct. For 
example, commenters highlighted concerns with debt collectors 
submitting a Facebook ``friend request'' or a LinkedIn ``connection'' 
while omitting information about the debt collector's true purpose, in 
order to engage in collection communications or to obtain information 
about consumers. A group of State Attorneys General stated that all 
debt collection communications sent using social media should be 
accompanied by a notice that the purpose of the communication is to 
collect a debt.\487\ Similarly, Federal government agency staff 
indicated in its comment that the agency has initiated enforcement 
actions against debt collectors for using false pretenses to engage 
consumers in conversation through social media.
---------------------------------------------------------------------------

    \487\ Some commenters requested that the Bureau restrict debt 
collectors from sending private direct messages to consumers on 
social media platforms. Those comments are discussed in the section-
by-section analysis of Sec.  1006.22(f)(4).
---------------------------------------------------------------------------

    The Bureau recognizes that there are unique consumer concerns 
presented by social media interactions with debt collectors, whether 
through direct messaging or connections generally. To clarify the 
application of the final rule to the type of conduct described by 
commenters, the Bureau is adding comment 18(d)-1. Comment 18(d)-1 
restates the general rule of Sec.  1006.18(d) and provides two 
examples.
    First, given the purpose of social media platforms marketed for 
social or professional networking purposes, such as Facebook or 
LinkedIn, a consumer who receives a ``friend'' or ``connection'' 
request on such a platform would take away from the request that the 
requester is interested in a social or professional networking 
relationship. This consumer takeaway would be false if the request is 
from a debt collector in connection with the collection of a debt, and 
this false claim may cause the consumer to accept a request that the 
consumer otherwise would not have accepted. Such deceptive means of 
engaging with the consumer violate Sec.  1006.18(d). To address this, 
comment 18(d)-1.i provides an example of a debt collector who sends a 
private message to a consumer, in connection with the collection of a 
debt, requesting to be added as one of the consumer's contacts on a 
social media platform marketed for social or professional networking 
purposes. The comment explains that a debt collector makes a false 
representation or implication if the debt collector does not disclose 
his or her identity as a debt collector when making a friend or 
connection request on social media.
    Second, the Bureau is including an example to clarify that a debt 
collector using a social media account for the purpose of engaging with 
third parties to obtain location information about a consumer must use 
a profile that accurately identifies the debt collector's individual 
name. Specifically, comment 18(d)-1.ii provides an example of a debt 
collector who sends a private communication to a friend or coworker of 
the consumer on a social media platform for the purpose of obtaining 
location information. The comment states that, pursuant to Sec.  
1006.10(b)(1), the debt collector must identify himself or herself 
individually by name, and that, pursuant to Sec.  1006.18(d), the debt 
collector must communicate using a profile that accurately identifies 
the debt collector's individual name. To clarify that this comment is 
not intended to prohibit the use of an otherwise permissible assumed 
name, the comment includes a cross-reference to Sec.  1006.18(f). The 
comment also states that the debt collector must comply with the other 
applicable requirements of Sec. Sec.  1006.6(d)(1), 1006.10, and 
1006.22(f)(4) when communicating with third parties.
    Because the use of social media by debt collectors is a relatively 
new practice, the Bureau intends to monitor closely developments in 
this space. The Bureau also emphasizes that the general prohibition on 
false, deceptive, or misleading conduct with any person may prohibit 
social media activities that are not specifically discussed in comment 
18(d)-1.
18(e) Disclosures Required
    The Bureau proposed Sec.  1006.18(e) to implement FDCPA section 
807(11), which requires debt collectors to disclose in their initial 
communications with consumers that they are attempting to collect a 
debt and that any information obtained will be used for that purpose, 
and to disclose in their subsequent communications with consumers that 
the communication is from a debt collector, except in a formal pleading 
made in connection with a legal action (the ``mini-Miranda 
disclosure'').\488\
---------------------------------------------------------------------------

    \488\ 15 U.S.C. 1692e(11). Proposed Sec.  1006.18(e)(1) 
addressed initial communications, proposed Sec.  1006.18(e)(2) 
addressed subsequent communications, and proposed Sec.  
1006.18(e)(3) provided an exception for legal pleadings.

---------------------------------------------------------------------------

[[Page 76830]]

    Proposed comment 18(e)(1)-1 described the circumstances in which 
debt collectors would be required to provide disclosures in initial 
communications under proposed Sec.  1008.18(e)(1). Proposed comment 
18(e)(1)-1 specified that a debt collector must provide the disclosures 
in the debt collector's initial communication with the consumer, 
regardless of whether that initial communication is written or oral, 
and regardless of whether the debt collector or the consumer initiated 
the communication. Proposed comment 18(e)(1)-1 also provided an example 
of the rule regarding required disclosures during initial 
communications. Proposed comment 18(e)-1 provided general commentary to 
explain how the disclosure requirements in proposed Sec.  1006.18(e) 
would interact with the proposal's limited-content message, a message 
that was not a communication under proposed Sec.  1006.2(d).
    For the reasons discussed below, the Bureau is finalizing Sec.  
1006.18(e) largely as proposed, with minor changes for clarity, and is 
adopting new Sec.  1006.18(e)(4) regarding translated disclosures.
    The Bureau received a few comments on the proposed implementation 
of the mini-Miranda disclosure requirement. A trade group commenter 
asked the Bureau to allow debt collectors to modify the mini-Miranda 
disclosure in the bankruptcy context to remove the reference to the 
collection of a debt and to the use of any information for debt 
collection purposes. This commenter stated that such language could be 
construed as an attempt to collect the debt in violation of the 
automatic stay provisions of the bankruptcy code. The Bureau declines 
to adopt a specialized bankruptcy version of the mini-Miranda 
disclosure. Removing a reference to the collection of a debt and to the 
use of any information for debt collection purposes would functionally 
eliminate the mini-Miranda that Congress required debt collectors to 
provide in FDCPA section 807(11).
    One industry commenter asked the Bureau to clarify that caller ID 
that reveals a debt collector's business name does not constitute the 
initial communication with a consumer under Sec.  1006.18(e)(1). The 
Bureau believes that disclosure of a debt collector's business name 
does not automatically convey information regarding a debt such that a 
communication, as defined in final Sec.  1006.2(d), has occurred. As 
discussed in the section-by-section analysis of final Sec.  1006.2(j), 
the final rule defines a message, the limited-content message, that 
includes a business name for the debt collector that does not indicate 
that the debt collector is in the debt collection business, but is not 
a communication. The Bureau does not determine, however, that caller ID 
can never constitute a communication because caller ID systems might 
convey information regarding a debt.
    This commenter also asked the Bureau to clarify which 
communications in a series of email or text messages are the 
``subsequent communications'' for purposes of Sec.  1006.18(e)(2), such 
that a debt collector must again disclose that the communication is 
from a debt collector. The Bureau currently lacks information showing 
that the meaning of subsequent communication in FDCPA section 807(11) 
is a source of serious harm to consumers or burden to debt collectors. 
Moreover, the Bureau believes that a highly prescriptive approach that 
attempts to define when the ``initial'' communication ends and a 
``subsequent'' communication begins for all communication media would 
be too rigid to accommodate the various forms that communications 
between debt collectors and consumers might take. On one hand, 
communications that occur in different media, such as an email message 
followed by a text message, or communications that have no inherent 
connection between them, such as two letters, seem to be exactly the 
kind of ``subsequent communications'' where a new disclosure would 
further the purposes of the FDCPA section 807(11) and final Sec.  
1006.18(e)(2). On the other hand, some communications, such as a 
webchat session, may be closer to individual telephone calls where new 
disclosures throughout the conversation would likely be 
unnecessary.\489\ Other communications exist between these examples and 
might allow for several reasonable interpretations of when a subsequent 
communication occurs. Given the diversity of communications and the 
Bureau's lack of information, the Bureau is finalizing Sec.  
1006.18(e)(2) as proposed.
---------------------------------------------------------------------------

    \489\ Comment 6(b)(1)-2 states that, if a consumer initiates a 
communication with a debt collector at a time or from a place that 
the consumer previously designated as inconvenient, the debt 
collector may respond once at that time or place through the same 
medium of communication used by the consumer. Depending on the 
circumstances, such a reply by a debt collector may not constitute a 
subsequent communication and therefore new disclosures would be 
unnecessary.
---------------------------------------------------------------------------

    Consumer advocates urged the Bureau to require the mini-Miranda 
disclosure for any voicemail message that deviates from the content 
required or permitted in a limited-content message, as defined in Sec.  
1006.2(j). The Bureau declines to adopt such a requirement. As 
explained in the section-by-section analysis of final Sec.  1006.2(j), 
the limited-content message identifies a voicemail message that debt 
collectors can leave for consumers without conveying information about 
a debt--and therefore communicating--under the final rule. Final Sec.  
1006.2(j) does not attempt to define the exclusive means by which debt 
collectors would not convey information about a debt. Requiring the 
mini-Miranda disclosure in every voicemail other than a limited-content 
message would conflict with the FDCPA's definition of communication by 
treating all such messages as communications even if they do not convey 
information regarding a debt to any person.
    Several commenters addressed language access requirements. Most of 
these comments addressed non-English language translations of the 
validation notice in proposed Sec.  1006.34. These comments included 
recommendations that the Bureau include a non-English language mini-
Miranda disclosure on the validation notice. As discussed in the 
section-by-section analysis of Sec.  1006.34, the Bureau intends to 
finalize certain provisions of the proposal in a disclosure-focused 
final rule addressing the validation notice and will respond to 
commenters' suggestions regarding accessibility of the mini-Miranda 
disclosures on the validation notice as part of that rulemaking. 
However, the Bureau is adopting a requirement that debt collectors make 
the disclosures required by Sec.  1006.18(e)(1) and (2) in the same 
language or languages used for the rest of the communication in which 
the disclosures are conveyed.
    Consumers who are unable to communicate in English would benefit 
from receiving translated versions of the mini-Miranda disclosure. At 
the same time, however, the Bureau determines that requiring debt 
collectors to identify such consumers and provide accurate translations 
in the myriad languages that consumers speak may impose a significant 
burden on debt collectors. If a debt collector chooses to communicate 
with a consumer in a non-English language, however, this burden is 
reduced. Such a debt collector will have already identified the 
consumer's language preference and exhibited a willingness to 
communicate in that language. In those circumstances, requiring a debt 
collector who communicates in a non-English language to provide the 
disclosures in that language would decrease the risk of deception and 
help ensure that the disclosures are effective for more consumers. 
Accordingly, final Sec.  1006.18(e)(4) provides that a debt

[[Page 76831]]

collector must make the disclosures required by Sec.  1006.18(e)(1) and 
(2) in the same language or languages used for the rest of the 
communication in which the debt collector conveyed the disclosures.
    Finally, the Bureau requested comment on whether additional 
clarification regarding false or misleading representations would be 
helpful in the decedent debt context, or whether to require any 
affirmative disclosures when debt collectors communicate in connection 
with the collection of a debt owed by a deceased consumer. Although the 
Bureau did not propose specific rules regarding deception in the 
decedent debt context, the Bureau noted that the FTC expressed concern 
in its Policy Statement on Decedent Debt that, even absent explicit 
misrepresentations, a debt collector might violate FDCPA section 807 by 
communicating with such individuals in a manner that conveys the 
misleading impression that the individual is personally liable for the 
deceased consumer's debts, or that the debt collector could seek assets 
outside of the deceased consumer's estate to satisfy the consumer's 
debt. The FTC's Policy Statement suggested two possible disclosures 
that debt collectors generally could use to avoid deceiving individuals 
who are attempting to resolve the financial affairs of an estate about 
their liability for the decedent's debts.\490\
---------------------------------------------------------------------------

    \490\ FTC Policy Statement on Decedent Debt, supra note 157, at 
44922. The FTC's suggested disclosures were: ``(1) That the debt 
collector is seeking payment from the assets in the decedent's 
estate; and (2) [that] the individual could not be required to use 
the individual's assets or assets the individual owned jointly with 
the decedent to pay the decedent's debt.'' Id.
---------------------------------------------------------------------------

    Several commenters addressed these issues. Two consumer advocates 
urged the Bureau to require affirmative disclosures of non-liability. 
Several industry commenters noted that they affirmatively disclose non-
liability and recommended that the Bureau adopt similar disclosures. 
One trade group commenter supported the creation of safe harbor 
language that debt collectors could use to avoid deceiving consumers. 
Another trade group commenter requested certain exceptions from any 
required disclosure, such as for communications with attorneys.
    The Bureau declines to adopt any additional clarifications or 
affirmative disclosures. The need for required disclosures is 
diminished by the lack of evidence of deception regarding decedent 
debt, as noted in the proposal, and by the widespread debt collector 
practice of disclosing non-liability, as noted by commenters. Moreover, 
as the FTC explained, the information debt collectors would need to 
disclose to avoid deception depends on the circumstances. Indeed, even 
in the abstract, commenters suggested slightly different disclosures, 
with two commenters supporting the FTC's disclosures and several others 
offering their own alternative language. Accordingly, the Bureau 
declines to require in the final rule affirmative disclosures in the 
decedent debt context.
    For the reasons discussed above and pursuant to its authority to 
implement and interpret FDCPA section 807(11), the Bureau is finalizing 
Sec.  1006.18(e) largely as proposed, with minor revisions for clarity, 
and is adopting new Sec.  1006.18(e)(4) regarding translated 
disclosures. Final Sec.  1006.18(e)(4) provides that a debt collector 
must make the disclosures required by Sec.  1006.18(e) in the same 
language or languages used for the rest of the communication in which 
the disclosures are conveyed. Any translation of the disclosures must 
be complete and accurate. The Bureau is also adopting new comment 
18(e)(4)-1, which provides an illustrative example.
18(f) Assumed Names
    Proposed Sec.  1006.18(f) stated that nothing in Sec.  1006.18 
prohibits a debt collector's employee from using an assumed name when 
communicating or attempting to communicate with a person, provided that 
the employee uses the assumed name consistently and that the employer 
can readily identify the employee even if the employee is using the 
assumed name. For the reasons discussed below, the Bureau is finalizing 
Sec.  1006.18(f) as proposed, with additional clarifying commentary.
    As the Bureau explained in the proposal, debt collectors may 
instruct or permit their employees to use assumed names when 
interacting with consumers for a variety of reasons. For example, some 
employees may have privacy or safety concerns about revealing their 
true name and employer to a potentially large number of consumers or to 
particular consumers. As the Bureau explained, from a consumer's 
perspective, it may not be relevant whether employees use true names or 
assumed names, provided that the name used does not mislead the 
consumer about the debt at issue and who is attempting to collect it. 
The Bureau also noted that the FTC previously issued guidance stating 
that a debt collector's employee does not violate the FDCPA by using an 
assumed name if the employee uses the assumed name consistently and the 
debt collector can readily ascertain the employee's identity.
    The Bureau requested comment on the use of assumed names by debt 
collectors' employees in general, as well as on whether and how 
employers can readily identify their employees who are using assumed 
names. One industry commenter supported the proposal because the use of 
assumed names would help ensure the safety of the commenter's 
employees. A trade group commenter asked whether proposed Sec.  
1006.18(f) would require an assumed name to be linked to a specific 
individual, or if it could be used in other ways, such as by linking 
certain assumed names to certain letters mailed to consumers.
    Consumer advocates opposed the use of assumed names by debt 
collectors' employees. These commenters argued that assumed names are 
inconsistent with FDCPA section 806(6)'s prohibition on the placement 
of telephone calls without meaningful disclosure of the caller's 
identity. These commenters further argued that permitting assumed names 
would enable debt collectors to escape accountability for abusing 
consumers by concealing their identities. If the Bureau were to allow 
assumed names, these commenters stated that the Bureau must develop a 
Federal database of aliases, with one alias per employee and no 
duplicate aliases within the same company, among other requirements, so 
that consumers could look up the names of any debt collector's 
employees.
    The Bureau is finalizing Sec.  1006.18(f) as proposed with 
additional clarifying commentary. As explained in the proposal, debt 
collectors' employees may use assumed names for many legitimate 
reasons, including for safety and efficiency, and the Bureau does not 
conclude that assumed names are inherently deceptive. The use of 
assumed names is consistent with accountability for debt collectors, as 
long as the debt collector can connect any assumed name to an 
employee's real identity. The Bureau's creation of a register of 
assumed names used by debt collectors' employees is outside the scope 
of this rule, and the Bureau does not believe that such a requirement 
is necessary or warranted.
    In response to a trade group commenter's question about whether an 
assumed name must be linked to a specific employee, the Bureau finds 
that any system of managing assumed names must ensure that the employee 
uses the assumed name consistently and that the employer can readily 
identify the employee even if the employee is using the assumed name. 
The Bureau is

[[Page 76832]]

adding comment 18(f)-1 to clarify that one way of doing so is for an 
employer to require an employee to use the same assumed name when 
communicating or attempting to communicate with any person, and to 
prohibit any other employee from using the same assumed name. But the 
Bureau does not believe a one-to-one link is the only way for an 
employer to comply with the final rule. The Bureau anticipates, 
however, that a debt collector who permits many employees to use the 
same assumed name, e.g., for a specific letter campaign, would be 
unable to readily identify any employee communicating or attempting to 
communicate with any person.
    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.18(f) largely as proposed. Final Sec.  1006.18(f) provides that 
Sec.  1006.18 does not prohibit a debt collector's employee from using 
an assumed name when communicating or attempting to communicate with a 
person, provided that the employee uses the assumed name consistently 
and that the debt collector can readily identify any employee using an 
assumed name. New comment 18(f)-1 clarifies that a debt collector may 
use any method of managing assumed names that enables the debt 
collector to determine the true identity of any employee using an 
assumed name. For example, a debt collector may require an employee to 
use the same assumed name when communicating or attempting to 
communicate with any person and may prohibit any other employee from 
using the same assumed name.
Proposed Provision Not Finalized
    FDCPA section 807 contains certain provisions designed to protect 
consumers from false, deceptive, or misleading representations made by, 
or means employed by, attorneys in debt collection litigation. FDCPA 
section 807(3) prohibits the false representation or implication that 
any individual is an attorney or that any communication is from an 
attorney. In addition, debt collection communications sent under an 
attorney's name may violate FDCPA section 807(10) if the attorney was 
not meaningfully involved in the preparation of the communication.\491\ 
The meaningful attorney involvement case law also has been applied in 
the specific context of debt collection litigation submissions.\492\
---------------------------------------------------------------------------

    \491\ See, e.g., Nielsen v. Dickerson, 307 F.3d 623, 635 (7th 
Cir. 2002); Clomon, 988 F.2d at 1320. Courts have found violations 
of other subsections of FDCPA section 807 for similar conduct. See, 
e.g., Lesher v. Law Offices of Mitchell N. Kay, PC, 650 F.3d 993, 
1002 (3d Cir. 2011); Avila v. Rubin, 84 F.3d 222, 229 (7th Cir. 
1996).
    \492\ See Bock v. Pressler & Pressler, 30 F. Supp. 3d 283, 303 
(D.N.J. 2014) (``The claimed misrepresentation here does not relate 
to the ultimate veracity of the numbered factual allegations of the 
complaint; it concerns the veracity of the implied representation 
that an attorney was meaningfully involved in the preparation of the 
complaint. If, in fact, the attorney who signed the complaint is not 
involved and familiar with the case against the debtor, then the 
debtor has been unfairly misled and deceived within the meaning of 
the FDCPA. . . .''), reaff'd on remand, 254 F. Supp. 3d 724, 729 
(D.N.J. 2017); Miller v. Upton, Cohen & Slamowitz, 687 F. Supp. 2d 
86, 100 (E.D.N.Y. 2009) (applying meaningful involvement liability 
to, among other actions, filing of complaint in court).
---------------------------------------------------------------------------

    Proposed Sec.  1006.18(g) would have provided a safe harbor for 
attorneys and law firms against claims asserting lack of meaningful 
attorney involvement in debt collection litigation materials signed by 
the attorney and submitted to the court, provided that the attorneys 
met the requirements in proposed Sec.  1006.18(g). Proposed Sec.  
1006.18(g) provided that an attorney has been meaningfully involved in 
the preparation of debt collection litigation submissions if the 
attorney: (1) Drafts or reviews the pleading, written motion, or other 
paper; and (2) personally reviews information supporting the submission 
and determines, to the best of the attorney's knowledge, information, 
and belief, that, as applicable: The claims, defenses, and other legal 
contentions are warranted by existing law; the factual contentions have 
evidentiary support; and the denials of factual contentions are 
warranted on the evidence or, if specifically so identified, are 
reasonably based on belief or lack of information.
    The Bureau received a large number of comments on the proposed 
meaningful attorney involvement safe harbor from a variety of 
commenters, almost all of whom opposed the proposal. As discussed 
below, the Bureau has decided after considering the comments not to 
finalize the proposed provision regarding meaningful attorney 
involvement.
    While some debt collectors supported proposed Sec.  1006.18(g), 
other industry commenters--particularly debt collection attorneys and 
associations thereof--opposed it. These commenters stated that the 
meaningful attorney involvement case law discussed above is misguided 
because FDCPA section 807(3) prohibits only the false representation 
that any communication is from an attorney and, therefore, any 
communication that is, in fact, from an attorney does not run afoul of 
that section. These commenters also stated that the FDCPA does not 
authorize the Bureau to adopt the meaningful attorney involvement 
standard through rulemaking, because the standard is not found in the 
FDCPA and is found only in case law.\493\ These commenters also stated 
that the proposed standard would improperly infringe on the practice of 
law, which, they said, has historically been regulated by the judicial 
branch and State governments and would undermine the attorney-client 
privilege and work-product doctrines. A member of Congress also opposed 
the proposed meaningful attorney involvement standard on these grounds. 
Finally, debt collection attorneys stated that the proposed standard 
would not provide clarity but would instead lead to litigation, which 
would necessarily result in sharing confidential attorney work product. 
A few of these commenters stated that they had considered alternatives 
to the Bureau's proposal and found that none of them were workable.
---------------------------------------------------------------------------

    \493\ A few of these commenters additionally argued that Dodd-
Frank Act section 1027(e)(1) precludes the Bureau from regulating 
the practice of law by debt collection attorneys.
---------------------------------------------------------------------------

    Consumer advocates stated that the proposed meaningful attorney 
involvement standard was too lenient and would sanction debt collection 
attorney practices that these commenters believe to be problematic. The 
commenters expressed the opinion that the proposed standard was more 
lenient than some meaningful attorney involvement standards set forth 
in the Bureau's past enforcement work, State enforcement work, and 
State laws. Some United States Senators also opposed the proposed 
meaningful attorney involvement standard for these reasons. Consumer 
advocates additionally stated that the Bureau did not describe a safe 
harbor for meaningful attorney involvement in its SBREFA Outline and 
asserted that the proposed provision therefore harmed the integrity of 
the Bureau's rulemaking process. These commenters recommended that the 
Bureau propose a meaningful attorney involvement rule, as opposed to 
safe harbor, incorporating requirements set forth in Bureau enforcement 
actions.
    Having considered all of the comments on the issue that it 
received, the Bureau declines to finalize the proposed meaningful 
attorney involvement safe harbor.\494\
---------------------------------------------------------------------------

    \494\ The Bureau disagrees with commenter assertions that the 
absence of a meaningful attorney involvement safe harbor from the 
Bureau's SBREFA Outline represents a shortcoming in the Bureau's 
rulemaking process. The Bureau thoroughly described the proposed 
safe harbor and the Bureau's rationale for it in the proposal. The 
proposed safe harbor therefore raised no concerns from an APA 
perspective.

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[[Page 76833]]

    As the Bureau noted in the proposal, under existing case law, a 
debt collection communication sent under an attorney's name may violate 
FDCPA section 807(10) if the attorney was not meaningfully involved in 
the preparation of the communication.\495\ Further, the meaningful 
attorney involvement case law has been applied in the specific context 
of debt collection litigation submissions.\496\ The Bureau intended its 
proposed safe harbor to provide greater clarity for all stakeholders as 
to the standards law firms and attorneys submitting pleadings, written 
motions, or other papers to courts in debt collection litigation should 
meet in order to be in compliance with FDCPA section 807(10). As noted 
above, however, many industry commenters stated that the proposed safe 
harbor would not provide the intended clarity, and some of these 
commenters stated that they had considered various alternatives to the 
proposed safe harbor and found none to be workable in providing clarity 
either. And, many consumer advocates felt that the standards proposed 
were too permissive. Because neither the proposal nor alternatives 
discussed in comments would provide greater clarity as to the meaning 
of meaningful attorney involvement, the Bureau has decided not to 
include a safe harbor in the final rule.
---------------------------------------------------------------------------

    \495\ See supra note 491.
    \496\ See supra note 492.
---------------------------------------------------------------------------

    The Bureau anticipates that debt collection attorneys will continue 
to face lawsuits under this legal theory. As the Bureau described in 
the proposal, the legal theory underlying these lawsuits is that a debt 
collection attorney makes an implied false representation, in violation 
of the prohibition in FDCPA section 807 against misleading 
representations, when the attorney submits litigation materials without 
there having been meaningful attorney involvement in the preparation of 
the materials. As a general matter, the Bureau believes that this legal 
theory has a valid basis in the text of FDCPA section 807; \497\ 
accordingly, the Bureau expects that the law regarding violations of 
FDCPA section 807 due to lack of meaningful attorney involvement will 
continue to evolve case-by-case. The Bureau will monitor these 
developments and continue to assess whether a future rulemaking in this 
area to provide clarity and decrease consumer harm would be desirable. 
In that regard, the Bureau disagrees with commenter assertions that the 
FDCPA does not authorize the Bureau to adopt a meaningful attorney 
involvement standard--whether consisting of requirements or a safe 
harbor or both--through rulemaking.\498\ The Bureau believes that the 
FDCPA provides it with ample authority to adopt a meaningful attorney 
involvement standard by rule.
---------------------------------------------------------------------------

    \497\ FDCPA section 807 states that ``[a] debt collector may not 
use any false, deceptive, or misleading representation or means in 
connection with the collection of any debt.''
    \498\ The Bureau also disagrees with commenter assertions that 
Dodd-Frank Act section 1027(e)(1) constrains the Bureau's ability to 
adopt rules regarding meaningful attorney involvement pursuant to 
its FDCPA authority. See supra notes 115 and 116.
---------------------------------------------------------------------------

Section 1006.22 Unfair or Unconscionable Means
    FDCPA section 808 prohibits the use of unfair or unconscionable 
means in debt collection.\499\ The Bureau proposed Sec.  1006.22 to 
implement FDCPA section 808.\500\ Specifically, the Bureau proposed 
Sec.  1006.22(a) to implement FDCPA section 808's general prohibition 
against unfairness and Sec.  1006.22(b) through (f)(2) to implement 
section 808's prohibited conduct examples.\501\ These provisions 
largely restated the statute. The Bureau proposed Sec.  1006.22(f)(3) 
and (4) to prohibit certain conduct with respect to the use of 
employer-provided email addresses and social media for debt collection 
communications and Sec.  1006.22(g) to provide a safe harbor for 
information contained in certain email messages.
---------------------------------------------------------------------------

    \499\ 15 U.S.C. 1692f.
    \500\ 84 FR 23274, 23324-27 (May 21, 2019).
    \501\ Section 1006.22(b) proposed to implement FDCPA section 
808(1), 15 U.S.C. 1692f(1); Sec.  1006.22(c) proposed to implement 
FDCPA section 808(2) through (4), 15 U.S.C. 1692f(2) through (4); 
and Sec.  1006.22(d) through (f)(2) proposed to implement FDCPA 
section 808(5) through (8), 15 U.S.C. 1692f(5) through (8).
---------------------------------------------------------------------------

    The Bureau did not receive feedback about proposed Sec.  
1006.22(a), (c)(2) and (3), (d), or (e). The Bureau therefore does not 
address them in the section-by-section analysis below and is finalizing 
them as proposed. After considering feedback, the Bureau is finalizing 
proposed Sec.  1006.22(b), (c)(1), (f), and (g) as discussed below. 
Except as otherwise discussed, the Bureau is finalizing Sec.  1006.22 
to implement and interpret FDCPA section 808, pursuant to its authority 
under FDCPA section 814(d) to prescribe rules with respect to the 
collection of debts by debt collectors.
22(b) Collection of Unauthorized Amounts
    The Bureau proposed Sec.  1006.22(b) to implement FDCPA section 
808(1). The proposed provision generally mirrored the statute, with 
minor wording and organizational changes for clarity. Specifically, 
proposed Sec.  1006.22(b) provided that a debt collector ``must not 
collect any amount unless such amount is expressly authorized by the 
agreement creating the debt or permitted by law,'' where the term any 
amount includes ``any interest, fee, charge, or expense incidental to 
the principal obligation.'' \502\
---------------------------------------------------------------------------

    \502\ 84 FR 23274, 23324, 23403 (May 21, 2019).
---------------------------------------------------------------------------

    One industry commenter expressed concern about litigation risk 
under Sec.  1006.22(b) in the context of medical collections in which 
debt collectors are sued due to inadvertent billing errors caused by 
healthcare providers, or due to failing to identify if a bankruptcy is 
involved. The commenter advocated for giving debt collectors fifteen 
days to investigate and resolve disputes before they are sued by 
consumers, protection from liability based on reliance on information 
provided by a creditor, and a mechanism by which debt collectors report 
corrections caused by medical providers to the Bureau.
    The Bureau declines to adopt this suggestion. As discussed 
elsewhere in this Notice, the Bureau appreciates that the complexity of 
medical collections may result in inadvertent errors. But FDCPA section 
808(1) does not contain any pre-litigation dispute resolution or 
correction-reporting procedures, and the Bureau did not propose such 
procedures in Sec.  1006.22(b). As such, they are outside the scope of 
this rulemaking. Accordingly, the Bureau is finalizing Sec.  1006.22(b) 
as proposed. The Bureau notes that, as discussed elsewhere in this 
Notice, under FDCPA section 813(c), debt collectors may have a bona 
fide error defense to civil liability if they can show that a violation 
was not intentional and resulted from a bona fide error notwithstanding 
the maintenance of procedures reasonably adapted to avoid any such 
error. Depending on the facts and circumstances of a particular case, 
this defense might apply in certain scenarios.
22(c) Postdated Payment Instruments
22(c)(1)
    The Bureau proposed Sec.  1006.22(c)(1) to implement FDCPA section 
808(2), which prohibits debt collectors from accepting from any person 
a check or other payment instrument postdated by more than five days, 
unless such person is notified in writing of the debt collector's 
intent to deposit such check or instrument ``not more than ten nor

[[Page 76834]]

less than three business days prior to such deposit.'' Proposed Sec.  
1006.22(c)(1) generally mirrored that statute, except that it included 
the phrase ``days (excluding legal public holidays, Saturdays, and 
Sundays)'' in lieu of the statutory phrase ``business day.'' \503\
---------------------------------------------------------------------------

    \503\ Id.
---------------------------------------------------------------------------

    In response to proposed Sec.  1006.22(c)(1), one commenter 
explained that the proposed language would require debt collectors to 
monitor State holidays, which can vary significantly. The commenter 
suggested that the language be revised to state ``three days (excluding 
federally recognized legal public holidays, Saturdays and Sundays).''
    The Bureau is finalizing proposed Sec.  1006.22(c)(1) substantially 
as proposed, with a minor modification in response to this comment. To 
address potential ambiguity, final Sec.  1006.22(c)(1) contains the 
phrase ``excluding legal public holidays identified in 5 U.S.C. 
6103(a), Saturdays, and Sundays.''
22(f) Restrictions on Use of Certain Media
22(f)(1)
    FDCPA section 808(7) prohibits a debt collector from communicating 
with a consumer regarding a debt by postcard. The Bureau proposed Sec.  
1006.22(f)(1) to implement FDCPA section 808(7). The proposed provision 
generally mirrored the statutory language.\504\
---------------------------------------------------------------------------

    \504\ Id.
---------------------------------------------------------------------------

    A consumer advocate suggested that the Bureau revise proposed Sec.  
1006.22(f)(1) to prohibit not only communications, as defined in Sec.  
1006.2(d), but also attempts to communicate, as defined in Sec.  
1006.2(b). The commenter observed that, if Sec.  1006.22(f)(1) 
prohibited only communications, and if the Bureau finalized the 
definition of limited-content messages as proposed in Sec.  1006.2(j) 
as only attempts to communicate, then Sec.  1006.22(f)(1) would permit 
debt collectors to send limited-content messages by postcard. As 
discussed in the section-by-section analysis of Sec.  1006.2(j), the 
definition of limited-content message in the final rule is limited to 
voicemail and cannot contain either the consumer's name or the 
consumer's address. Under this definition, limited-content messages 
cannot be sent by postcard. The Bureau accordingly is finalizing Sec.  
1006.22(f)(1) as proposed.
22(f)(2)
    The Bureau proposed Sec.  1006.22(f)(2) to implement FDCPA section 
808(8). The proposed provision generally mirrored the statute. 
Specifically, as proposed, Sec.  1006.22(f)(2) would have prohibited 
debt collectors from using any language or symbol, other than the debt 
collector's address, on any envelope when communicating with a consumer 
by mail, but would have permitted a debt collector to use the debt 
collector's business name on an envelope if the name did not indicate 
that the debt collector was in the debt collection business.\505\
---------------------------------------------------------------------------

    \505\ Id.
---------------------------------------------------------------------------

    In response to proposed Sec.  1006.22(f)(2), a consumer advocate 
commenter stated that the Bureau should clarify that the provision 
prohibits email message ``from'' or ``subject'' lines that indicate 
that a communication either is about a debt or is from a debt 
collector. The Bureau declines to prohibit the inclusion of such 
information in email message ``from'' or ``subject'' lines. Although 
the Bureau's proposal made a minor change for clarity from the wording 
of FDCPA section 808(8) by omitting the term ``by telegram,'' the 
Bureau did not propose to expand the application of FDCPA section 
808(8) beyond mail. In addition, the commentary to final Sec.  1006.42 
provides that the inclusion of some such information in an email 
subject line is a factor in determining whether the debt collector has 
complied with Sec.  1006.42(a)(1)'s requirement to send required 
disclosures in a manner that is reasonably expected to provide actual 
notice.
    The Bureau is, however, clarifying how Sec.  1006.22(f)(2) applies 
in the context of mail. In the Seventh Circuit, the Bureau filed an 
amicus brief arguing that, while there is no benign language exception 
in FDCPA section 808(8) that would permit debt collectors to include 
phrases such as ``time sensitive'' on mailed envelopes, the FDCPA 
permits debt collectors to include language or symbols on an envelope 
that facilitate making use of mail. Specifically, because FDCPA section 
808(8) expressly recognizes that a debt collector may ``communicat[e] 
with a consumer by use of the mails,'' the FDCPA permits language and 
symbols that facilitate mailing an envelope.\506\ The Seventh Circuit 
agreed with the Bureau's analysis. In the final rule, the Bureau is 
adding comment 22(f)(2)-1, which, consistent with the Bureau's amicus 
brief, clarifies that, for purposes of Sec.  1006.22(f)(2), the phrase 
``language or symbol'' does not include language or symbols that 
facilitate communications by mail, for example: Postage; language such 
as ``forwarding and address correction requested;'' and the United 
States Postal Service's Intelligent Mail barcode.
---------------------------------------------------------------------------

    \506\ See Brief for Consumer Financial Protection Bureau as 
Amicus Curiae, Preston v. Midland Credit Mgmt., Inc., 948 F.3d 772 
(7th Cir. 2020) (No. 1:18-cv-01532), https://files.consumerfinance.gov/f/documents/cfpb_amicus-brief_preston-v-midland.pdf.
---------------------------------------------------------------------------

22(f)(3)
    The Bureau proposed Sec.  1006.22(f)(3) to provide that a debt 
collector violates FDCPA section 808's general prohibition against 
unfairness, as proposed to be implemented in Sec.  1006.22(a), by 
communicating or attempting to communicate with a consumer using an 
email address that the debt collector knows or should know is provided 
to the consumer by the consumer's employer, unless the debt collector 
received the consumer's prior direct consent to use that email address 
or the consumer had sent the debt collector an email from that address. 
The Bureau proposed Sec.  1006.22(f)(3) on the basis that a debt 
collector who communicates or attempts to communicate by sending an 
email message to a consumer's employer-provided email address generally 
would violate FDCPA section 808 because of the likelihood that the 
consumer's employer could access and read the message and, in turn, 
that the consumer could suffer reputational or other harm.\507\
---------------------------------------------------------------------------

    \507\ See 84 FR 23274, 23324-26 (May 21, 2019). The proposal 
used the terms ``work'' and ``non-work'' email addresses. Consistent 
with other sections of the final rule, final Sec.  1006.22(f)(3) 
replaces these terms with ``employer-provided'' and ``personal,'' 
respectively.
---------------------------------------------------------------------------

    The Bureau received many comments regarding proposed Sec.  
1006.22(f)(3) from a wide variety of commenters. Many commenters, 
including several consumers, consumer advocates, a group of State 
Attorneys General, Federal government agency staff, a local government 
agency, a commenter from an academic institution, and a number of 
industry commenters generally supported proposed Sec.  1006.22(f)(3). 
Some consumer advocates argued, however, that the Bureau should further 
restrict, or even prohibit, debt collectors' use of employer-provided 
email addresses.
    By contrast, many industry commenters questioned the Bureau's basis 
for proposed Sec.  1006.22(f)(3), raising concerns that it was overly 
restrictive in light of the privacy features of email and citing the 
potential cost of compliance compared to lack of evidence of consumer 
harm. Some such commenters argued that the Bureau should not include 
the provision in the final rule. For example, some industry

[[Page 76835]]

commenters argued that employees are well aware that their employer has 
the right to view emails sent to email addresses within the employer-
provided email domain and thus are aware of the risks of being 
contacted at such addresses. Several industry commenters believed that 
debt collectors should be permitted to contact consumers at employer-
provided email addresses as long as consumers could opt out. Another 
argued that debt collectors should be permitted to communicate or 
attempt to communicate using an email address that is not obviously 
employer provided unless a consumer expressly states a desire not to be 
contacted at work.\508\
---------------------------------------------------------------------------

    \508\ As discussed further below, many industry commenters also 
expressed significant compliance concerns with the ``should know'' 
aspect of the proposed knowledge standard.
---------------------------------------------------------------------------

    After considering this feedback, the Bureau is finalizing proposed 
Sec.  1006.22(f)(3) with revisions, as discussed below, because the 
Bureau concludes that the provision provides important protections for 
consumers. As discussed in the proposal, employers often have the right 
to access, and may monitor, email accounts they provide to employees. 
And the risks of harm to consumers from debt collectors sending 
messages to an employer-provided email address are particularly high 
because of the risk of adverse employment consequences, which can cause 
economic harm and exacerbate a consumer's financial distress, including 
by making it more difficult to satisfy outstanding financial 
obligations. The legislative history of the FDCPA indicates an emphasis 
on preventing such risks to a consumer's employment from debt 
collection communications. Final Sec.  1006.22(f)(3) provides 
protections specific to such harms consumers may face with the use of 
employer-provided email addresses.
Knows-or-Should-Know Standard
    Section 1006.22(f)(3) proposed, in relevant part, to prohibit debt 
collectors from communicating or attempting to communicate with a 
consumer using an email address that the debt collector knows or should 
know is provided to the consumer by the consumer's employer. Proposed 
comment 22(f)(3)-3 described the know or should know standard and set 
forth three scenarios in which a debt collector would have met it. 
Proposed comment 22(f)(3)-3 also stated that, absent contrary 
information, a debt collector would not know (and should not know) that 
an email address was employer provided if the domain name in the email 
address was one commonly associated with a provider of personal email 
addresses (e.g., gmail.com).\509\
---------------------------------------------------------------------------

    \509\ See 84 FR 23274, 23325 (May 21, 2019).
---------------------------------------------------------------------------

    Notwithstanding the examples in proposed comment 22(f)(3)-3, a 
number of commenters, including many industry and some consumer 
advocate commenters, expressed concern about the ``should know'' 
standard, stating that, in many cases, debt collectors may be unable to 
easily or reliably distinguish between employer-provided and personal 
email addresses. A number of industry commenters, for example, stated 
that whether an ``.edu'' email address belongs to a student or employee 
of an educational institution can be ambiguous. Similarly, several 
consumer advocate commenters questioned whether debt collectors would 
be able to rely on domain name alone to distinguish personal from 
employer-provided email addresses because some consumers use free or 
low-cost email accounts in connection with their employment. Industry 
commenters explained that there currently are no systems to scrub email 
addresses to determine whether they are employer provided and that 
developing and maintaining such systems would cost the industry 
millions of dollars and entail privacy risks for consumers. Many 
industry commenters stated that the lack of clarity regarding ``should 
know'' would impose significant costs on debt collectors and increase 
litigation risk, and some stated that it would discourage debt 
collectors from using email altogether, even if email might potentially 
benefit some consumers.
    Industry commenters suggested a number of revisions to proposed 
Sec.  1006.22(f)(3) to address their concerns regarding the knowledge 
standard. A variety of industry commenters suggested that the Bureau 
should include a presumption that email domain names commonly 
associated with personal accounts (e.g., gmail, hotmail, yahoo, msn, 
and other similar products) are personal email addresses, unless the 
debt collector knows or has reason to know that such email addresses 
are employer provided. Other industry commenters requested that the 
Bureau limit Sec.  1006.22(f)(3) to situations in which the debt 
collector knows an email address is employer provided. Other industry 
commenters asked the Bureau to clarify that debt collectors are not 
required to impute knowledge that one consumer's email address is 
employer provided to other consumers who are employees of the same 
employer. On the other hand, a consumer advocate commenter and a law 
firm commenter argued that finalizing Sec.  1006.22(f)(3) to include an 
actual knowledge standard would make it too difficult for consumers to 
establish a violation.
    The Bureau appreciates that, under a ``should know'' standard, debt 
collectors may have difficulty determining, for example, whether 
certain email addresses are employer provided and that such uncertainty 
may cause some debt collectors to refrain from communicating through 
any email address, even if email might be beneficial and preferable for 
at least some consumers. As discussed elsewhere in part V, the final 
rule clarifies the FDCPA's application to electronic communication 
media and such clarity is intended, in part, to permit those consumers 
and debt collectors who prefer to use such newer communication 
technologies to do so while also establishing important consumer 
protections.
    The Bureau also understands concerns raised by consumer advocate 
commenters about an actual knowledge standard. However, in light of the 
difficulties identified regarding a ``should know'' standard, and 
because the Bureau finds that consumers will benefit from a clear 
prohibition in the final rule against the use of employer-provided 
email addresses, the Bureau is finalizing Sec.  1006.22(f)(3) to 
generally prohibit debt collectors from communicating or attempting to 
communicate with a consumer by sending an email to an email address 
that the debt collector knows is provided to the consumer by the 
consumer's employer.\510\ The standard is consumer-specific; that is, a 
debt collector does not necessarily know that a consumer's email 
address is employer provided merely because the domain name for that 
email address is the same as the domain name for an email address that 
a different consumer has told the debt collector is employer provided.
---------------------------------------------------------------------------

    \510\ The Bureau notes that debt collectors remain subject to 
the general prohibition on third-party disclosure in Sec.  
1006.6(d)(1) and that consumers may set communication limits 
according to their preferences under Sec. Sec.  1006.6(b)(1) and 
1006.14(h).
---------------------------------------------------------------------------

Consent and Prior Use Exceptions
    Proposed Sec.  1006.22(f)(3) provided that a debt collector could 
communicate or attempt to communicate with a consumer using an 
employer-provided email address if the debt collector had received 
directly from the consumer either prior consent to use that email 
address or an email from that email address. Proposed comments 
22(f)(3)-1 and -2 clarified these exceptions.

[[Page 76836]]

    Several industry commenters supported the consent provision as 
proposed, but many requested that debt collectors be able to rely on 
evidence of consent provided to the creditor, such as an employer-
provided email address included in a loan application or an email 
recently used by a creditor.\511\ One industry commenter asked that 
debt collectors be able to rely on a documented specific request by a 
consumer to be contacted at an employer-provided email address. Other 
industry commenters asked the Bureau to clarify how the rule applies if 
a consumer withdraws consent for the debt collector to use an employer-
provided email address after the debt collector has sent an email to 
that address. Two industry commenters recommended that consumers be 
required to provide debt collectors an alternative email address if 
they withdraw their consent to be contacted at their employer-provided 
address.
---------------------------------------------------------------------------

    \511\ The proposal stated that a consumer may consent to 
receiving emails from a creditor on their work account based on the 
characteristics of that particular creditor; in contrast, consumers 
generally have no ability to choose which debt collector attempts to 
collect their debts. 84 FR 23274, 23326 (May 21, 2019). Some 
industry commenters disagreed. They stated that most contracts 
specify that the creditor may hire a third-party debt collector if 
the consumer fails to uphold the agreement and that, in the 
commenters' view, the debt collector should therefore be able to use 
an email address provided by the consumer to the creditor.
---------------------------------------------------------------------------

    Consumer advocate commenters generally argued that the Bureau 
should limit how a debt collector could obtain a consumer's prior 
consent. A number of consumer advocate commenters requested that 
consent be provided in conformity with the requirements of the E-SIGN 
Act. One consumer advocate commenter requested that the Bureau prohibit 
debt collectors from soliciting employer-provided email addresses. 
Another consumer advocate commenter requested that the Bureau narrow 
the scope of the consent exception by only allowing, in some 
circumstances, the debt collector to respond by sending a single 
follow-up email to confirm the consumer's consent.
    Regarding industry commenters' suggestion that prior consent cover 
email addresses the consumer provided to a creditor, the Bureau finds 
that, as discussed in the section-by-section analysis of Sec.  
1006.6(d)(4), consumers might not appreciate the risks of sharing an 
email address with a creditor at the time of initiating an account 
relationship, when the prospect of defaulting on a financial obligation 
is remote. The Bureau also declines to require consumers who are 
withdrawing their prior consent for debt collectors to use an employer-
provided email address to provide an alternative email address to debt 
collectors. Such a requirement does not have a basis in the FDPCA and 
is not necessary or warranted for debt collectors to avoid a third-
party disclosure violation. As to the request for clarification about 
what to do if a consumer withdraws consent to communicate using an 
employer-provided address, the Bureau notes that Sec.  1006.14(h) 
prohibits debt collectors from using that email address again.\512\
---------------------------------------------------------------------------

    \512\ The Bureau notes that one commenter asked that debt 
collectors be able to rely on a documented specific request by a 
consumer to be contacted at an employer-provided email address. A 
consumer who specifically requested to be contacted at an employer-
provided email address would qualify as prior direct consent under 
the final rule.
---------------------------------------------------------------------------

    The Bureau finds that it is not necessary to limit the prior 
consent exception in the ways that consumer advocates suggested in 
light of other revisions to the final rule addressing consent for and 
prior use of particular email addresses. As discussed in the section-
by-section analysis of Sec.  1006.6(d)(4)(i) and (iii), the procedures 
described in those sections are tailored to minimize the risk of third-
party disclosures, including disclosures to employers. Specifically, 
Sec.  1006.6(d)(4)(i) outlines procedures based on whether the consumer 
used the email address to communicate with the debt collector or 
directly consented to the debt collector's use of the address. These 
procedures permit the consumer to assess the risk of a third-party 
disclosure, including to an employer, before deciding whether to 
communicate by email. Section 1006.6(d)(4)(iii) outlines procedures 
based on communication by a prior debt collector and limits a debt 
collector to using email addresses that, among other things, were 
obtained by a prior debt collector under Sec.  1006.6(d)(4)(i) or 
(ii).\513\
---------------------------------------------------------------------------

    \513\ An additional requirement of Sec.  1006.6(d)(4)(iii) is 
that the consumer did not opt out of the immediately prior debt 
collector's use of the particular email address. This requirement, 
when satisfied, suggests that the risk of third-party disclosure is 
low if the later debt collector uses the email address, even if that 
debt collector knows the email address is employer provided.
---------------------------------------------------------------------------

    The Bureau also declines to adopt consumer advocates' 
recommendation to prohibit debt collectors from soliciting employer-
provided email addresses. While the Bureau appreciates the risk that a 
debt collector could engage in abusive, deceptive, or unfair conduct to 
obtain a consumer's consent to use an employer-provided email address, 
a per se prohibition on soliciting a consumer's permission would be 
overbroad because debt collectors need not engage in such conduct to 
obtain consumer consent. And, to the extent a debt collector does so, 
the debt collector will have violated one or more of FDCPA sections 806 
through 808 and Sec. Sec.  1006.14(a), 1006.18(a), and 1006.22(a). For 
these reasons, the Bureau is finalizing Sec.  1006.22(f)(3) to provide, 
as proposed, prior consent and consumer use exceptions to the general 
prohibition. For ease of compliance, however, the Bureau is finalizing 
the exceptions by replacing them with a cross-reference to Sec.  
1006.6(d)(4)(i) and (iii), which, as described above, are generally 
consistent with the proposed exceptions.
    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.22(f)(3) to prohibit a debt collector from communicating or 
attempting to communicate with a consumer by sending an email to an 
email address that the debt collector knows is provided to the consumer 
by the consumer's employer, unless the email address is one described 
in Sec.  1006.6(d)(4)(i) or (iii).\514\ The Bureau is adopting new 
comment 22(f)(3)-1 to further clarify that a debt collector who sends 
an email to an email address described in Sec.  1006.6(d)(4)(i) or 
(iii) does not violate the prohibition in Sec.  1006.22(f)(3), even if 
the debt collector knows the email address is employer provided. New 
comment 22(f)(3)-1 also clarifies that a debt collector who sends an 
email to an email address described in Sec.  1006.6(d)(4)(ii) complies 
with Sec.  1006.22(f)(3) because a debt collector who follows Sec.  
1006.6(d)(4)(ii) does not, by definition, send an email to an email 
address that the debt collector knows is provided by a consumer's 
employer. In effect, therefore, comment 22(f)(3)-1 clarifies that a 
debt collector who sends an email to an email address described in 
Sec.  1006.6(d)(4) does not violate Sec.  1006.22(f)(3).
---------------------------------------------------------------------------

    \514\ In light of the changes the Bureau is making to Sec.  
1006.22(f)(3), proposed comments 22(f)(3)-1 through -3 are no longer 
necessary, and the Bureau is not finalizing them.
---------------------------------------------------------------------------

22(f)(4)
    The FDCPA does not specifically address newer technologies, 
including social media. The Bureau proposed to provide that certain 
communications and communication attempts, when made using social 
media, represent unfair or unconscionable means to collect a debt in 
violation of FDCPA section 808, as proposed to be implemented in Sec.  
1006.22(a).\515\ Specifically, proposed Sec.  1006.22(f)(4) provided 
that a debt collector must not

[[Page 76837]]

communicate or attempt to communicate with a consumer in connection 
with the collection of a debt through a social media platform that is 
viewable by a person other than the persons described in Sec.  
1006.6(d)(1)(i) through (vi) (i.e., the consumer; the consumer's 
attorney; a consumer reporting agency, if otherwise permitted by law; 
the creditor; the creditor's attorney; or the debt collector's 
attorney).\516\ Proposed comment 22(f)(4)-1 provided certain 
clarifications regarding the proposed prohibition. As discussed below, 
the Bureau is finalizing proposed Sec.  1006.22(f)(4) with revisions in 
response to feedback and for clarity.
---------------------------------------------------------------------------

    \515\ See 84 FR 23274, 23326-27 (May 21, 2019).
    \516\ These individuals are those with whom a debt collector may 
communicate about a debt, even in the absence of an exception such 
as prior consent, without violating the FDCPA's prohibition against 
third-party communications. See the section-by-section analysis of 
Sec.  1006.6(d)(1).
---------------------------------------------------------------------------

Public-Facing Social Media Communications and Attempts to Communicate
    No commenters objected to the general concept of restricting 
publicly viewable social media communications as an unfair means of 
debt collection. Several industry commenters supported the proposed 
concept, as did a Federal government commenter, consumer advocate 
commenters, and individual consumer commenters.
    Some commenters were uncertain whether the proposal would have 
prohibited communications or attempts to communicate that might be 
viewable by social media platform providers, given that such providers 
were persons other than those specified in Sec.  1006.6(d)(1)(i) 
through (vi). The Bureau clarifies in the final rule that the 
prohibition applies to communications or attempts to communicate that 
can be viewed by members of the general public or a person's social 
media contacts,\517\ not to messages that could be accessible in some 
form by a social media platform provider but that are otherwise not 
viewable by the general public or a person's social media 
contacts.\518\
---------------------------------------------------------------------------

    \517\ In this way, Sec.  1006.22(f)(4) is similar to other 
provisions of the FDCPA and Regulation F that focus on protecting 
consumers from public disclosure of information regarding their 
debts. See FDCPA sections 806(3) (Sec.  1006.14(e)) and 808(7) and 
(8) (Sec.  1006.22(f)(1) and (2)).
    \518\ For further discussion of electronic communications and 
access by providers, see the section-by-section analysis of Sec.  
1006.6(d)(4)(ii)(E).
---------------------------------------------------------------------------

    Similarly, one industry commenter believed that the proposal's use 
of the word ``viewable'' would create compliance risk for messages 
inadvertently viewed by a third party on a shared device. The Bureau 
confirms that the prohibition in Sec.  1006.22(f)(4) applies to public-
facing communications and attempts to communicate, not to private 
messages (i.e., social media messages that cannot be viewed by members 
of the general public or a person's social media contacts) that might 
be inadvertently accessed by a third party.\519\
---------------------------------------------------------------------------

    \519\ Other commenters argued that the Bureau should prohibit 
private social media messages because of the risks involved in 
sending such messages, including the risk that they might be 
inadvertently accessed by third parties. Those comments are 
discussed in the section-by-section analysis below regarding private 
social media communications and attempts to communicate.
---------------------------------------------------------------------------

    One consumer advocate commenter stated that, instead of prohibiting 
communications or attempts to communicate through a social media 
platform that is viewable by a person other than the persons described 
in Sec.  1006.6(d)(1)(i) through (vi), the rule should prohibit social 
media communications or attempts to communicate that are viewable by 
anyone other than the consumer as defined in FDCPA section 803(3) 
(i.e., by anyone other than the person who owes or is alleged to owe 
the debt). The commenter explained that it was unaware of any social 
media platform that would allow for communications to be viewable only 
by the persons described in Sec.  1006.6(d)(1)(i) through (vi) and 
nobody else. The Bureau agrees that a debt collector's communications 
or attempts to communicate through a social media platform are unlikely 
to be limited in that way and is finalizing Sec.  1006.22(f)(4) without 
that language.
    One consumer advocate commenter stated that the scope of proposed 
Sec.  1006.22(f)(4) should be expanded to include not just public-
facing social media communications and communication attempts, but any 
public-facing electronic communication or attempt to communicate, e.g., 
comments to a blog post, group text, or chatroom discussions. The 
Bureau declines to expand the scope of Sec.  1006.22(f)(4) in this way. 
The Bureau notes that, even if not specifically prohibited by Sec.  
1006.22(f)(4), any public-facing communication (whether online or 
otherwise) may well violate one or more other prohibitions, such as the 
prohibition against third-party communications in FDCPA section 805(b) 
(as implemented by Sec.  1006.6(d)(1)); the prohibition against 
harassing, oppressive, or abusive conduct in FDCPA section 806 (as 
implemented by Sec.  1006.14(a)); and the prohibition against unfair or 
unconscionable collection means in FDCPA section 808 (as implemented by 
Sec.  1006.22(a)).
Private Social Media Communications and Attempts To Communicate
    Although proposed Sec.  1006.22(f)(4) would not have prohibited 
private communications or attempts to communicate by social media, most 
commenters who addressed proposed Sec.  1006.22(f)(4) addressed this 
topic.
    Some industry commenters noted that communicating privately through 
social media could benefit both consumers and debt collectors, but some 
also indicated that they do not currently use social media due to data 
security and privacy concerns.\520\ A few commenters noted that 
consumers do not provide their social media contact information to 
creditors and therefore do not expect to be contacted through that 
channel about financial matters, although one industry commenter noted 
that consumers might post about their collection experiences in a 
social media forum and companies might monitor social media for such 
mentions.\521\ One group of consumer advocates stated that some 
consumers might be advantaged by private social media communications. 
But this commenter, along with many consumer, consumer advocate, 
government, and other commenters, expressed concerns about such 
communications, as discussed further below. One member of Congress 
expressed particular concern regarding private social media debt 
collection communications about consumers' medical debts, which, this 
commenter stated, could include consumers' protected health-care 
information. In light of those concerns, some of these commenters 
argued that the Bureau should either expand Sec.  1006.22(f)(4) to also 
ban private social media communications and attempts to communicate or 
to require debt collectors to obtain prior consent directly from 
consumers before communicating privately through social media.\522\ The 
Bureau declines to do so for the reasons discussed below.
---------------------------------------------------------------------------

    \520\ A few industry commenters noted the possibility of inbound 
private social media messages from consumers. In response to a 
request for clarification, the Bureau notes that nothing in the 
FDCPA or the final rule requires a debt collector to communicate 
using a social media platform merely because a consumer sends the 
debt collector a message using that platform.
    \521\ The Bureau notes that debt collectors can respond to such 
posts privately, as discussed below, and that the prohibition in 
Sec.  1006.22(f)(4) applies only to communications and attempts to 
communicate in connection with the collection of a debt.
    \522\ Many commenters in support of a prior consent requirement 
recommended that consent be express and provided directly to the 
debt collector or conform with the E-SIGN Act's consumer consent 
provisions. See 15 U.S.C. 7001(c)(1).

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[[Page 76838]]

    One common area of concern among commenters regarding private 
social media messages was the risk of third-party disclosures, which 
commenters observed could occur if, for example, debt collectors 
accidentally sent messages to the wrong person (e.g., to a person with 
a similar name as the consumer) or if social media platform providers 
accessed private communications for advertising or other purposes. As 
to sending messages to the wrong person, debt collectors remain subject 
to Sec.  1006.6(d)(1) when communicating through social media and, 
accordingly, should exercise caution to avoid violating FDCPA section 
805(b) and Sec.  1006.6(d) by communicating with the wrong 
consumer.\523\ For example, a debt collector would violate FDCPA 
section 805(b) and Sec.  1006.6(d) if, as suggested in one 
hypothetical, the debt collector communicated by private social media 
message with the wrong person because the debt collector merely 
identified a person with the same or similar name as the consumer.\524\ 
As to social media platform providers accessing private communications, 
the Bureau discusses this concern in Sec.  1006.6(d)(4)(ii)(E). 
Accordingly, the Bureau declines to prohibit private social media 
communications and attempts to communicate.
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    \523\ For the reasons discussed in the section-by-section 
analysis of Sec.  1006.6(d)(3), although the Bureau is outlining 
procedures that, when followed, may provide a debt collector a safe 
harbor from civil liability for a third-party disclosure when 
sending emails and text messages, the Bureau is not outlining such 
procedures for sending private social media messages.
    \524\ Commenters also expressed concern that third-party 
disclosures of private social media messages might occur as the 
result of identity theft or a data breach; inadvertently (e.g., if 
the consumer shares a device with another person); or if consumers 
give permission to a third party. The Bureau notes that these types 
of risks are present in any type of electronic debt collection 
communication and that debt collectors must take care not to violate 
the general prohibition against third-party disclosures in FDCPA 
section 805(b) (Sec.  1006.6(d)(1)).
---------------------------------------------------------------------------

    Other commenters expressed concern about consumers' ability to 
communicate effectively about a debt over social media. Several 
consumer advocates explained that some consumers would inadvertently 
miss important information, such as the validation notice, if it were 
sent using social media, due to difficulty accessing information online 
or managing a high number of electronic communications. The Bureau 
notes that, as discussed in the section-by-section analysis of Sec.  
1006.42, it is finalizing standards that a debt collector must meet to 
send required disclosures electronically, including that the disclosure 
must be sent in a manner that is reasonably expected to provide actual 
notice to the consumer, and, with respect to the validation notice that 
is not the initial communication, that the disclosure be sent in 
accordance with section 101(c) of the E-SIGN Act. The Bureau notes that 
communications over social media may be less likely to reach consumers 
and therefore, under the final rule, debt collectors may be less likely 
to meet these standards by sending validation notices to consumers 
through private social media messages.
    Some commenters worried about the potential for deception from 
private social media messages. Consumer commenters expressed concern 
that consumers would have difficulty verifying the identity of a debt 
collector over social media. Relatedly, a group of State Attorneys 
General, a Federal government commenter, and a member of Congress 
identified risks from potentially deceptive acts or practices, such as 
``friending'' someone in connection with the collection of the debt in 
a way that omits material information about the debt collector's 
identity and motives. One member of Congress expressed particular 
concern regarding this conduct in connection with collection of medical 
debts. In response to commenters' concerns, the Bureau notes that the 
specific conduct described above likely would violate FDCPA section 807 
and final Sec.  1006.18's prohibition against false or deceptive 
representations, as discussed in the section-by-section analysis of 
Sec.  1006.18(d).
    Some commenters observed that consumers might find private social 
media communications from debt collectors unwelcome or harassing, 
particularly because consumers do not provide social media contact 
information to creditors and generally are not accustomed to being 
contacted about financial matters in this way. While the Bureau 
recognizes this concern, the Bureau also notes that private messages 
are subject to all of the provisions of the FDCPA and the final rule, 
including all of the provisions designed to empower consumers to 
communicate with debt collectors in the manner that they prefer (i.e., 
the time and place restrictions in FDCPA section 805(a) and Sec.  
1006.6(b)(1),\525\ the opt-out instructions for electronic 
communications in Sec.  1006.6(e), and the limitations on use of 
certain communications media in Sec.  1006.14(h)). They also are 
subject to the FDCPA's general prohibitions against unfair, deceptive, 
and abusive conduct in sections 806 through 808 (final Sec. Sec.  
1006.14, 1006.18, and 1006.22).\526\
---------------------------------------------------------------------------

    \525\ One industry commenter requested that the Bureau clarify 
whether private messages on social media platforms would be subject 
to time and place restrictions under the FDCPA; the Bureau clarifies 
that they would be. Section 1006.6, and specifically final comments 
6(b)(1)-1 and -2 and 6(b)(1)(i)-1, provide guidance about how the 
time and place restrictions apply in the case of electronic 
communications, which include private social media messages.
    \526\ Several groups of consumer advocate commenters argued that 
private social media messages should be subject to a frequency limit 
like the one the Bureau proposed in Sec.  1006.14 with respect to 
telephone calls. For the reasons discussed in the section-by-section 
analysis of Sec.  1006.14, electronic communications, including 
private social media messages, are not subject to the telephone call 
frequencies in final Sec.  1006.14(b). However, as noted, they are 
subject to the general prohibition in FDCPA section 806 and final 
Sec.  1006.14(a) against conduct the natural consequence of which is 
to harass, oppress, or abuse any person in connection with the 
collection of a debt. See the section-by-section analysis of Sec.  
1006.14(a) and (b).
---------------------------------------------------------------------------

    Some consumer advocates recommended that consumers be able to opt 
out of private social media messages, among other types of electronic 
communications, such as by allowing consumers to reply simply with 
``stop.'' Others suggested that consumers should be allowed to opt out 
of all social media platforms because opting out of individual 
platforms would be burdensome. The Bureau notes that, under the final 
rule, debt collectors will be required to include, in any private 
social media message, a reasonable and simple method by which the 
consumer can opt out of receiving further messages. Consumers also will 
have the option to opt out of all social media communications, or 
communications through a particular platform.\527\
---------------------------------------------------------------------------

    \527\ See the section-by-section analyses of Sec. Sec.  
1006.6(e) and 1006.14(h), respectively.
---------------------------------------------------------------------------

Coverage
    As proposed, Sec.  1006.22(f)(4) would have applied only to 
communications or attempts to communicate with a consumer, as defined 
in FDCPA section 803(3) and proposed Sec.  1006.2(e) (i.e., the person 
obligated or allegedly obligated to pay the debt). A consumer advocate 
commenter stated that the Bureau should broaden Sec.  1006.22(f)(4) to 
apply to consumers as defined in FDCPA section 805(d) and proposed 
Sec.  1006.6(a) (i.e., to the person obligated or allegedly obligated 
to pay the debt and that person's spouse, parent (if the person is a 
minor), or guardian, or the executor or administrator of the person's 
estate), as well as to deceased consumers. The commenter explained that 
debt collectors should not be able to post

[[Page 76839]]

publicly about a deceased consumer's alleged debt on the person's 
social media account because a debt collector's only reason for doing 
so would be to pressure surviving relatives to pay the debt, either to 
protect the deceased consumer's reputation or out of a sense of moral 
obligation. Other commenters raised concerns about debt collectors 
contacting persons other than consumers, such as family members, by 
social media and as discussed above, many commenters supported a broad 
ban on public-facing social media communications.
    The Bureau is finalizing Sec.  1006.22(f)(4) with revisions to the 
scope of coverage. Specifically, final Sec.  1006.22(f)(4) prohibits a 
debt collector from communicating or attempting to communicate with a 
person, in connection with the collection of a debt, through a social 
media platform if the communication or attempt to communicate is 
viewable by the general public or the person's social media contacts. 
The definition of person includes a consumer. FDCPA section 803(3) 
defines a consumer as any natural person obligated or allegedly 
obligated to pay any debt. As noted in the section-by-section analysis 
of Sec.  1006.2(e), the Bureau received a number of comments regarding 
its proposal to interpret the term consumer to include deceased natural 
persons. 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.
    For the reasons discussed above, the Bureau is finalizing Sec.  
1006.22(f)(4) to provide that a debt collector must not communicate or 
attempt to communicate with a person in connection with the collection 
of a debt through a social media platform if the communication or 
attempt to communicate is viewable by the general public or the 
person's social media contacts.\528\ The Bureau is finalizing proposed 
comment 22(f)(4)-1 with revisions to conform to the text of the final 
rule.\529\
---------------------------------------------------------------------------

    \528\ As proposed, Sec.  1006.22(f)(4) provided, in relevant 
part, that a debt collector must not communicate or attempt to 
communicate ``by a social media platform that is viewable'' by the 
public. The Bureau is finalizing Sec.  1006.22(f)(4) to provide, in 
relevant part, that a debt collector must not communicate or attempt 
to communicate ``through a social media platform if the 
communication or attempt to communicate is viewable'' by the general 
public, to clarify that the relevant question is whether the 
communication or attempt to communicate is viewable, not whether the 
platform itself is viewable.
    \529\ Among other conforming changes, final comment 22(f)(4)-1 
omits references to limited-content messages. As discussed in the 
section-by-section analysis of Sec.  1006.2(j), final Sec.  
1006.2(j) defines a limited-content message to mean a voicemail 
message for a consumer. Accordingly, under the final rule, it will 
not be possible for debt collectors to leave limited-content 
messages using social media. In light of this change, the Bureau 
does not further address comments received regarding the use of 
limited-content messages in publicly viewable social media messages.
---------------------------------------------------------------------------

22(g) Safe Harbor
    Proposed Sec.  1006.22(g) provided that a debt collector who 
communicates with a consumer using an email address, or telephone 
number for text messages, and follows the procedures described in Sec.  
1006.6(d)(3) does not violate Sec.  1006.22(a) by revealing in the 
email or text message the debt collector's name or other information 
indicating that the communication relates to the collection of a debt. 
The procedures in proposed Sec.  1006.6(d)(3) were designed to ensure 
that a debt collector who uses a particular email address or telephone 
number to communicate with a consumer by email or text message does not 
have a reason to anticipate that an unauthorized third-party disclosure 
may occur. As the Bureau explained in the proposal, if the proposed 
procedures work as designed, there would not be a reason to anticipate 
that a third party would see the debt collector's name or other debt-
collection-related information included in a communication sent to such 
an email address or telephone number. Some consumer advocate commenters 
stated that the Bureau should not finalize the proposed safe harbor for 
emails and text messages in Sec.  1006.22(g) because the commenter 
believed the procedures in proposed Sec.  1006.6(d)(3) were 
inadequate.\530\
---------------------------------------------------------------------------

    \530\ A few industry commenters stated that the safe harbor in 
proposed Sec.  1006.22(g) should be expanded to include voicemails. 
As to voicemails, final Sec.  1006.2(j) defines a limited-content 
message that debt collectors can leave for consumers without 
communicating under the FDCPA.
---------------------------------------------------------------------------

    The Bureau is finalizing Sec.  1006.22(g) substantially as 
proposed. For the reasons discussed in the section-by-section analysis 
of Sec.  1006.6(d)(3) through (5), the Bureau believes the safe harbor 
procedures at Sec.  1006.6(d)(3) will provide appropriate consumer 
protections and that debt collectors using those procedures would not 
have reason to anticipate a third-party disclosure would occur. If a 
debt collector is using those procedures, the Bureau concludes that a 
safe harbor for Sec.  1006.22(a) is necessary and warranted. 
Accordingly, the Bureau is finalizing Sec.  1006.22(g) substantially as 
proposed, with technical revisions for clarity.
Section 1006.26 Collection of Time-Barred Debts
    Proposed Sec.  1006.26(a) and (b) would have defined the terms 
statute of limitations and time-barred debt and would have interpreted 
FDCPA section 807 to prohibit debt collectors from suing and 
threatening to sue consumers to collect time-barred debts.\531\ In 
addition, proposed Sec.  1006.26(c), as set forth in the Bureau's 
February 2020 proposal,\532\ would have required a debt collector 
collecting a debt that the debt collector knows or should know is time 
barred to disclose: (1) That the law limits how long the consumer can 
be sued for a debt and that, because of the age of the debt, the debt 
collector will not sue the consumer to collect it; and (2) if the debt 
collector's right to bring a legal action against the consumer to 
collect the debt can be revived under applicable law, the fact that 
revival can occur and the circumstances in which it can occur. The 
February 2020 proposal also included model language and forms that debt 
collectors could use to comply with the proposed time-barred debt and 
revival disclosures.
---------------------------------------------------------------------------

    \531\ 84 FR 23274, 23327-29 (May 21, 2019).
    \532\ The Bureau proposed the time-barred debt disclosures in 
the February 2020 proposal. 85 FR 12672 (Feb. 21, 2020).
---------------------------------------------------------------------------

    The Bureau is not finalizing proposed Sec.  1006.26 at this time. 
As noted in part III, the comment period for the February 2020 proposal 
closed on August 4, 2020, and the Bureau is now completing its review 
and evaluation of all comments received regarding proposed Sec.  
1006.26. As discussed in the section-by-section analysis of Sec.  
1006.34, the Bureau intends to issue a disclosure-focused final rule to 
address the Bureau's proposed validation notice, and the Bureau intends 
to address Sec.  1006.26 at that time, as well. For this reason, the 
Bureau is reserving Sec.  1006.26.
Section 1006.30 Other Prohibited Practices
    The Bureau proposed in Sec.  1006.30 several measures designed to 
protect consumers from certain harmful debt collection practices. 
Specifically, the Bureau proposed in Sec.  1006.30(a) to regulate debt 
collectors' furnishing practices under certain circumstances; in Sec.  
1006.30(b) to limit the transfer of certain debts; and in Sec.  
1006.30(c), (d), and (e) to generally restate statutory provisions 
regarding allocation of payments, venue, and the furnishing of certain 
deceptive forms, respectively. The Bureau received no comments 
specifically addressing proposed Sec.  1006.30(e) regarding the 
furnishing of deceptive forms and is finalizing it as

[[Page 76840]]

proposed.\533\ Accordingly, the Bureau does not address Sec.  
1006.30(e) further in the section-by-section analysis below.
---------------------------------------------------------------------------

    \533\ The Bureau proposed Sec.  1006.30(e) to implement FDCPA 
section 812, 15 U.S.C. 1692j. 84 FR 23274, 23333 (May 21, 2019). 
FDCPA section 812 addresses the furnishing of deceptive forms and 
applies to any person, not just to debt collectors. As noted in the 
proposal, Sec.  1006.30(e), like the rest of the rule, applies only 
to FDCPA debt collectors. FDCPA section 812 continues to prohibit 
other persons from furnishing deceptive forms. Id. at 23286 n.137.
---------------------------------------------------------------------------

30(a) Communication Prior To Furnishing Information
    Proposed Sec.  1006.30(a) would have prohibited a debt collector 
from furnishing to a consumer reporting agency, as defined in section 
603(f) of the Fair Credit Reporting Act (FCRA),\534\ information 
regarding a debt before communicating with the consumer about the 
debt.\535\ The Bureau is not finalizing proposed Sec.  1006.30(a) at 
this time. As discussed in the section-by-section analysis of Sec.  
1006.34, the Bureau intends to issue a disclosure-focused final rule to 
address the Bureau's proposed validation notice, and the Bureau intends 
to address proposed Sec.  1006.30(a) at that time, as well. For this 
reason, the Bureau is reserving Sec.  1006.30(a).
---------------------------------------------------------------------------

    \534\ 15 U.S.C. 1681 et seq. FCRA section 603(f) is codified at 
15 U.S.C. 1681a.
    \535\ See 84 FR 23274, 23329-30 (May 21, 2019).
---------------------------------------------------------------------------

30(b) Prohibition on the Sale, Transfer for Consideration, or Placement 
for Collection of Certain Debts
30(b)(1) In General
    The Bureau proposed in Sec.  1006.30(b)(1) to prohibit a debt 
collector from selling, transferring, or placing for collection a debt 
if the debt collector knows or should know that the debt has been paid 
or settled, discharged in bankruptcy, or that an identity theft report 
has been filed with respect to the debt (``transfer ban'').\536\ The 
Bureau proposed Sec.  1006.30(b)(1) pursuant to its authority under 
FDCPA section 814(d) to prescribe rules with respect to the collection 
of debts by debt collectors, and pursuant to its authority to interpret 
FDCPA section 808 regarding unfair or unconscionable debt collection 
practices. The Bureau proposed to prohibit the sale, transfer, or 
placement of such debts as unfair under FDCPA section 808 on the basis 
that, because consumers do not owe or cannot lawfully be subject to 
collections on alleged debts that have been paid or settled or 
discharged in bankruptcy, and likely do not owe alleged debts that are 
subject to identity theft reports, the sale, transfer, or placement of 
such debts is unfair or unconscionable. The Bureau also proposed Sec.  
1006.30(b)(1) pursuant to its authority under section 1031(b) of the 
Dodd-Frank Act to prescribe rules to identify and prevent unfair acts 
or practices by Dodd-Frank Act covered persons.
---------------------------------------------------------------------------

    \536\ See id. at 23330-32.
---------------------------------------------------------------------------

    The Bureau received numerous substantive comments addressing the 
proposed transfer ban. Some industry commenters, including creditors 
and associations thereof, as well as the U.S. SBA Office of Advocacy, 
expressed concern about the Bureau's proposed adoption of the transfer 
ban through reliance on its authority under section 1031(b) of the 
Dodd-Frank Act in addition to its FDCPA authority. These commenters 
stated that use of authority under section 1031(b) of the Dodd-Frank 
Act creates uncertainty and legal risk for creditors without increasing 
consumer protections because a ban might be imputed to creditors even 
if they are not FDCPA debt collectors. These commenters urged the 
Bureau to adopt the transfer ban using only its FDCPA authority. These 
commenters further commented that, if the Bureau retained the use of 
its authority under section 1031(b) of the Dodd-Frank Act, the Bureau 
should take other steps to provide clarity, such as explicitly 
excluding debt sales by creditors from the transfer ban, adding a safe 
harbor for sale or transfer of accounts by creditors subject to a 
repurchase agreement, or permitting creditors to invoke the bona fide 
error defense in FDCPA section 813(c) in the context of the transfer 
ban.
    Some industry commenters stated that the ``should know'' aspect of 
the proposed ``knows or should know'' standard is unclear and argued 
that the rule should reflect a ``knows'' standard, or, if ``should 
know'' is retained, include safe harbors for certain practices. For 
example, some of these commenters stated that the rule should provide a 
safe harbor for the bankruptcy prong of the ban to a debt collector who 
``scrubs'' a debt against commercially available databases 30 days 
before the debt's sale, transfer, or placement to ascertain whether the 
debt has been discharged in bankruptcy.
    Industry commenters also suggested changes to the proposed transfer 
ban's application to a debt for which an identity theft report has been 
filed. These commenters asserted that the proposed transfer ban would 
increase consumers' incentives to make false identity theft claims in 
order to avoid repaying their debts. These commenters requested that 
the rule permit a debt collector to investigate a consumer's identity-
theft claim--within a prescribed time period of, for example, 30 days--
and to sell, transfer, or place the debt if, pursuant to its 
investigation, the debt collector determines that the claim is not 
valid. Some of these commenters noted that the FCRA prohibits a person 
from selling, transferring for consideration, or placing for collection 
a debt after being notified that a consumer reporting agency identified 
that debt as having resulted from identity theft. They also noted that 
the FCRA includes provisions designed to ensure that consumer reporting 
agencies and furnishers are able to conduct reasonable investigations 
of consumers' identity-theft claims and to prevent consumers and credit 
repair companies from abusing the FCRA's identity-theft related 
consumer protections.
    Industry commenters also provided comments seeking other 
modifications and clarifications to the proposed transfer ban. One 
industry commenter stated that the ban should apply to disputed debts 
if the debt collector does not have access to original account-level 
documentation; other industry commenters said that the ban should not 
encompass any additional debt types beyond those set forth in the 
proposal. Finally, one industry commenter stated that the Bureau should 
clarify that the transfer ban does not prohibit the return of an 
assignment, a file of data being sent for analytics, or a file sent for 
``scrubbing.'' Instead, commenters argued the transfer ban should apply 
only when the transferring entity intends the receiving entity to 
undertake collection activity for receiving payment from the debtor.
    Consumer advocates suggested that the Bureau expand the transfer 
ban's coverage in proposed Sec.  1006.30(b)(1) to encompass several 
additional types of debt beyond, as proposed, debts that have been paid 
or settled, discharged in bankruptcy, or that are subject to an 
identity theft report. They suggested that the ban also prohibit the 
sale, transfer, or placement of time-barred debt, disputed debt, debt 
lacking ownership documentation, debt subject to litigation, and debt 
that has been extinguished pursuant to State law. They also suggested 
that the Bureau clarify that the proposed ban of the sale, transfer, or 
placement of ``debt that has been paid or settled'' would apply if a 
consumer has entered into an uncompleted settlement agreement, as 
opposed to being limited to a completed repayment agreement. They also 
suggested that the rule explicitly prohibit the collection of these 
types of debt (in addition to banning their transfer, placement, or 
sale). Further, they suggested that, if an identity-theft

[[Page 76841]]

report has been filed regarding a debt, the rule should prohibit a debt 
collector from reporting the debt to a credit reporting agency (in 
addition to banning its transfer, placement, or sale).
    A comment letter from Federal government agency staff did not 
address expanding the proposed transfer ban to encompass the above-
mentioned types of debt but did recommend that the Bureau prohibit the 
sale, transfer, or placement of debts that are counterfeit or 
fictitious. This letter also observed that the FCRA currently prohibits 
a person from selling, transferring, or placing for collection any debt 
after being notified that the debt resulted from identity theft.
    Consumer advocates suggested that the transfer ban in proposed 
Sec.  1006.30(b)(1) be modified in several additional respects. Some 
suggested that the rule prohibit the sale, transfer, or placement of 
debt unless the prior debt collector represents in writing that the 
debt has not been paid, settled, or otherwise discharged; is not time 
barred; and whether the debt is subject to a dispute. Some suggested 
that the rule clarify that a debt collector may not require a consumer 
to file an identity-theft report with the police or to complete a 
specific identity-theft report form required by the debt collector for 
the prohibition to apply. Instead, they said, the rule should require a 
debt collector to accept from a consumer the FTC identity-theft report 
form, thereby furthering the FTC's goal of reducing the need for police 
reports. They also suggested that the rule require debt collectors to 
perform a search of PACER or of another commercially available database 
to screen for bankruptcy discharges prior to a debt's sale, transfer, 
or placement for collection.
    Taking into consideration all the comments regarding the proposed 
transfer ban in Sec.  1006.30(b)(1), the Bureau is finalizing the ban 
and its commentary with substantial revisions, as follows.
    Subject to the exceptions in Sec.  1006.30(b)(2), final Sec.  
1006.30(b)(1) prohibits a debt collector from selling, transferring for 
consideration, or placing for collection a debt if the debt collector 
knows or should know that the debt has been paid or settled or 
discharged in bankruptcy. The Bureau is finalizing Sec.  1006.30(b)(1) 
pursuant solely to its FDCPA authority. The Bureau has determined that 
the sale, transfer for consideration, or placement for collection of a 
debt that a debt collector knows or should know has been paid or 
settled or discharged in bankruptcy constitutes an unfair or 
unconscionable means to collect or attempt to collect the debt under 
FDCPA section 808 because consumers do not owe or cannot legally be 
subject to collections on alleged debts that have been paid or settled 
or discharged in bankruptcy, and yet the debt collector receives or 
expects to receive compensation for the sale, transfer, or placement of 
such debt.\537\
---------------------------------------------------------------------------

    \537\ The Bureau has not determined in connection with this 
final rule whether the sale, transfer for consideration, or 
placement for collection of such debts constitutes an unfair act or 
practice under section 1031 of the Dodd-Frank Act.
---------------------------------------------------------------------------

    Because the Bureau is finalizing Sec.  1006.30(b)(1) pursuant 
solely to its FDCPA authority, the Bureau determines it is clear, as 
the Bureau intended and stated in the proposal, that Sec.  
1006.30(b)(1) of the final rule does not apply to creditors, except to 
the extent the creditor is an FDCPA debt collector. Accordingly, the 
Bureau concludes it is not necessary or warranted for final Sec.  
1006.30(b)(1) to include a safe harbor or other requested 
clarifications for accounts that creditors sell or transfer as part of 
a portfolio subject to a repurchase agreement.
    As to concerns about the breadth of the ``know or should know'' 
language, the Bureau notes that the prohibition in Sec.  1006.30(b)(1) 
is limited to specific account circumstances. These account 
circumstances will, in general, be within the debt collector's ability 
to know or obtain the necessary knowledge. For example, whether a debt 
has been paid or settled is a fact that a debt collector knows or 
should know because it should be within the debt collector's account 
management system. Although bankruptcy may not be within the debt 
collector's own system in the same manner as paid or settled debts, a 
debt collector should be able to utilize a commercial database or 
publicly available records to reasonably assess whether a debt has been 
discharged in bankruptcy.\538\ Because of the limited nature of the 
transfer ban as finalized, the Bureau believes the ``know or should 
know'' standard is appropriate but will monitor this issue for any 
potential consumer harm or compliance concerns and revisit at a later 
time if needed.
---------------------------------------------------------------------------

    \538\ Depending on the circumstances, FDCPA section 813(c)'s 
defense against civil liability may also apply where a debt 
collector utilizes a commercial database to reasonably assess 
whether a debt has been discharged in bankruptcy.
---------------------------------------------------------------------------

    The Bureau declines to apply the prohibition in final Sec.  
1006.30(b)(1) to debts for which the consumer has reported identity 
theft. The Bureau believes that transfer of these debts is a consumer 
protection concern but recognizes that commenters identified several 
complexities with respect to the Bureau's incorporation of identity-
theft-related debt in proposed Sec.  1006.30(b)(1). Moreover, because 
FCRA section 615(f) prohibits a person from selling, transferring for 
consideration, or placing for collection a debt after such person has 
been notified in accordance with the FCRA that the debt resulted from 
identity theft, the Bureau believes that these consumer protection 
concerns can be addressed by adding new comment 30(b)(1)-2, which 
states that nothing in Sec.  1006.30(b)(1) alters a debt collector's 
obligation to comply with the prohibition set forth in FCRA section 
615(f)(1) (15 U.S.C. 1681m(f)(1)).\539\
---------------------------------------------------------------------------

    \539\ The Bureau considered the comments it received regarding 
prohibiting a debt collector from reporting an identity-theft debt 
to a credit reporting agency and from requiring a consumer to use a 
specific identity-theft report form. The FCRA provides a private 
right of action and places liability on ``any person'' for failure 
to comply with the FCRA. See FCRA sections 616 through 618, 15 
U.S.C. 1681n-1681p. As a result, the Bureau concludes it is 
unnecessary for the prohibition in Sec.  1006.30(b)(1) to address 
debt collector practices in the area of credit reporting.
---------------------------------------------------------------------------

    The Bureau also declines to expand the prohibition in Sec.  
1006.30(b)(1) to encompass other types of debt beyond debt that has 
been paid or settled or discharged in bankruptcy. The Bureau concludes 
that the transfer of time-barred debt, disputed debt, debt lacking 
ownership documentation, debt subject to litigation, debt in which the 
consumer has an uncompleted settlement agreement, or other types of 
debt suggested by commenters do not present the same unfairness and 
unconscionability concerns of the same prevalence and magnitude as the 
debt types to which the prohibition in Sec.  1006.30(b)(1) applies. The 
prohibition in Sec.  1006.30(b)(1) applies to debts that are 
extinguished or uncollectible or that consumers do not owe. For the 
reasons discussed above, the sale, transfer for consideration, or 
placement for collection of the debts described in Sec.  1006.30(b)(1) 
is unfair or unconscionable collection activity under FDCPA section 808 
because the consumer does not owe or cannot legally be subject to 
collection of such debt. While the debt types listed above in this 
paragraph may present consumer protection concerns, and while their 
collection remains subject to the FDCPA's general prohibitions on 
harassment or abuse, false or misleading statements, and unfair or 
unconscionable practices, the Bureau declines to expand the prohibition 
in Sec.  1006.30(b)(1) to encompass them.
    The Bureau declines to finalize a prohibition regarding the sale, 
transfer for consideration, or placement for collection of debt that a 
debt collector

[[Page 76842]]

knows or should know has been extinguished pursuant to State law or is 
counterfeit or fictitious. It clearly is an unfair or unconscionable 
practice under FDCPA section 808 for a debt collector to sell, transfer 
for consideration, or place for collection a debt that the debt 
collector knows or should know has been extinguished pursuant to State 
law or is counterfeit or fictitious.
    As noted above, some commenters stated that the term ``transfer'' 
should be clarified. The Bureau agrees, and final Sec.  1006.30(b)(1) 
therefore states that ``a debt collector must not sell, transfer for 
consideration, or place for collection a debt if the debt collector 
knows or should know. . . .'' (emphasis added). In addition, the Bureau 
is adopting new comment 30(b)(1)-1 to clarify that a debt collector 
transfers a debt for consideration if the debt collector receives or 
expects to receive compensation for the transfer. A debt collector does 
not transfer a debt for consideration if the debt collector sends 
information about the debt, as opposed to the debt account itself, to 
another party. For example, a debt collector does not transfer a debt 
for consideration if the debt collector sends a file with data about 
the debt to another person for analytics, ``scrubbing,'' or archiving. 
A debt collector also does not transfer a debt for consideration if the 
debt collector reports to a credit reporting agency information that a 
debt has been paid or settled or discharged in bankruptcy.
30(b)(2) Exceptions
    Proposed Sec.  1006.30(b)(2) set forth four narrow exceptions to 
proposed Sec.  1006.30(b)(1) to accommodate circumstances in which 
allowing the sale, transfer, or placement of the debts described in 
proposed Sec.  1006.30(b)(1) for certain bona fide business purposes 
other than debt collection may not create a significant risk of unfair 
collections activity. The Bureau proposed in Sec.  1006.30(b)(2)(i) to 
allow a debt collector to transfer a debt described in proposed Sec.  
1006.30(b)(1) to the debt's owner. The Bureau proposed in Sec.  
1006.30(b)(2)(ii) through (iv) three additional exceptions that 
paralleled the FCRA's exceptions to its prohibition on the sale, 
transfer for consideration, or placement for collection of debt caused 
by identity theft.\540\ Specifically, (1) the Bureau proposed in Sec.  
1006.30(b)(2)(ii) to allow a debt collector to transfer a debt 
described in proposed Sec.  1006.30(b)(1) to a previous owner if the 
transfer is authorized under the terms of the original contract between 
the debt collector and the previous owner; (2) proposed in Sec.  
1006.30(b)(2)(iii) to permit a debt collector to securitize such debt, 
or to pledge a portfolio of such debt as collateral in connection with 
a borrowing; and (3) proposed in Sec.  1006.30(b)(2)(iv) to allow a 
debt collector to transfer such debt as a result of a merger, 
acquisition, purchase and assumption transaction, or a transfer of 
substantially all of the debt collector's assets.
---------------------------------------------------------------------------

    \540\ See 15 U.S.C. 1681m(f)(3).
---------------------------------------------------------------------------

    With respect to the exceptions set forth in proposed Sec.  
1006.30(b)(2), industry commenters stated that the proposed ban of the 
sale, transfer, or placement of a debt that has been discharged in 
bankruptcy should treat secured debt differently. Specifically, these 
commenters said, if the discharged debt is a secured debt, including 
but not limited to a residential mortgage, the transfer ban should not 
impede a creditor's ability to maintain and exercise its security 
interest in the collateral that secures the discharged debt. Industry 
commenters suggested several approaches through which the rule might 
accomplish this objective, such as by including an exemption from the 
transfer ban for secured claims for residential mortgage loans and 
other secured debts.
    Consumer advocates also suggested changes to the proposed 
exceptions set forth in Sec.  1006.30(b)(2). Like industry commenters, 
consumer advocates suggested that the ban be modified with respect to 
mortgage debt. They observed that, after a bankruptcy discharge, the 
owner of the loan (or a debt collector acting on the owner's behalf) 
may nevertheless conduct a foreclosure sale if the borrower defaults on 
payments due under the loan obligation. Citing 11 U.S.C. 524(j), 
consumer advocates also observed that the bankruptcy code includes an 
exception to the discharge order that allows post-discharge debt 
collection limited to seeking or obtaining periodic payments due under 
a mortgage when the creditor seeks the payments as an alternative to 
exercise of its right to foreclose. Consumer advocates suggested 
including an additional exception under Sec.  1006.30(b)(2) to address 
these concerns and requested that the additional exception include a 
requirement that the transferring debt collector identify the debt as 
one for which the personal liability of the debtor has been discharged 
in bankruptcy.
    In addition, consumer advocates suggested other changes to the 
proposed exceptions to the transfer ban set forth in Sec.  
1006.30(b)(2). These commenters stated that the exception in proposed 
Sec.  1006.30(b)(2)(iii), for securitizations or pledges as collateral 
of portfolios of debts, should be eliminated because the debt types in 
proposed Sec.  1006.30(b)(1) cannot legally be collected and therefore 
should not be securitized or pledged as collateral. These commenters 
also stated that the other proposed exceptions (in Sec.  
1006.30(b)(2)(i), (ii), and (iv)) should be limited to transfers of 
debt, because those exceptions do not involve sales or placements for 
collection. Finally, these commenters stated that, if a debt collector 
transfers an account to the owner or to a prior owner, per the 
exceptions in proposed Sec.  1006.30(b)(2)(i) and (ii), the rule should 
require the transferring collector to clearly disclose the applicable 
category of debt being transferred (e.g., discharged, paid, or settled 
debt).
    In light of both industry and consumer advocates' comments, the 
final rule includes a new exception in Sec.  1006.30(b)(2)(ii) for 
secured debts. The exception states that a debt collector may sell, 
transfer for consideration, or place for collection a debt that has 
been discharged in bankruptcy if the debt is secured by an enforceable 
lien and the debt collector provides notice to the transferee that the 
consumer's personal liability for the debt was discharged in 
bankruptcy. The Bureau determines that the notice requirement will help 
ensure that the transfer of the discharged, secured debt is not an 
unfair or unconscionable practice because the compensation that the 
transferring debt collector receives (or expects to receive) for the 
transfer will not be related to the consumer's personal liability on 
the debt. In addition, the notice requirement will help ensure that the 
transferee debt collector does not engage in a deceptive debt 
collection practice by trying to collect on the debt as a personal 
liability of the consumer.
    With respect to consumer advocates' other suggested changes to the 
exceptions set forth in proposed Sec.  1006.30(b)(2), the Bureau notes 
as follows. Proposed Sec.  1006.30(b)(2)(i), (ii), and (iv) were 
limited to ``transfers'' and did not encompass sale or placement for 
collection; final Sec.  1006.30(b)(2)(i) includes a revision to clarify 
this point. The Bureau declines to eliminate the exception in Sec.  
1006.30(b)(2)(iii) for securitizations and pledges of debt because the 
Bureau concludes, as noted in the proposal,\541\ that a debt collector 
who securitizes or pledges a portfolio of debt may be unable to exclude 
the debts described in Sec.  1006.30(b)(1) from the portfolio. Finally, 
the Bureau declines to require a debt collector who transfers for

[[Page 76843]]

consideration a debt to the owner or a previous owner (pursuant to the 
exceptions in Sec.  1006.30(b)(2)(i)(A) and (B)) to disclose the 
applicable category of debt being transferred (i.e., paid, settled, or 
discharged debt). The Bureau concludes that such disclosure is not 
necessary or warranted to avoid an unfair or unconscionable practice.
---------------------------------------------------------------------------

    \541\ 84 FR 23274, 23332 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau adopts the prohibition set forth in Sec.  1006.30(b)(1) 
and the exceptions set forth in Sec.  1006.30(b)(2) pursuant to its 
authority under FDCPA section 814(d) to prescribe rules with respect to 
the collection of debts by debt collectors. As stated above, the Bureau 
has determined that the sale, transfer for consideration, or placement 
for collection of a debt that a debt collector knows or should know has 
been paid or settled or discharged in bankruptcy constitutes an unfair 
or unconscionable means to collect or attempt to collect the debt under 
FDCPA section 808. Therefore, pursuant to FDCPA section 814(d), the 
Bureau prescribes the rules in Sec.  1006.30(b) with respect to that 
unfair or unconscionable means of collection of debts by debt 
collectors.
30(c) Multiple Debts
    The Bureau proposed Sec.  1006.30(c) to implement FDCPA section 810 
\542\ regarding multiple debts.\543\ The proposed provision generally 
restated the statutory text, with only minor revisions for clarity. Two 
industry commenters addressed proposed Sec.  1006.30(c) and asked the 
Bureau to provide an exception to the prohibition that would permit 
debt collectors to apply, at the consumer's request, a single payment 
made with respect to multiple debts to a debt that the consumer had 
disputed. The Bureau is not aware of confusion or concerns regarding 
this issue and the minor revisions for clarity are not intended to 
change the meaning of the statute. The Bureau therefore declines to 
adopt such an exception.
---------------------------------------------------------------------------

    \542\ 15 U.S.C. 1692h.
    \543\ 84 FR 23274, 23333 (May 21, 2019).
---------------------------------------------------------------------------

30(d) Legal Actions by Debt Collectors
    The Bureau proposed Sec.  1006.30(d) to implement FDCPA section 810 
\544\ regarding legal actions by debt collectors.\545\ The proposed 
provision generally restated the statutory text, with only minor 
revisions for clarity. The Bureau received a few comments asking the 
Bureau to clarify whether specific practices related to the filing of 
legal actions either are unfair or unconscionable or do not violate the 
prohibition. The Bureau concludes that it is not advisable to finalize 
such clarifications, which the Bureau did not propose, without the 
benefit of public notice and comment on the specific clarifications 
requested. Accordingly, the Bureau is finalizing Sec.  1006.30(d) as 
proposed.
---------------------------------------------------------------------------

    \544\ 15 U.S.C. 1692i.
    \545\ 84 FR 23274, 23333 (May 21, 2019).
---------------------------------------------------------------------------

Section 1006.34 Notice for Validation of Debts
    FDCPA section 809(a) generally requires a debt collector to provide 
certain information to a consumer either at the time that, or shortly 
after, the debt collector first communicates with the consumer in 
connection with the collection of a debt. The required information--
i.e., the validation information--includes details about the debt and 
about consumer protections, such as the consumer's rights to dispute 
the debt and to request information about the original creditor.\546\ 
The Bureau proposed Sec.  1006.34 to require debt collectors to provide 
certain validation information to consumers and to specify when and how 
the information must be provided. In addition, the Bureau proposed 
Model Form B-3 in appendix B as a model validation notice form that 
debt collectors could use to comply with certain disclosure 
requirements in proposed Sec.  1006.34.\547\
---------------------------------------------------------------------------

    \546\ See 15 U.S.C. 1692g(a).
    \547\ See 84 FR 23274, 23333-52 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau is not finalizing proposed Sec.  1006.34 at this time. 
The Bureau is completing its review and evaluation of comments 
regarding proposed Sec.  1006.34, including the form and content of 
validation information. The Bureau also is conducting additional, 
qualitative disclosure testing that may be used to further validate 
proposed Model Form B-3 and to inform statements about the quality of 
the validation notice in the final rulemaking.\548\ For instance, the 
Bureau seeks insight through the consumer testing into how consumers 
would interact with the proposed model form, if finalized. The Bureau 
plans to address comments received regarding proposed Sec.  1006.34 and 
proposed appendix B as part of the Bureau's disclosure-focused final 
rule. The Bureau intends to issue a report about the ongoing 
qualitative testing in connection with that final rule. For these 
reasons, the Bureau is reserving Sec.  1006.34 and appendix B.
---------------------------------------------------------------------------

    \548\ Dodd-Frank Act section 1032(b)(1) provides that ``any 
final rule prescribed by the Bureau under this section requiring 
disclosures may include a model form that may be used at the option 
of the covered person for provision of the required disclosures.'' 
12 U.S.C. 5532(b)(1). Dodd-Frank Act section 1032(b)(3) provides 
that any such model form ``shall be validated through consumer 
testing.'' 12 U.S.C. 5532(b)(3).
---------------------------------------------------------------------------

Section 1006.38 Disputes and Requests for Original-Creditor Information
    FDCPA section 809(b) requires debt collectors to take certain 
actions and to refrain from taking certain actions if a consumer either 
disputes the debt in writing or requests the name and address of the 
original creditor in writing during the 30-day period after the 
consumer receives the written notice described in FDCPA section 809(a). 
In turn, FDCPA section 809(c) states that a consumer's failure to 
dispute a debt under FDCPA section 809(b) may not be construed by any 
court as an admission of liability.\549\ The Bureau proposed Sec.  
1006.38 to implement and interpret FDCPA section 809(b) and (c), 
pursuant to its authority under FDCPA section 814(d) to prescribe rules 
with respect to the collection of debts by debt collectors.\550\ 
Pursuant to this same authority, the Bureau is finalizing Sec.  1006.38 
as discussed below.
---------------------------------------------------------------------------

    \549\ 15 U.S.C. 1692g(b)-(c).
    \550\ 84 FR 23274, 23352-55 (May 21, 2019).
---------------------------------------------------------------------------

    Proposed comment 38-1 would have clarified the applicability of 
Sec.  1006.38 in the decedent debt context. As described in the 
section-by-section analysis of Sec.  1006.2(e), the Bureau proposed to 
interpret the term consumer in FDCPA section 803(3) to include deceased 
consumers. The Bureau proposed that interpretation, in large part, to 
facilitate the delivery of validation notices under proposed Sec.  
1006.34 when the consumer obligated, or allegedly obligated, on the 
debt has died. The Bureau plans to address comments received regarding 
that interpretation, as well as whether and how to finalize proposed 
comment 38-1, as part of the Bureau's disclosure-focused final 
rule.\551\
---------------------------------------------------------------------------

    \551\ See the section-by-section analysis of Sec.  1006.34.
---------------------------------------------------------------------------

    The Bureau proposed comment 38-2 to interpret the applicability of 
the E-SIGN Act as it relates to FDCPA section 809(b)'s writing 
requirement for consumers' submission of disputes or requests for 
original-creditor information. Section 101(a)(1) of the E-SIGN Act 
generally provides that a record relating to a transaction in or 
affecting interstate or foreign commerce may not be denied legal 
effect, validity, or enforceability solely because it is in electronic 
form. However, section 101(b)(2) of the E-SIGN Act (15 U.S.C. 
7001(b)(2)) does not require any person to agree to use or accept 
electronic records or electronic signatures (other than a governmental 
agency with respect to a record other than a contract

[[Page 76844]]

to which it is a party). The Bureau proposed in comment 38-2 that FDCPA 
section 809(b)'s writing requirement is satisfied when a consumer 
submits a dispute or request for original-creditor information using a 
medium of electronic communication through which a debt collector 
accepts electronic communications from consumers, such as email or a 
website portal. Thus, under the proposal, a debt collector was required 
to give legal effect to an electronic consumer dispute or request for 
original-creditor information only if the debt collector agreed to 
accept electronic communications from consumers. The Bureau proposed to 
codify this E-SIGN Act interpretation in proposed comment 38-3.
    The comments the Bureau received on comments 38-2 and -3 expressed 
support. The Bureau finalizes this commentary as proposed, renumbered 
as comments 38-1 and -2, respectively. E-SIGN Act section 104(b)(1)(A) 
(15 U.S.C. 7004(b)(1)(A)) authorizes a Federal agency with rulemaking 
authority under a statute (here, the FDCPA) to interpret by regulation 
E-SIGN Act section 101 with respect to such statute. Pursuant to E-SIGN 
Act section 104(b)(1)(A), the Bureau has determined that the final rule 
as reflected in final comments 38-1 and -2 does not contravene E-SIGN 
Act section 101(b)(2) (15 U.S.C. 7001(b)(2)) because the comments do 
not require a debt collector to agree to use or accept consumers' 
electronic notices of disputes or requests for original-creditor 
information if the debt collector does not otherwise accept electronic 
communications from consumers. Further, if a debt collector agrees to 
accept these notices or requests electronically from consumers, the 
comments do not prohibit the debt collector from requesting consumers 
to send these electronic communications through online portals or to 
email addresses designated by the debt collector.\552\
---------------------------------------------------------------------------

    \552\ The final rule's prohibitions on harassing, deceptive, and 
unfair practices in Sec. Sec.  1006.14, 1006.18, and 1006.22 
continue to apply such that a debt collector should not ignore a 
consumer's dispute or request for original-creditor information 
received through an online portal or to an email address not 
designated by the debt collector for receiving such disputes or 
requests.
---------------------------------------------------------------------------

38(a) Definitions
38(a)(1) Duplicative Dispute
    The Bureau is finalizing the definition of duplicative dispute as 
proposed. The Bureau's reasoning is discussed below under Sec.  
1006.38(d)(2)(ii) in this section-by-section analysis.
38(a)(2) Validation Period
    The Bureau's proposed definition of validation period in Sec.  
1006.38(a)(2) cross-referenced the definition of that term in proposed 
Sec.  1006.34(b)(5). The Bureau expects to address comments received on 
proposed Sec.  1006.34(b)(5) as part of its disclosure-focused final 
rule. Therefore, at the present time, the Bureau is finalizing the 
definition in Sec.  1006.38(a)(2) with revised wording to refer to the 
30-day period described in FDCPA section 809 (rather than the 
definition in proposed Sec.  1006.34(b)(5)) as defined by Bureau 
regulation. The Bureau will consider revising the definition of 
validation period in Sec.  1006.38(a)(2) to cross-reference any such 
definition of that term that the Bureau adopts in the disclosure-
focused final rule.
38(b) Overshadowing of Rights To Dispute or Request Original-Creditor 
Information
    FDCPA section 809(b) provides that, for 30 days after the consumer 
receives the validation notice information described in FDCPA section 
809(a), a debt collector must not engage in collection activities or 
communications that overshadow or are inconsistent with the disclosure 
of the consumer's right to dispute the debt or request information 
about the original creditor.\553\ The Bureau proposed in Sec.  
1006.38(b) to implement this prohibition and generally restate the 
statute, with only minor changes for style and clarity.
---------------------------------------------------------------------------

    \553\ This language was added to the FDCPA by the Financial 
Services Regulatory Relief Act of 2006, Public Law 109-351, sec. 
802(c), 120 stat. 1966, 2006 (2006), after an FTC advisory opinion 
on the same subject. See Fed. Trade Comm'n, Advisory Opinion to 
American Collector's Ass'n (Mar. 31, 2000) (opining that the 30-day 
period set forth in FDCPA section 809(a) ``is a dispute period 
within which the consumer may insist that the debt collector verify 
the debt, and not a grace period within which collection efforts are 
prohibited'' but that ``[t]he collection agency must ensure, 
however, that its collection activity does not overshadow and is not 
inconsistent with the disclosure of the consumer's right to dispute 
the debt specified by [s]ection 809(a).'').
---------------------------------------------------------------------------

    The Bureau received a few substantive comments addressing proposed 
Sec.  1006.38(b).\554\ Two industry commenters requested that the final 
rule define the term ``overshadowing.'' These commenters observed that 
debt collectors' communications of validation notice information almost 
always expressly advise the consumer of the right to dispute the debt 
and to request the name and address of the original creditor. These 
commenters asserted that overshadowing claims are nonetheless some of 
the most common allegations in FDCPA lawsuits. These commenters also 
requested clarity as to whether the safe harbor in proposed Sec.  
1006.34(d)(2) for debt collectors who use proposed Model Form B-3 in 
proposed appendix B also precludes suits for violations of the 
overshadowing prohibition in proposed Sec.  1006.38(b). One industry 
commenter requested that the final rule clarify that credit reporting 
during the validation period does not constitute overshadowing.
---------------------------------------------------------------------------

    \554\ In addition, one industry representative stated that it 
generally agrees with proposed Sec.  1006.38, and a group of 
consumer advocates that addressed proposed Sec.  1006.38(b) did not 
object to the proposal.
---------------------------------------------------------------------------

    At this time, the Bureau is finalizing proposed Sec.  1006.38(b) as 
Sec.  1006.38(b)(1) and is reserving Sec.  1006.38(b)(2). As noted 
above, proposed Sec.  1006.38(b) generally restated the statute, with 
only minor changes for style and clarity, and final Sec.  1006.38(b)(1) 
does the same. The Bureau expects to address the comments it received 
requesting further clarity about the extent of the safe harbor that 
would be provided by proposed Sec.  1006.34(d)(2) as part of its 
disclosure-focused final rule. The Bureau is reserving Sec.  
1006.38(b)(2) for the purpose of providing any such safe harbor.
38(c) Requests for Original-Creditor Information
    FDCPA section 809(b) provides that, if a consumer requests the name 
and address of the original creditor in writing within 30 days of 
receiving the validation notice information described in FDCPA section 
809(a), the debt collector must cease collection of the debt until the 
debt collector obtains and mails that information to the consumer. The 
Bureau proposed in Sec.  1006.38(c) to implement and interpret this 
requirement. In general, proposed Sec.  1006.38(c) mirrored the 
statute, with minor changes for style and clarity. To accommodate 
electronic media through which a debt collector could send original-
creditor information under proposed Sec.  1006.42, proposed Sec.  
1006.38(c) interpreted FDCPA section 809(b) to require debt collectors 
to ``provide,'' rather than to ``mail,'' original-creditor information 
to consumers in a manner consistent with the delivery provisions in 
proposed Sec.  1006.42.
    The Bureau received a number of comments addressing proposed Sec.  
1006.38(c).\555\ Three industry

[[Page 76845]]

commenters requested that the final rule provide that, if a debt 
collector's communication of the validation notice information to a 
consumer identifies the original creditor, the debt collector need not 
give the consumer the option of requesting original-creditor 
information from the debt collector. These commenters stated that, if 
the original creditor has already been identified to a consumer, it 
would be confusing to the consumer to provide the option to request the 
name and address of the original creditor. Further, they stated, 
consumers could use unnecessary requests for original-creditor 
information as a tactic to delay or avoid collection. One industry 
commenter requested that the final rule clarify that a debt collector 
is not required to include original-creditor information in its 
communication of validation notice information to a consumer. This 
commenter stated that lawsuits are often filed alleging that the FDCPA 
is violated if the communication does not identify the original 
creditor.
---------------------------------------------------------------------------

    \555\ A few of these comments asked the Bureau to define the 
term original creditor. These commenters' requests are largely 
related to clarifications for purposes of the notice required by 
FDCPA section 809(a), so the Bureau will address these comments as 
part of its disclosure-focused final rule.
---------------------------------------------------------------------------

    A group of consumer advocates who addressed proposed Sec.  
1006.38(c) generally noted the importance of original-creditor 
information to consumers in helping them recognize the debt in 
question. One commenter stated that the rule should require debt 
collectors to identify the original creditor in the validation notice 
information.\556\
---------------------------------------------------------------------------

    \556\ Consumer advocates also addressed the proposal's 
provisions regarding electronic delivery of original-creditor 
information (and other information) in proposed Sec.  1006.42. These 
comments regarding electronic delivery are addressed in the section-
by-section analysis of Sec.  1006.42.
---------------------------------------------------------------------------

    The Bureau is finalizing Sec.  1006.38(c) generally as 
proposed.\557\ In the final rule, the Bureau has changed the word 
``provides'' to ``sends.'' The reason for this change is discussed in 
the section-by-section analysis of Sec.  1006.42(a)(1).
---------------------------------------------------------------------------

    \557\ The Bureau is renumbering Sec.  1006.38(c) as Sec.  
1006.38(c)(1) and is reserving Sec.  1006.38(c)(2) for any 
alternative procedures that the Bureau finalizes in its disclosure-
focused final rule.
---------------------------------------------------------------------------

    The Bureau declines to provide that a debt collector's 
communication of the validation notice information may omit the option 
to request original-creditor information if the debt collector has 
already identified the original creditor to the consumer. The FDCPA 
expressly provides a consumer the right to request original-creditor 
information from a debt collector. FDCPA section 809(a)(5) states that 
the validation notice information must include ``a statement that, upon 
the consumer's written request within the 30-day period, the debt 
collector will provide the consumer with the name and address of the 
original creditor, if different from the current creditor.'' \558\ 
Further, FDCPA section 809(b) states that ``[a]ny collection activities 
and communication during the 30-day period may not overshadow or be 
inconsistent with the disclosure of the consumer's right to dispute the 
debt or request the name and address of the original creditor.'' \559\
---------------------------------------------------------------------------

    \558\ 15 U.S.C. 1692g(a)(5).
    \559\ 15 U.S.C. 1692g(b) (emphasis added).
---------------------------------------------------------------------------

    However, the Bureau also believes that FDCPA section 809(a)(5) 
contemplates that a debt collector may respond differently to the 
consumer's request for original-creditor information when the original 
creditor is not ``different from the current creditor.'' Because the 
question of how a debt collector may respond to a request for original-
creditor information when the original creditor is the same as the 
current creditor implicates the proposed Sec.  1006.34 provisions 
regarding disclosure of validation notice information, which are not 
being finalized at this time, the Bureau is not at the present time 
providing in Sec.  1006.38(c) an alternative response mechanism for 
this situation. The Bureau expects to address further the comments 
received on this topic as part of its disclosure-focused final rule and 
may provide by regulation for alternative procedures when the original 
creditor is the same as the current creditor.
    For the same reason--that the Bureau is not presently finalizing 
the proposed Sec.  1006.34 provisions for how validation notice 
information must be disclosed--the Bureau is not at the present time 
addressing (in response to comments from both industry commenters and 
consumer advocates, as noted above) whether a debt collector must 
include original-creditor information in its communication of 
validation notice information to a consumer. The Bureau expects to 
address these comments in its disclosure-focused final rule and may 
provide by regulation for alternative procedures when the original 
creditor is the same as the current creditor.
38(d) Disputes
38(d)(1) Failure To Dispute
    The Bureau proposed Sec.  1006.38(d)(1) to implement FDCPA section 
809(c), which states that the failure of a consumer to dispute the 
validity of a debt may not be construed by any court as an admission of 
liability by the consumer. Proposed Sec.  1006.38(d)(1) generally 
restated the statute, with non-substantive changes for style. The 
Bureau received one comment generally supporting proposed Sec.  
1006.38(d)(1) and one comment arguing that Sec.  1006.38(d)(1) is 
inconsistent with FDCPA section 809(a)(3), which requires a debt 
collector to disclose that, unless a consumer disputes the validity of 
the debt within thirty days of receiving the validation notice, the 
debt collector will assume the debt is valid.\560\ The Bureau disagrees 
that there is an inconsistency. FDCPA section 809(a)(3) addresses a 
debt collector's assumption regarding the validity of the debt; Sec.  
1006.38(d)(1) addresses whether a consumer's failure to dispute is a 
legal admission of liability. Accordingly, the Bureau is finalizing 
Sec.  1006.38(d)(1) as proposed.
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    \560\ 15 U.S.C. 1692g(3).
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38(d)(2) Response to Disputes
    FDCPA section 809(b) provides that, if a consumer disputes a debt 
in writing within 30 days of receiving the information or notice 
described in FDCPA section 809(a), the debt collector must cease 
collection of the debt, or any disputed portion of the debt, until the 
debt collector obtains verification of the debt or a copy of a judgment 
and mails it to the consumer. Section 1006.38(d)(2) implements and 
interprets this requirement.
38(d)(2)(i)
    The Bureau proposed in Sec.  1006.38(d)(2)(i) to implement FDCPA 
section 809(b)'s general requirements regarding disputes and 
verification. Proposed Sec.  1006.38(d)(2)(i) generally mirrored the 
statute, with minor changes for style and clarity. To accommodate 
various electronic media through which a debt collector could send a 
copy of verification or a judgment under proposed Sec.  1006.42, 
proposed Sec.  1006.38(d)(2)(i) interpreted FDCPA section 809(b) to 
require debt collectors to provide, rather than to mail, such 
information to consumers in a manner consistent with the delivery 
provisions in proposed Sec.  1006.42.
    The Bureau received no comments objecting to proposed Sec.  
1006.38(d)(2)(i) and is finalizing it generally as proposed.\561\ In 
the final rule, the Bureau has changed the word ``provides'' to 
``sends.'' The reason for this change is discussed in the section-by-
section analysis of Sec.  1006.42(a)(1).
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    \561\ The Bureau received numerous comments regarding the 
proposed electronic delivery requirements in proposed Sec.  1006.42. 
Those comments are addressed in the section-by-section analysis of 
Sec.  1006.42.

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[[Page 76846]]

38(d)(2)(ii)
    The Bureau proposed in Sec.  1006.38(d)(2)(ii) to establish an 
alternative way for debt collectors to respond to disputes that they 
reasonably conclude are duplicative disputes as that term is defined in 
Sec.  1006.38(a)(1). The Bureau proposed in Sec.  1006.38(a)(1) to 
define the term ``duplicative dispute'' to mean a dispute submitted by 
the consumer in writing within the validation period that satisfies two 
criteria. The first criterion was that the dispute is substantially the 
same as a dispute previously submitted by the consumer in writing 
within the validation period to which the debt collector has already 
responded in accordance with the requirements of Sec.  
1006.38(d)(2)(i). The second criterion was that the dispute does not 
include new and material supporting information.
    Proposed Sec.  1006.38(d)(2)(ii) provided that, upon receipt of a 
duplicative dispute, a debt collector must cease collection of the 
debt, or any disputed portion of the debt, until the debt collector 
either: Notifies the consumer in writing or electronically in a manner 
permitted by Sec.  1006.42 that the dispute is duplicative, provides a 
brief statement of the reasons for the determination, and refers the 
consumer to the debt collector's response to the earlier dispute; or 
satisfies Sec.  1006.38(d)(2)(i).\562\
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    \562\ The Bureau did not propose to address duplicative requests 
for original-creditor information. As the Bureau noted in its 
proposal, some members of the debt collection industry have 
described being overwhelmed by the number of repeat disputes they 
receive. Industry members have not described any similar concerns 
about duplicative requests for original-creditor information. 84 FR 
23274, 23354 (May 21, 2019).
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    The Bureau received numerous substantive comments on the Bureau's 
proposal regarding duplicative disputes, including the proposed 
definition of duplicative dispute.
    With respect to the definition of duplicative dispute in Sec.  
1006.38(a)(1), industry commenters stated that the Bureau should 
provide more clarity about the meaning of ``substantially the same.'' 
These commenters stated that the lack of clarity might result in the 
threat of additional disputes and litigation, which might make it not 
worthwhile for debt collectors to use the proposed alternative response 
mechanism for duplicative disputes.
    Consumer advocates observed that it is unlikely that a consumer 
would submit a dispute that meets the proposed duplicative dispute 
definition, because it is rare that a consumer submits a dispute, a 
debt collector responds to the dispute, and the consumer resubmits the 
dispute, all within the 30-day validation period. They also stated that 
the proposed definition would give too much discretion to debt 
collectors to determine if a dispute is duplicative. They stated that 
the Bureau should either limit collector discretion by including 
additional criteria in the ``duplicative dispute'' definition or 
eliminate the alternative response to duplicative disputes set forth in 
Sec.  1006.38(d)(2)(ii). Finally, some consumer advocates stated that 
the definition of duplicative dispute should include an additional 
criterion under which a consumer's dispute is duplicative only if the 
consumer submits the second dispute to the same debt collector who 
provided a copy of the debt verification or judgment to the consumer in 
response to the consumer's first dispute.
    With respect to the proposed alternative response to duplicative 
disputes in Sec.  1006.38(d)(2)(ii), industry commenters generally 
suggested substantial changes to make it easier for debt collectors to 
address disputes that they determine to be duplicative. Some industry 
commenters stated that the duplicative dispute provision should permit 
debt collectors to disregard all disputes submitted by debt-relief 
companies. Others stated that the provision should permit debt 
collectors to disregard all disputes that meet the definition of 
duplicative dispute in Sec.  1006.38(a)(1). Others stated that the 
provision should permit debt collectors to disregard all disputes 
(whether or not duplicative) submitted by consumers outside of the 30-
day validation period. Finally, others stated that, by defining what it 
means for a debt collector to ``verify'' a debt--and by also requiring 
consumers to include specific information when they dispute a debt--the 
Bureau could reduce burden by making it easier for debt collectors to 
identify and dispose of disputes that are duplicative.
    Some industry commenters suggested more minor changes with respect 
to how the rule should permit debt collectors to address disputes that 
they determine to be duplicative. Specifically, some of these 
commenters suggested that, if a debt collector receives a consumer's 
dispute electronically, then the rule should permit the debt collector 
to respond to the dispute electronically, irrespective of whether the 
debt collector has the consumer's E-SIGN consent. Others suggested that 
the rule permit debt collectors to respond to duplicative disputes 
through a telephone call. Finally, in their comments on proposed Sec.  
1006.42(b) (discussed below), some industry commenters stated that debt 
collector responses to consumer disputes as required by Sec.  
1006.38(d)(2) are not written ``disclosures'' (but are instead, in 
these commenters' view, documents substantiating the debt) and, 
therefore, the rule should not require debt collectors to obtain 
consumers' E-SIGN consent before providing dispute responses 
electronically.
    Consumer advocates, as noted above, expressed concern that the 
definition of duplicative dispute in Sec.  1006.38(a)(1) gives too much 
discretion to debt collectors to determine if a dispute is duplicative. 
But, they said, taking that definition as given, the alternative 
response mechanism for a duplicative dispute set forth in proposed 
Sec.  1006.38(d)(2)(ii) should be eliminated from the final rule, 
because the proposed treatment of disputes would not reduce the number 
of duplicative disputes because it would not mandate that debt 
collectors review and provide copies of original, account-level 
documentation in response to consumer disputes and would not prohibit 
debt collectors from responding to disputes by providing summary data 
found in the debt collector's database.
    The Bureau is finalizing as proposed the definition of duplicative 
dispute in Sec.  1006.38(a)(1). The Bureau also is finalizing largely 
as proposed the optional alternative response mechanism for a 
duplicative dispute in Sec.  1006.38(d)(2)(ii), but with one change 
intended to reduce burden for debt collectors who choose to use the 
alternative response mechanism. This change will thus also benefit 
consumers by allowing debt collectors to devote more resources to non-
duplicative consumer disputes, as follows.
    Regarding the duplicative dispute definition, the Bureau believes 
that the meaning of ``substantially the same'' is sufficiently clear 
and is a concept that is already present in other regulations. For 
example, Regulation V, 12 CFR 1022, Sec.  1022.43(f)(1)(ii) addresses 
direct disputes to a furnisher that are ``substantially the same as a 
dispute previously submitted by or on behalf of the consumer.'' And, 
Regulation X, 12 CFR 1024, Sec.  1024.35(g)(1)(i) addresses consumer-
asserted errors to a mortgage servicer that are ``substantially the 
same as an error previously asserted by the borrower for which the 
servicer has previously complied with its obligation to respond.'' 
Similarly, Regulation X Sec.  1024.36(f)(1)(i) addresses a request for 
information to a mortgage servicer that ``is substantially the same as

[[Page 76847]]

information previously requested by the borrower for which the servicer 
has previously complied with its obligation to respond.'' The Bureau 
therefore declines to provide examples in the commentary about the 
meaning of ``substantially the same'' because doing so is unnecessary 
and unwarranted.
    The Bureau acknowledges that it is possible that consumers might 
infrequently submit disputes that meet the duplicative dispute 
definition, because it might be unusual for a consumer to submit a 
dispute, a debt collector to respond, and the consumer to resubmit the 
dispute all within the 30-day validation period. With respect to both 
the meaning of ``substantially the same'' and the frequency with which 
consumers submit duplicative disputes as defined, the Bureau expects to 
monitor consumers' and debt collectors' responses to and 
implementations of the duplicative dispute aspect of the Bureau's rule 
to ensure that the definition is not resulting in consumer harm and to 
ascertain the extent to which the duplicate dispute provisions allow 
debt collectors to devote more resources to non-duplicative disputes.
    Regarding the alternative response mechanism for a duplicative 
dispute in Sec.  1006.38(d)(2)(ii), the Bureau declines to adopt the 
substantial changes to the proposal that industry commenters suggested 
and declines to eliminate the mechanism from the final rule as consumer 
advocates suggested. With respect to industry commenters' suggestion 
that the duplicative dispute provision permit debt collectors to 
disregard all disputes submitted by debt-relief companies, the Bureau 
declines to adopt a categorical approach because the Bureau cannot say 
that every such dispute is duplicative. As to the suggestion that the 
rule permit debt collectors to disregard all disputes that meet the 
definition of duplicative dispute, the Bureau determines that a debt 
collector's notice to a consumer that the debt collector has determined 
that a dispute is a duplicative dispute, and the reasons for that 
determination, may nevertheless be informative to the consumer and is 
consistent with the statutory requirement to provide a response to 
disputes. Finally, the Bureau's proposal did not define what it means 
to verify a debt, and the Bureau declines to do so in this final rule. 
The Bureau concludes that it is not necessary or warranted to provide 
such a definition because the Bureau generally expects that debt 
collectors will respond to non-duplicative disputes by providing 
verifications of debts (or copies of judgments) as they do today.
    The Bureau has determined that debt collectors' responses to 
consumer disputes are disclosures of information relating to a 
transaction or transactions, as E-SIGN Act section 101(c)(1) uses that 
phrase.\563\ And the Bureau interprets the requirement in FDCPA section 
809(b) that ``a copy'' of a verification of the debt or a judgment, or 
the name and address of the original creditor be ``mailed'' requires a 
writing. Nonetheless, the FDCPA does not explicitly address debt 
collectors' responses to duplicative disputes and, as a result, does 
not specify that responses to such disputes must involve mailing 
another copy of the verification or judgment. Rather, the statute says 
that only ``a'' copy of the verification or judgment must be 
``mailed.'' Accordingly, the Bureau finds that the statute is ambiguous 
as to whether responses to duplicative disputes must be mailed if a 
copy of the verification or judgment previously has been mailed. The 
Bureau therefore has discretion to determine whether the E-SIGN Act's 
consumer-consent provisions apply if a debt collector responds 
electronically to a duplicative dispute. For the policy reasons set 
forth below, the Bureau has determined to permit debt collectors to 
respond electronically to disputes that they determine to be 
duplicative without obtaining the relevant consumers' E-SIGN consent.
---------------------------------------------------------------------------

    \563\ See 15 U.S.C. 7001(c)(1) (stating that ``if a statute, 
regulation, or other rule of law requires that information relating 
to a transaction or transactions in or affecting interstate or 
foreign commerce be provided or made available to a consumer in 
writing, the use of an electronic record to provide or make 
available (whichever is required) such information satisfies the 
requirement that such information be in writing if (A) the consumer 
has affirmatively consented to such use and has not withdrawn such 
consent. . . .'') (emphasis added). See also E-Sign Act sections 
106(7) and (13) (15 U.S.C. 7006(7) and (13)), which, respectively, 
define ``information'' and ``transaction'' quite broadly.
---------------------------------------------------------------------------

    In the final rule, the Bureau has effected this change in Sec.  
1006.42(b)(1), which, as revised from the proposal, now provides that 
consumers' E-SIGN consent is necessary only for debt collectors to 
respond electronically to consumers' initial, non-duplicative disputes 
(pursuant to Sec.  1006.38(d)(2)(i)). As proposed, Sec.  1006.42(a)(1) 
applies to debt collectors' responses to all disputes, including to 
duplicative disputes. Thus, debt collectors' responses to duplicative 
disputes (and to initial disputes) must be provided in a manner that is 
reasonably expected to provide actual notice and in a form the consumer 
may keep and access later, while debt collectors' electronic responses 
to initial disputes must also comply with Sec.  1006.42(b).
    The Bureau believes there may be scenarios in which debt collectors 
respond to consumers' initial disputes in paper form because the debt 
collectors do not have consumers' E-SIGN consent, but in which the debt 
collectors nonetheless can respond to consumers' duplicative disputes 
electronically, because the debt collectors have consumers' email 
addresses or mobile telephone numbers for text messages. By adopting 
the duplicative dispute provision largely as proposed, but modified as 
described above, the Bureau intends to provide a method of delivery 
that allows debt collectors the option to respond to duplicative 
disputes in a less burdensome way, which may permit collectors to apply 
more resources to responding to non-duplicative disputes, while also 
appropriately balancing consumer protections, because those electronic 
communications remain subject to Sec.  1006.42(a)(1). The Bureau will 
monitor industry implementation of the final rule's duplicative-
disputes provision to assess its impact on all stakeholders.
    The Bureau declines to permit collectors to respond to duplicative 
disputes orally. The Bureau concludes that FDCPA section 809(b) 
requires responses to consumers' disputes in a form that consumers may 
keep and access later for the reasons discussed in the section-by-
section discussion of Sec.  1006.42.\564\
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    \564\ FDCPA section 809(b) states that, when a debt collector 
receives a consumer's dispute, ``the debt collector shall cease 
collection of the debt, or any disputed portion thereof, until the 
debt collector obtains verification of the debt or a copy of a 
judgment . . . and a copy of such verification or judgment . . . is 
mailed to the consumer by the debt collector.''
---------------------------------------------------------------------------

    The Bureau is finalizing the alternative procedure in Sec.  
1006.38(d)(2)(ii) for responding to duplicative disputes as an 
interpretation of FDCPA section 809(b) and pursuant to its rulemaking 
authority provided by FDCPA section 814(d). In particular, Sec.  
1006.38(d)(2)(ii) interprets what it means for a debt collector to 
``obtain[ ] verification of the debt or any copy of a judgment'' and to 
provide ``a copy of such verification or judgment'' to the consumer 
when the debt collector reasonably determines that a dispute is a 
duplicative dispute. In some cases a consumer might submit a timely 
written dispute that is duplicative of an earlier dispute for which the 
debt collector already obtained and mailed to the consumer a copy of 
verification of the

[[Page 76848]]

debt or a judgment. In those cases, the Bureau interprets FDCPA section 
809(b)'s requirement to provide ``a copy of such verification or 
judgment'' to the consumer to mean that a debt collector must provide 
the consumer either with another copy of the materials the debt 
collector provided in response to the earlier dispute, or with a notice 
explaining the reasons for the debt collector's determination that the 
dispute is duplicative and referring the consumer to the materials the 
debt collector provided in response to the earlier dispute.
    The Bureau also is finalizing the notice requirement of Sec.  
1006.38(d)(2)(ii) pursuant to the Bureau's authority under Dodd-Frank 
Act section 1032(a). As discussed above, 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.
    The Bureau is finalizing the notice requirement in Sec.  
1006.38(d)(2)(ii) on the basis that a debt collector's decision to 
treat a dispute as a duplicative dispute under Sec.  1006.38(d)(2)(ii) 
is a feature of debt collection. A debt collector's notice to a 
consumer that the debt collector has determined that a dispute is a 
duplicative dispute, and the reasons for that determination, may help 
the consumer understand the costs, benefits, and risks associated with 
filing additional disputes and deciding whether to pay a debt.
Section 1006.42 Sending Required Disclosures
    Section 1006.42 sets forth requirements for sending the disclosures 
required by the FDCPA and Regulation F. Proposed Sec.  1006.42(a)(1) 
set forth a general standard for providing the required disclosures in 
writing or electronically. Proposed Sec.  1006.42(b) provided that, to 
meet that standard when delivering the required disclosures 
electronically, a debt collector needed to either obtain a consumer's 
E-SIGN consent directly from the consumer or comply with alternative 
procedures in proposed Sec.  1006.42(c), and needed to take certain 
additional steps regarding the format and delivery of the 
communication.\565\ For the reasons discussed below, final Sec.  
1006.42 focuses on the general standard and on clarifying that a debt 
collector who sends the required written disclosures electronically 
must do so in accordance with the E-SIGN Act. At this time, the Bureau 
declines to interpret whether, and if so when, the E-SIGN Act requires 
a debt collector to obtain E-SIGN consent directly from the consumer 
and declines to finalize the alternative procedures in proposed Sec.  
1006.42(c). The Bureau is finalizing Sec.  1006.42 to implement and 
interpret FDCPA section 809(a) and (b) and pursuant to its authority 
under FDCPA section 814(d) to prescribe rules with respect to the 
collection of debts by debt collectors. In addition, the Bureau is 
finalizing the general standard in Sec.  1006.42(a)(1) as an 
interpretation of FDCPA section 808's prohibition on using unfair or 
unconscionable means to collect a debt.\566\
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    \565\ See 84 FR 23274, 23355-67 (May 21, 2019).
    \566\ The proposal explained the Bureau's basis for citing to 
FDCPA section 808. See id. at 23356. The Bureau addresses feedback 
about this basis at the end of the section-by-section analysis of 
Sec.  1006.42.
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42(a) Sending Required Disclosures
42(a)(1) In General
    The Bureau proposed Sec.  1006.42(a)(1) to require a debt collector 
who provides disclosures required by Regulation F in writing or 
electronically to do so: (1) In a manner that is reasonably expected to 
provide actual notice to the consumer; and (2) in a form that the 
consumer may keep and access later. Commenters generally supported this 
standard, and the Bureau is finalizing it largely as proposed, with 
minor edits for clarity.
    Specifically, final Sec.  1006.42(a)(1) uses the term sends, rather 
than the proposed term provides, to clarify that a debt collector's 
obligation under the rule--and as the Bureau intended under the 
proposal--is to send required disclosures in a manner reasonably 
expected to provide actual notice.\567\ Final Sec.  1006.42(a)(1) also 
clarifies that the general standard applies when debt collectors send 
disclosures required either by the FDCPA or Regulation F.\568\ With 
these revisions, final Sec.  1006.42(a)(1) provides that a debt 
collector who sends disclosures required by the FDCPA and Regulation F 
in writing or electronically must do so in a manner that is reasonably 
expected to provide actual notice, and in a form that the consumer may 
keep and access later.
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    \567\ For simplicity, the Bureau uses ``send'' throughout this 
section-by-section analysis, including when describing what proposed 
provisions would have required.
    \568\ Proposed Sec.  1006.42 referred in certain places to the 
disclosures required by proposed Sec.  1006.34. Final Sec.  1006.42 
instead refers in those places to the disclosures required by the 
FDCPA, as implemented by Bureau regulation, because the Bureau is 
not finalizing Sec.  1006.34 at this time. The Bureau expects that, 
in the Bureau's disclosure-focused final rule, these references will 
be updated to refer to Sec.  1006.34.
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    In response to feedback, the Bureau is revising the proposed 
commentary for Sec.  1006.42(a)(1) in several ways, including by 
renumbering proposed comment 42(a)(1)-1 as new comment 42(a)(1)-2 and 
by adding three new comments (final comments 42(a)(1)-1, -3, and -4) to 
incorporate text from proposed Sec.  1006.42(b)(2) and (3), (e)(1), and 
comment 42(c)(1)-1. The Bureau is not otherwise finalizing proposed 
Sec.  1006.42(b)(2) or (3), (e)(1), or comment 42(c)(1)-1 and, 
therefore, addresses comments received in response to those provisions 
in this section-by-section analysis.
Final Comment 42(a)(1)-1
    Proposed Sec.  1006.42(b)(2) would have required the debt collector 
to identify the purpose of an electronic communication transmitting a 
required disclosure by including in the email subject line or the first 
line of a text message the name of the creditor to whom the debt is 
owed and one additional piece of information identifying the debt, 
other than the amount.\569\ Consumer advocates expressed concern that 
proposed Sec.  1006.42(b)(2) would be unlikely to lead many consumers 
to open or read emails or text messages from debt collectors and could 
lead some consumers or their email providers to mark the messages as 
spam. Consumer advocates suggested that the Bureau eliminate proposed 
Sec.  1006.42(b)(2) and replace it with more robust monitoring to 
ensure consumers' actual receipt of electronic communications 
containing required disclosures.
---------------------------------------------------------------------------

    \569\ Proposed comment 42(b)(2)-1 provided examples of the types 
of information that a debt collector might include.
---------------------------------------------------------------------------

    Proposed Sec.  1006.42(b)(3) would have required a debt collector 
sending required disclosures electronically to permit receipt of 
notifications of undeliverability from communications providers, 
monitor for any such notifications, and treat any such notifications as 
precluding a reasonable expectation of actual notice for that delivery 
attempt. Some industry commenters stated that the general standard in 
Sec.  1006.42(a)(1) should be deemed to be satisfied if a debt 
collector emails required disclosures to the consumer email address 
that the creditor provided to the debt collector and the debt collector 
does not receive a notice that the email was returned as undeliverable. 
Consumer advocates

[[Page 76849]]

stated that proposed Sec.  1006.42(b)(3) would be inadequate to provide 
debt collectors with a reasonable expectation of actual notice. These 
commenters stated that the rule should provide that a debt collector 
does not have a reasonable expectation of actual notice if the debt 
collector's records do not indicate that the electronic message was 
opened by the consumer.
    The Bureau determines that the actions described in proposed Sec.  
1006.42(b)(2) and (3) are relevant to the analysis regarding whether a 
debt collector has a reasonable expectation of actual notice but that 
these factors may be viewed in light of any other relevant facts and 
circumstances. The Bureau therefore finalizes the text of proposed 
Sec.  1006.42(b)(2) and (3) as new comments 42(a)(1)-1.i and .ii, 
respectively, to instead set forth relevant factors in determining 
whether a debt collector has complied with the Sec.  1006.42(a)(1) 
general standard. The Bureau also is finalizing new comment 42(a)(1)-
1.iii to provide an additional factor.
    Specifically, final comment 42(a)(1)-1.i incorporates the text of 
proposed Sec.  1006.42(b)(2) and comment 42(b)(2)-1 to provide that a 
relevant factor in determining whether the debt collector has met the 
general standard in Sec.  1006.42(a)(1) is whether the debt collector 
identified the purpose of an electronic communication transmitting a 
required disclosure by including in the subject line the name of the 
creditor and one additional piece of information identifying the debt, 
such as a truncated account number; the name of the original creditor; 
the name of any store brand--that is, the merchant--associated with the 
debt; the date of sale of a product or service giving rise to the debt; 
the physical address of service; and the billing or mailing address on 
the account.
    Final comment 42(a)(1)-1.ii incorporates the text of proposed Sec.  
1006.42(b)(3) to provide that a relevant factor in determining whether 
the debt collector has met the general standard in Sec.  1006.42(a)(1) 
is whether the debt collector permitted receipt of and monitored for 
notifications of undeliverability from communications providers and 
treated any such notifications as precluding a reasonable expectation 
of actual notice for that delivery attempt.
    Final comment 42(a)(1)-1.iii provides that a relevant factor is 
whether the debt collector identified itself as the sender of the 
communication by including a business name that the consumer would be 
likely to recognize, such as the name included in the notice described 
in Sec.  1006.6(d)(4)(ii)(C) or in a prior limited-content message left 
for the consumer or in an email message sent to the consumer. The 
Bureau adds this comment because the consumer's ability to recognize 
the sender as a legitimate business is a factor in whether the debt 
collector has a reasonable expectation of actual notice. Particularly 
if the consumer has been alerted that a specific debt collector may be 
sending a communication to the consumer, as in the case of the notice 
described in Sec.  1006.6(d)(4)(ii)(C), then the debt collector is 
unlikely to satisfy Sec.  1006.42(a)(1) unless the debt collector uses 
the same name that was included in the notice.
Final Comment 42(a)(1)-2
    The Bureau is finalizing proposed comment 42(a)(1)-1 as new comment 
42(a)(1)-2 and, apart from renumbering it, is finalizing it largely as 
proposed with minor wording changes for consistency with the text of 
final Sec.  1006.42(a)(1). Final comment 42(a)(1)-2 thus states that a 
debt collector who sends a required disclosure in writing or 
electronically and who receives a notice that the disclosure was not 
delivered has not sent the disclosure in a manner that is reasonably 
expected to provide actual notice under Sec.  1006.42(a)(1). One 
industry commenter stated that, when a debt collector attempts to 
deliver a required disclosure electronically and the attempt is 
returned as undeliverable, the debt collector should be able to rely on 
the previously sent delivery attempt. The Bureau believes this 
commenter was primarily concerned with whether a debt collector 
violates the five-day validation notice timing requirement set forth in 
FDCPA section 809(a) and proposed Sec.  1006.34(a)(1)(i)(B)--i.e., that 
the notice be sent within five days of the initial communication--if 
the debt collector's first attempt to deliver the notice is returned as 
undeliverable. The Bureau expects to address this issue as part of its 
disclosure-focused final rule. The Bureau also expects that rulemaking 
to address how a debt collector should redeliver the validation notice 
if it is returned as undeliverable. See proposed comment 34(b)(5)-1.
Final Comment 42(a)(1)-3
    Proposed Sec.  1006.42(e)(1) described a safe harbor for required 
disclosures sent by mail. Specifically, proposed Sec.  1006.42(e)(1) 
provided that a debt collector satisfied the general standard in Sec.  
1006.42(a)(1) if the debt collector mailed a printed copy of a required 
disclosure to the consumer's residential address, unless the debt 
collector received notification from the entity or person responsible 
for delivery that the disclosure was not delivered.\570\ Proposed 
comment 42(e)(1)-2 specified that a debt collector did not mail a 
disclosure to a consumer's residential address if the debt collector 
knew or should have known at the time of mailing that the consumer did 
not reside at that location. The Bureau is finalizing proposed Sec.  
1006.42(e)(1) and its accompanying commentary as new comment 42(a)(1)-
3, for the reasons and with the revisions discussed below.
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    \570\ Proposed Sec.  1006.42(e) set forth two safe harbors, the 
first, Sec.  1006.42(e)(1), covering provision of disclosures by 
mail and the second, Sec.  1006.42(e)(2), covering provision of the 
validation notice within the body of an email that is a debt 
collector's initial communication with the consumer. The Bureau 
addresses proposed Sec.  1006.42(e)(2) in the section-by-section 
analysis regarding proposed provisions not finalized, below.
---------------------------------------------------------------------------

    Some industry commenters stated the safe harbor for mail set forth 
in proposed Sec.  1006.42(e)(1) should be revised to encompass mail to 
a post office box or a consumer's ``last known address.'' These 
commenters observed that a consumer might move without advising the 
creditor or debt collector of the consumer's new address. They also 
observed that some consumers use post office boxes or commercial 
addresses to receive mail (e.g., if a consumer is a small business 
owner).
    Some consumer advocates recommended that the Bureau withdraw the 
safe harbor for mail delivery set forth in proposed Sec.  
1006.42(e)(1). These commenters stated that a debt collector may have 
multiple mail addresses for a consumer and stated that the Bureau's 
proposed safe harbor did not provide sufficient guidance on how the 
debt collector should determine the consumer's residential address. 
They further stated that the proposed safe harbor was arbitrary and 
that a debt collector could use it to claim compliance with Sec.  
1006.42(a)(1) without doing any due diligence to ensure that a consumer 
was likely to receive the disclosure at the residential address to 
which the debt collector mailed it.
    After considering these comments, and because the safe harbor 
illustrates how a debt collector may comply with Sec.  1006.42(a)(1), 
the Bureau is finalizing the proposed safe harbor with revisions in new 
comment 42(a)(1)-3.
    Regarding industry's concerns about the proposed requirement that 
mail be sent to a consumer's residential address, the Bureau does not 
believe that consumer harm will result from including post office boxes 
in the safe harbor because post office boxes are generally secure and 
private. Further, some consumers may benefit from

[[Page 76850]]

providing post office box addresses to creditors and debt collectors 
because a consumer can maintain a post office box address for receiving 
mail even as the consumer moves and thereby changes his or her 
residential address. The final safe harbor set forth in comment 
42(a)(1)-3 therefore encompasses a consumer address that is a post 
office box, unless the debt collector knows or should know that the 
consumer does not currently receive mail at that post office box. 
However, the safe harbor does not encompass an address that is a 
commercial address (e.g., if a consumer is a small business owner) 
because the Bureau is concerned that including such addresses in the 
safe harbor could result in consumers inappropriately receiving debt 
collection mail at their places of employment. Nonetheless, while a 
commercial address is not covered by the final safe harbor, mail sent 
to such an address could satisfy the requirements of Sec.  
1006.42(a)(1) and be otherwise compliant with the FDCPA and Regulation 
F, depending on the facts and circumstances.
    The Bureau determines that it is unnecessary for the final safe 
harbor to clarify how debt collectors should ascertain the address at 
which a consumer actually receives mail. Debt collectors already should 
have methods to ascertain correct addresses for consumers since mailing 
disclosures is not free and debt collectors generally may want 
consumers to receive such disclosures. In addition, the safe harbor 
only applies to a debt collector who mails a disclosure to the 
consumer's last known address, and it does not cover a debt collector 
who knows or should know that the consumer does not currently reside 
at, or receive mail at, that location at the time of mailing.
    For these reasons, final comment 42(a)(1)-3 states that, subject to 
comment 42(a)(1)-2 regarding receipt of a notice of undeliverability, a 
debt collector satisfies Sec.  1006.42(a)(1) if the debt collector 
mails a printed copy of a disclosure to the consumer's last known 
address, unless the debt collector, at the time of mailing, knows or 
should know that the consumer does not currently reside at, or receive 
mail at, that location.
Final Comment 42(a)(1)-4
    The Bureau is finalizing proposed comment 42(c)(1)-1 as new comment 
42(a)(1)-4. Proposed comment 42(c)(1)-1 clarified that a debt collector 
could not deliver a required disclosure to an email address or 
telephone number if a consumer had opted out of receiving 
communications to that address or telephone number. The Bureau received 
no comments objecting to proposed comment 42(c)(1)-1 \571\ and, apart 
from renumbering it, is finalizing it as proposed, with wording changes 
only to reconcile its text to the Bureau's overall approach in final 
Sec.  1006.42. Final comment 42(a)(1)-4 thus states that, if a consumer 
has opted out of debt collection communications to a particular email 
address or telephone number by, for example, following the instructions 
provided pursuant to Sec.  1006.6(e), then a debt collector cannot use 
that email address or telephone number to send required disclosures.
---------------------------------------------------------------------------

    \571\ Consumer advocates objected to proposed Sec.  1006.42(c) 
overall and stated that the consumer's opt-out right referred to in 
proposed comment 42(c)(1)-1 was insufficient to resolve their 
objections.
---------------------------------------------------------------------------

42(a)(2) Exceptions
    Proposed Sec.  1006.42(a)(2) excepted the disclosures that would 
have been required by proposed Sec. Sec.  1006.6(e) and 1006.18(e) from 
the requirements of proposed Sec.  1006.42(a)(1), unless the disclosure 
was included on a notice required by FDCPA section 809(a) or Sec.  
1006.38(c) or (d)(2). The Bureau proposed to except these disclosures 
because they do not arise under FDCPA section 809 and generally do not 
implicate FDCPA section 808's prohibition on using unfair or 
unconscionable means to collect or attempt to collect any debt. The 
Bureau received no comments objecting to Sec.  1006.42(a)(2) and is 
finalizing it as proposed, with revisions only to conform its text to 
the Bureau's overall approach in final Sec.  1006.42.
    One industry commenter who addressed proposed Sec.  1006.42(a)(2) 
requested that the final rule provide that the intent-to-deposit letter 
described in proposed Sec.  1006.22(c)(1) (implementing FDCPA section 
808(2)) is not subject to the E-SIGN Act's consumer-consent 
requirements. Under the proposal, the Bureau did not take a position on 
E-SIGN coverage of the intent-to-deposit letter and, accordingly, the 
Bureau does not take a position on E-SIGN's applicability to the letter 
in this final rule. The Bureau is not aware that these notices are 
currently being delivered electronically or, if they are, that there 
are concerns or questions about compliance with the E-SIGN Act when 
sending them. The Bureau notes, however, that the intent-to-deposit 
letter is subject to the notice and form requirements of Sec.  
1006.42(a)(1).
42(b) Requirements for Certain Disclosures Sent Electronically
    In its proposal, the Bureau preliminarily determined that the E-
SIGN Act's consumer-consent requirements apply to certain FDCPA-
required disclosures. The proposal would have provided debt collectors 
with a choice between two general delivery options for providing 
required disclosures electronically. The first option, set forth in 
proposed Sec.  1006.42(b)(1), was to, among other requirements, comply 
with the E-SIGN Act after the consumer provided affirmative consent 
directly to the debt collector. The second option was to, among other 
requirements, comply with the alternative procedures described in 
proposed Sec.  1006.42(c)(1). The Bureau responds to comments regarding 
the proposed alternative procedures in the section-by-section analysis 
regarding proposed provisions that the agency is not finalizing, below. 
In this section-by-section analysis, the Bureau addresses comments 
regarding whether and how the E-SIGN Act's consumer-consent 
requirements apply to certain FDCPA-required disclosures.
    Some industry commenters argued that the E-SIGN Act's consumer-
consent requirements do not apply to the disclosures that the FDCPA and 
Regulation F require. Some of these commenters based this argument on 
an assertion that debt collection disclosures are not disclosures 
regarding a ``transaction'' as the E-SIGN Act defines that term. Others 
based it on an assertion that the FDCPA does not require the validation 
notice to be provided in writing, because the FDCPA permits the notice 
to be provided orally when it is contained in the initial 
communication.
    Consumer advocates stated that the rule should require a debt 
collector to obtain a consumer's E-SIGN consent before using any method 
of communication with the consumer other than mail or a telephone call. 
These commenters observed that many consumers whose debts enter 
collection are lower-income or elderly consumers who may not be 
familiar with internet-based financial transactions. Further, these 
commenters said, even if these consumers have and can use an email 
address or smartphone, they may not have reliable, high-bandwidth home 
internet service, such that they might prefer to receive important 
financial information through the mail. These commenters stated that 
the E-SIGN Act's consumer-consent requirements were purposefully 
designed to ensure that consumers, including lower-income and

[[Page 76851]]

elderly consumers, have access to a computer and the internet such that 
they can access written disclosures electronically.
    Within the E-SIGN Act's consumer-consent requirements, E-SIGN Act 
section 101(c)(1) states that, if a statute, regulation, or other rule 
of law requires that information relating to a transaction or 
transactions in or affecting interstate or foreign commerce be provided 
or made available to a consumer in writing, the use of an electronic 
record to provide or make available (whichever is required) such 
information satisfies the requirement that such information be in 
writing if (A) the consumer has affirmatively consented to such use and 
has not withdrawn such consent . . . .\572\ In turn, E-SIGN Act section 
106(13) defines the term ``transaction'' quite broadly.\573\ The Bureau 
concludes that transaction--as E-SIGN Act section 101(c)(1) uses that 
term and as E-SIGN Act section 106(13) defines it--includes the 
collection of debts by debt collectors.
---------------------------------------------------------------------------

    \572\ As discussed elsewhere in part V, E-SIGN Act section 
104(b)(1) grants Federal agencies authority to interpret E-SIGN Act 
section 101, including section 101(c).
    \573\ E-SIGN Act section 106(13) defines transaction as ``an 
action or set of actions relating to the conduct of business, 
consumer, or commercial affairs between two or more persons, 
including any of the following types of conduct--(A) the sale, 
lease, exchange, licensing, or other disposition of (i) personal 
property, including goods and intangibles, (ii) services, and (iii) 
any combination thereof; and (B) the sale, lease, exchange, or other 
disposition of any interest in real property, or any combination 
thereof.'' See 15 U.S.C. 7006(13).
---------------------------------------------------------------------------

    Further, FDCPA section 809(a) states that ``a debt collector shall 
. . . send the consumer a written [validation] notice'' unless it is 
contained in the initial communication. Under the above terms of E-SIGN 
Act section 101(c)(1), the E-SIGN Act consumer-consent requirements 
apply when a law requires a written disclosure to a consumer. And the 
Bureau has determined that FDCPA section 809(a) sets forth a 
requirement that a debt collector provide a written disclosure of 
information to a consumer; i.e., the Bureau has determined that the 
validation notice required by FDCPA section 809(a) is a disclosure of 
information to a consumer and that FDCPA section 809(a) requires the 
validation notice to be in writing when it is not contained in the 
initial communication. Accordingly, when a debt collector provides the 
required, written validation notice electronically and does so other 
than within the initial communication, the E-SIGN Act's consumer-
consent requirements apply to the debt collector's electronic provision 
of the notice. The same conclusion applies to the disclosures that 
FDCPA section 809(b) requires to be mailed, which are debt collectors' 
responses to consumers' requests for original-creditor information (see 
the section-by-section analysis of Sec.  1006.38(c)) and debt 
collectors' responses to consumers' disputes (see the section-by-
section analysis of Sec.  1006.38(d)(2)(i)). The Bureau thus is 
finalizing proposed Sec.  1006.42(b)(1) as Sec.  1006.42(b) to provide 
that a debt collector who sends the required, written validation 
notice, or the disclosures required by Sec.  1006.38(c) or 
(d)(2)(i),\574\ electronically, must do so in accordance with the 
consumer-consent requirements in E-SIGN Act section 101(c).\575\
---------------------------------------------------------------------------

    \574\ As discussed in the section-by-section analysis of Sec.  
1006.38(d)(2), the Bureau has determined not to apply the E-SIGN 
Act's consumer-consent requirements when a debt collector responds 
electronically to a dispute that the debt collector has determined 
is duplicative. Thus, final Sec.  1006.42(b) refers to the 
disclosures required by ``Sec.  1006.38(c) or (d)(2)(i)'' rather 
than ``Sec.  1006.38(c) or (d)(2)'' as proposed.
    \575\ As discussed elsewhere in the section-by-section analysis 
of Sec.  1006.42, the Bureau is moving proposed Sec.  1006.42(b)(2) 
and (3) into commentary to final Sec.  1006.42(a)(1) and is not 
finalizing proposed Sec.  1006.42(b)(4). The Bureau therefore is 
finalizing proposed Sec.  1006.42(b)(1) as Sec.  1006.42(b).
---------------------------------------------------------------------------

    As noted above, proposed Sec.  1006.42(b)(1) would have required a 
debt collector to obtain E-SIGN consent directly from consumers when 
the debt collector provided electronically the validation notice or the 
disclosures required by Sec.  1006.38(c) and (d)(2). Some industry 
commenters recommended that the Bureau take a different approach and 
interpret E-SIGN Act section 101(c) to permit a consumer's E-SIGN 
consent obtained by a creditor to pass from the creditor (or a prior 
debt collector) to the debt collector. Consumer advocates, by contrast, 
supported the Bureau's proposed approach. In these commenters' view, a 
consumer's E-SIGN consent applies only ``during the course of the 
parties' relationship'' per E-SIGN Act section 101(c)(1)(B)(ii). 
Further, these commenters stated, collection activity by third-party 
debt collectors to which the FDCPA applies is not within the 
relationship between the consumer and the original creditor.
    The Bureau is not finalizing in Sec.  1006.42(b) the proposed E-
SIGN Act interpretation that a debt collector who provides 
electronically the written disclosures required by the FDCPA and 
Regulation F must obtain a consumer's affirmative consent directly from 
the consumer. That is to say, the Bureau is not taking a position in 
this rulemaking on whether a consumer's E-SIGN consent provided to a 
creditor (or to a prior debt collector) transfers to a debt collector, 
and, as a result, is not addressing feedback received regarding the 
Bureau's proposed interpretation. The Bureau intends to monitor debt 
collectors' practices for sending required debt collection disclosures 
in accordance with the consumer-consent requirements in E-SIGN Act 
section 101(c), including debt collectors' practices for obtaining that 
consent.
Proposed Provisions Not Finalized
    Proposed Sec.  1006.42(b)(4) and (c) through (e) would have set 
forth additional requirements, alternative procedures, notice-and-opt-
out processes, and a safe harbor for a debt collector providing a 
validation notice electronically. Collectively, these provisions, along 
with proposed Sec.  1006.42(b) in general, prescribed various methods 
for a debt collector to deliver a validation notice either in the body 
of an email or through a hyperlink, in the initial communication with 
the consumer or within five days of the initial communication.
    The Bureau received thousands of comments concerning both the 
overall approach and details of these provisions. While many industry 
commenters supported the Bureau's attempt to provide clarity, such 
commenters were also concerned about what they considered to be the 
prescriptive and burdensome nature of the proposal. These commenters 
suggested that, if finalized, the proposed procedures would not lead to 
the clarity or increased use of electronic delivery that the Bureau 
expected. Consumer and consumer advocate commenters objected to the 
Bureau's proposal, arguing that, even with prescriptive procedures, the 
Bureau's proposal failed to adequately safeguard consumers from threats 
present in electronic communications and to ensure that consumers would 
have a reasonable likelihood of receiving such communications.
    For the reasons discussed below, the Bureau is not finalizing the 
following specific procedures and safe harbors. The Bureau emphasizes, 
however, that it concludes that consumers may benefit from electronic 
communications in debt collection, including the delivery of required 
notices, as consumers may be able to exert greater control over such 
communications than over non-electronic communications and those 
communications may be more easily retained and referenced by consumers. 
The Bureau also concludes that debt collectors may find electronic 
delivery of required notices to be a more effective

[[Page 76852]]

and efficient means of communicating with consumers.
    Nevertheless, because debt collectors do not presently engage in 
widespread use of electronic communications, as discussed in the 
section-by-section analysis of Sec.  1006.6(d)(3) through (5), and in 
light of commenters' concerns, the Bureau concludes that it does not, 
at this time, have sufficient information to properly weigh the risks 
to consumers and benefits to debt collectors to finalize specific 
procedures for electronic delivery of required disclosures. The Bureau 
determines that finalizing other communications provisions will 
encourage both debt collectors and consumers to communicate 
electronically when they prefer to do so. The Bureau intends to 
actively monitor the market and gather information on these electronic 
communications in general so that it may, in the future, revisit 
specific procedures for electronic delivery of required disclosures.
    Responsive format for validation notices sent electronically. 
Proposed Sec.  1006.42(b)(4) would have required a debt collector who 
provides a validation notice electronically to do so in a responsive 
format that is reasonably expected to be accessible on a screen of any 
commercially available size and via commercially available screen 
readers.
    Those industry commenters who addressed the proposed responsive 
format requirement in proposed Sec.  1006.42(b)(4) generally stated 
that it would be too burdensome and prescriptive. A few industry 
commenters supported the proposed requirement.
    Consumer advocates generally supported proposed Sec.  
1006.42(b)(4). They stated that responsive formats for required 
disclosures serve an important goal of readability on mobile devices. 
These commenters encouraged the Bureau to follow through on its 
proposal to release source code that collectors could use to provide 
electronically sent validation notices in a responsive format. While a 
group of State Attorneys General supported the responsive-format 
requirement, they stated that, if a responsive disclosure is magnified 
on a small screen, a consumer can read only one small section of the 
disclosure at a time, which can result in information being overlooked 
or taken out of context notwithstanding that the disclosure includes 
the requisite information.
    As discussed above, the Bureau is not finalizing many of the 
proposed requirements or safe harbors related to electronic delivery of 
required disclosures because the Bureau currently lacks sufficient 
information to properly balance the risks and benefits of rules for 
electronic delivery of required disclosures. Accordingly, the Bureau is 
declining at this time to finalize the proposal to require that the 
validation notice be provided in a responsive format.
    Alternative procedures to the E-SIGN Act for providing certain 
disclosures electronically. As noted in the section by-section analysis 
of Sec.  1006.42(b), proposed Sec.  1006.42(c) provided alternative 
procedures that debt collectors sending certain required disclosures 
electronically could have used in lieu of sending the disclosures in 
accordance with E-SIGN Act section 101 and obtaining affirmative 
consent directly from the consumer, as proposed Sec.  1006.42(b)(1) 
otherwise would have required. In the context of those alternative 
procedures, proposed Sec.  1006.42(c)(2) provided two methods from 
which debt collectors could choose for placing a required disclosure in 
an electronic communication. The first method, as described in proposed 
Sec.  1006.42(c)(2)(i), was to place the disclosure in the body of an 
email. The second method, described in proposed Sec.  
1006.42(c)(2)(ii), was to place the disclosure on a secure website that 
is accessible by clicking on a hyperlink included within an electronic 
communication, provided certain other conditions were met. Among those 
conditions was that the consumer receive notice and an opportunity to 
opt out of hyperlinked delivery as set forth in proposed Sec.  
1006.42(d).
    Proposed Sec.  1006.42(d) described two processes for providing 
consumers with notice and an opportunity to opt out of hyperlinked 
delivery of required disclosures. Proposed Sec.  1006.42(d)(1) required 
a debt collector to inform the consumer, in a communication with the 
consumer before providing the required disclosure, of certain 
information which included requiring the debt collector to inform the 
consumer of the consumer's ability to opt out of hyperlinked delivery 
of disclosures and to provide instructions for doing so within a 
reasonable period of time.\576\ Under proposed Sec.  1006.42(d)(2), the 
notice-and-opt-out process would have relied on a communication between 
the creditor and the consumer.\577\
---------------------------------------------------------------------------

    \576\ Proposed comment 42(d)(1)-3 would have clarified how the 
proposed requirement to communicate with the consumer before 
providing a hyperlinked disclosure worked together with the proposed 
requirement to provide the consumer a reasonable period within which 
to opt out. The proposed comment explained that, in an oral 
communication with the consumer, such as a telephone or in-person 
conversation, the debt collector may require the consumer to make an 
opt-out decision during that same communication. However, in a 
written or electronic communication, a debt collector would have had 
to allow a consumer more than five days to make an opt-out decision 
in order to grant sufficient time for the consumer to see and 
respond to the opt-out notice. And because, under FDCPA section 
809(a), no more than five days may elapse between an initial debt 
collection communication and when the debt collector sends the 
validation notice, under proposed comment 42(d)(1)-3, a debt 
collector who wished to obtain consumer consent in an initial 
communication to hyperlinked delivery of the validation notice would 
have been required to obtain the consumer's consent to such delivery 
orally.
    \577\ Under proposed Sec.  1006.42(d)(2), a debt collector would 
have been required, no more than 30 days before the debt collector's 
electronic communication containing the hyperlink to the disclosure, 
to confirm that the creditor: (1) Communicated with the consumer 
using the email address or, in the case of a text message, the 
telephone number to which the debt collector intends to send the 
electronic communication, and (2) informed the consumer of the 
information set forth in proposed Sec.  1006.42(d)(2).
---------------------------------------------------------------------------

    As noted above, some industry commenters argued that the E-SIGN 
Act's consumer-consent requirements should not apply to the written 
disclosures required under the FDCPA and Regulation F. Some industry 
commenters suggested that, if the Bureau were to determine that the E-
SIGN Act's consumer-consent requirements do apply, then the Bureau 
should use its exemption authority, provided by E-SIGN Act section 
104(d)(1), to exempt from the E-SIGN Act's consumer-consent 
requirements the disclosures that the FDCPA requires to be in writing. 
E-SIGN Act section 104(d)(1) states that a Federal agency may exempt 
required written disclosures from the E-SIGN Act's consumer-consent 
requirements if the agency determines that ``such exemption is 
necessary to eliminate a substantial burden on electronic commerce and 
will not increase the material risk of harm to consumers.'' Industry 
commenters stated that the E-SIGN Act's consumer-consent requirements 
impose a substantial burden on electronic commerce in the debt 
collection industry because it is infeasible for a debt collector to 
obtain a consumer's E-SIGN consent prior to electronically delivering 
the validation notice to the consumer.
    Industry commenters generally based this position on the same 
rationale that underpinned the Bureau's proposal to exempt from the E-
SIGN Act's consumer-consent requirements required disclosures sent 
pursuant to the alternative procedures in proposed Sec.  1006.42(c). 
Specifically, these commenters stated, it is not practicable to obtain 
a consumer's E-SIGN consent

[[Page 76853]]

through the mail or during a telephone call, which are the primary 
methods by which debt collectors make initial communications to 
consumers. Further, these commenters stated, it is difficult or 
impossible to obtain consumers' E-SIGN consent in the five days between 
when the debt collector makes an initial communication in a telephone 
call and when FDCPA section 809(a) provides that the debt collector 
must provide the validation notice (unless the validation notice is 
contained in the initial communication). Finally, these commenters 
stated, debt collectors generally do not have ongoing customer 
relationships with the consumers from whom the debt collectors seek 
debt repayment, such that it is difficult or impossible for debt 
collectors to use the practices for obtaining E-SIGN consent that 
creditors typically use.
    While some industry commenters argued that the Bureau should use 
its exemption authority, some also expressed concern with the specifics 
of the Bureau's proposed exemption, arguing that the proposal in Sec.  
1006.42(c) to permit debt collectors to use email addresses or 
telephone numbers that the creditor could have used in accordance with 
section 101(c) of the E-SIGN Act was not sufficient. These commenters 
stated that, in many cases, a creditor would not have a consumer's E-
SIGN consent but would have the consumer's email address or telephone 
number (for text messages). For example, these commenters said, the 
creditor might use the email address or telephone number to provide 
non-required messages and notifications to consumers, for which the 
consumers' E-SIGN consent is not required. To enable debt collectors to 
interact efficiently with consumers in these situations, these 
commenters said, the Bureau should provide an E-SIGN Act exemption and 
revise the alternative procedures in proposed Sec.  1006.42(c) to 
permit a debt collector to send required disclosures electronically to 
the consumer's email address or telephone number (for text messages) 
that the creditor provided to the debt collector, irrespective of 
whether the creditor or the debt collector obtained the consumer's E-
SIGN consent.
    Industry commenters also stated that the requirements in proposed 
Sec.  1006.42(c)(2)(ii) and (d) regarding provision of required 
disclosures through hyperlinks in emails or text messages were far too 
prescriptive and burdensome and would not be used. They generally did 
not, however, suggest alternatives to those procedures because, as 
noted above, their main argument was that the E-SIGN Act's consumer-
consent requirements do not apply or that the Bureau should establish a 
blanket exemption from those requirements.
    Consumer advocates objected to the E-SIGN Act exemption in proposed 
Sec.  1006.42(c). These commenters stated that the proposal failed to 
satisfy the two conditions that E-SIGN Act section 104(d)(1) requires 
an agency to meet when establishing an exemption from the E-SIGN Act's 
consumer-consent provisions. Specifically, consumer advocates stated 
that the proposal failed to show that (i) electronic commerce is 
substantially burdened by requiring debt collectors to obtain E-SIGN 
consent and that (ii) the proposed exemption would not materially 
increase the risk of harm to consumers.
    Regarding hyperlinks, consumer advocates observed that Federal 
agencies have advised consumers against clicking on hyperlinks in 
electronic communications from unrecognized senders. They stated that 
the proposed procedures for hyperlinked delivery of required 
disclosures failed to provide reasonable assurance that an electronic 
debt collection communication with a hyperlink would not be sent to 
spam or that the consumer would recognize the communication and be 
comfortable clicking on a hyperlink within it. They stated that the 
Bureau's rule should not permit required debt collection disclosures to 
be sent through hyperlinks in emails or text messages. For all of these 
reasons, consumer advocates recommended that the Bureau withdraw 
proposed Sec.  1006.42(c).
    After considering feedback, the Bureau believes that it currently 
lacks sufficient information to properly assess the risks and benefits 
of the alternative procedures in proposed Sec.  1006.42(c) vis-
[agrave]-vis the exemption criteria in E-SIGN Act section 104(d)(1), 
which, as noted above, are that ``such exemption is necessary to 
eliminate a substantial burden on electronic commerce and will not 
increase the material risk of harm to consumers.'' For the reasons the 
Bureau set forth in its proposal,\578\ the Bureau concludes that the E-
SIGN Act's consumer-consent requirements do pose a substantial burden 
on electronic commerce in the debt collection context. The Bureau also 
concludes, however, that it does not have sufficient evidence to 
establish that the proposed exemption and alternative procedures would 
not increase the material risk of harm to consumers.\579\ The Bureau 
also lacks evidence to assess and finalize other possible alternative 
procedures. Accordingly, the Bureau is not finalizing proposed Sec.  
1006.42(c) or otherwise establishing an exemption from the E-SIGN Act's 
consumer-consent requirements at the present time. As discussed above, 
the final rule--as reflected in Sec.  1006.42(b)--thus requires a debt 
collector who provides electronically the written disclosures required 
by the FDCPA and Regulation F to do so in accordance with the E-SIGN 
Act's consumer-consent requirements.
---------------------------------------------------------------------------

    \578\ 84 FR 23274, 23361 (May 21, 2019).
    \579\ Moreover, quantitative testing completed by the Bureau 
after publication of the proposal shows consumer preference for 
receiving validation notices through the mail and less consumer 
willingness to receive validation notices by email or text message. 
See CFPB Quantitative Testing Report, supra note 33, at 32-33.
---------------------------------------------------------------------------

    The Bureau also declines to finalize at the present time the 
requirements for hyperlinked delivery of required disclosures that were 
proposed as part of the alternative procedures. The Bureau believes 
that the consumer risks from clicking on hyperlinks in electronic 
communications from senders that consumers might not recognize warrant 
additional consideration by the Bureau \580\ and the Bureau intends to 
continue to monitor and gather information on electronic communications 
use in debt collection and, if applicable, use of hyperlinks in debt 
collection communications. In the absence of the proposed requirements, 
the final rule does not prohibit a debt collector from sending required 
disclosures electronically through hyperlinks (or with accompanying 
hyperlinks), provided that the debt collector complies with the 
requirements of the FDCPA and Regulation F and other applicable law. 
However, the final rule also does not provide a safe harbor for a debt 
collector to use hyperlinks to provide required disclosures 
electronically.\581\ As noted above, Sec.  1006.42(a)(1) provides, in 
part, that a debt collector who sends disclosures required by the FDCPA 
or

[[Page 76854]]

Regulation F in writing or electronically must, among other things, do 
so in a manner that is reasonably expected to provide actual notice. 
Final comment 42(a)(1)-1 provides relevant factors for determining 
whether a debt collector has met this requirement.
---------------------------------------------------------------------------

    \580\ As the Bureau noted in the proposal, the FTC advises 
consumers not to clink on links or attachments in unsolicited 
electronic communications from senders they do not recognize, in 
order to prevent phishing and malware. See 84 FR 23274, 23363 (May 
21, 2019); Fed. Trade Comm'n, How to Recognize and Avoid Phishing 
Scams (July 2017), https://www.consumer.ftc.gov/articles/how-recognize-and-avoid-phishing-scams; Fed. Trade Comm'n, Malware (Nov. 
2015), https://www.consumer.ftc.gov/articles/0011-malware. The FDIC 
offers consumers similar guidance. See Fed. Deposit Ins. Corp., 
Beware of Malware: Think Before You Click, https://www.fdic.gov/consumers/consumer/news/cnwin16/malware.html (last updated Mar. 8, 
2016).
    \581\ In this regard, see the discussion of Lavallee v. Med-1 
Solutions in the section-by-section analysis below addressing the 
Bureau's decision not to finalize a safe harbor for validation 
notices sent in the body of an electronic initial communication.
---------------------------------------------------------------------------

    Safe harbor for validation notices sent in the body of an 
electronic initial-communication. Proposed Sec.  1006.42(e)(2) provided 
that a debt collector satisfied the notice and retainability 
requirements of Sec.  1006.42(a) if the debt collector delivered a 
validation notice in the body of an email that was the debt collector's 
initial communication with the consumer and satisfied certain other 
conditions. The debt collector could either (i) satisfy the 
requirements of proposed Sec.  1006.42(b) for delivering validation 
notices electronically, which included obtaining the consumer's E-SIGN 
consent; or (ii) satisfy the requirements of the proposed alternative 
procedures in Sec.  1006.42(c) discussed above (except that proposed 
Sec.  1006.42(e)(2) would have permitted debt collectors to send the 
validation notice to a potentially broader set of email addresses than 
proposed Sec.  1006.42(c) would have permitted).
    Some industry commenters suggested that the safe harbor set forth 
in proposed Sec.  1006.42(e)(2) be expanded in certain ways, while 
others criticized it as being overly complicated and burdensome.\582\ 
Industry commenters generally stated that the safe harbor should be 
expanded through changes to the procedures for selecting an email 
address in proposed Sec.  1006.6(d)(3). For example, these commenters 
stated that the safe harbor should include any email address or 
telephone number that the consumer has provided to, or confirmed with, 
the creditor, debt collector, or other person for purposes of receiving 
communication about the account, including a consumer's employer-
provided email address if that is the email address that the consumer 
provided to the creditor.\583\
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    \582\ Some industry commenters did object to the safe harbor, 
but these commenters misunderstood the proposal as requiring a debt 
collector to obtain a consumer's E-SIGN consent when the debt 
collector delivers the validation notice in the body of an email 
that was the debt collector's initial communication with the 
consumer. Instead, as noted above, the proposed safe harbor included 
delivery without E-SIGN consent (per the alternative procedures set 
forth in proposed Sec.  1006.42(c)) of an email to an email address 
that the debt collector selected through the procedures described in 
proposed Sec.  1006.6(d)(3)).
    \583\ As also discussed in the section-by-section analysis of 
Sec.  1006.22(f)(3), these commenters stated that, while it may be 
true that a consumer's employer can access emails sent to the 
consumer's employer-provided email addresses, consumers understand 
that they do not have an expectation of privacy from their employers 
for their employer-provided email account when they provide 
employer-provided email addresses to creditors.
---------------------------------------------------------------------------

    With respect to the form of the communication, some industry 
commenters stated that the safe harbor should include delivery of the 
validation notice in the initial communication through a text message. 
Others stated that the safe harbor should include initial communication 
emails that have the validation notice as a portable document format 
(PDF) attachment. And others stated that the safe harbor should 
expressly permit the body of initial communication emails to include 
both the validation notice and hyperlinks to debt collector websites.
    Consumer advocates recommended that the Bureau withdraw the email 
safe harbor set forth in proposed Sec.  1006.42(e)(2). These commenters 
stated that the proposed procedures for obtaining consumers' email 
addresses set forth in proposed Sec.  1006.6(d)(3) would not reliably 
result in the validation notice information, contained within the 
emailed initial communication, actually reaching the consumer and could 
result in disclosure of sensitive information to third parties. These 
commenters stated that the proposal failed to provide a rational 
explanation of whether consumers would reliably receive the emailed 
initial communication.
    Having considered the comments, the Bureau declines to finalize the 
safe harbor for email delivery of the validation notice information 
within the initial communication. The Bureau has determined that the 
FDCPA does not require the validation notice information to be provided 
in writing when it is contained in the initial communication.\584\ The 
Bureau has therefore also determined that the E-SIGN Act's consumer-
consent requirements do not apply to a debt collector's electronic 
delivery of the validation notice information within the debt 
collector's initial communication to a consumer.\585\ Accordingly, a 
debt collector may electronically deliver the validation notice 
information within the debt collector's initial communication to a 
consumer without obtaining the consumer's E-SIGN consent.\586\
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    \584\ FDCPA section 809(a) permits the validation notice 
information to be contained in the initial communication. In turn, 
FDCPA section 807(11) indicates that the initial communication with 
the consumer may be oral. Accordingly, the Bureau interprets the 
FDCPA as not requiring that the validation notice information be 
provided in writing when it is contained in the initial 
communication.
    \585\ The E-SIGN Act's consumer-consent requirements apply only 
when a ``statute, regulation, or other rule of law'' requires that a 
disclosure be provided in writing. See E-SIGN Act section 101(c)(1) 
(15 U.S.C. 7001(c)(1)). Because the Bureau has determined that the 
FDCPA does not require that the validation notice information be 
provided in writing when it is contained in the initial 
communication (see previous footnote) and the Bureau is not imposing 
such a requirement through Regulation F, the Bureau has also 
determined that the E-SIGN Act's consumer-consent requirements do 
not apply to electronic delivery of the validation notice 
information when it is contained in the initial communication.
    \586\ In Lavallee v. Med-1 Solutions, the United States Court of 
Appeals for the Seventh Circuit held that the emails sent by Med-1 
Solutions to Lavallee did not meet the FDCPA's requirements for 
electronic delivery of the validation notice information within an 
initial communication because the emails did not ``contain'' the 
validation notice information. Lavallee v. Med-1 Solutions, LLC, 932 
F.3d 1049 at 1055 (7th Cir. 2019). The court observed that, to 
access the validation notice information, the consumers receiving 
the emails had to complete multiple, discrete tasks and ``[a]t best, 
the emails provided a digital pathway to access the information.'' 
Id. at 1055-56. Under the specific facts of that case, the Bureau 
agrees with the Seventh Circuit that the electronic delivery 
procedures used by Med-1 Solutions did not satisfy the requirement 
in FDCPA section 809(a) that the initial communication ``contain'' 
the validation notice information. Nonetheless, the Bureau believes 
that a debt collector may properly provide the validation notice 
information to a consumer within the debt collector's electronic 
initial communication with the consumer, provided that the 
communication ``contains'' the validation notice information.
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    The Bureau also has determined that the validation notice 
information (whether or not contained in the initial communication) is 
a disclosure required by the FDCPA. Accordingly, the general standard 
in final Sec.  1006.42(a)(1)--that a required disclosure be sent in a 
manner that is reasonably expected to provide actual notice and in a 
form that the consumer may keep and access later--applies when a debt 
collector sends the validation notice information electronically within 
the initial communication. The commentary discussed in the section-by-
section analysis of Sec.  1006.42(a)(1) clarifies the general standard.
    However, because email communications in general are not widely 
used in debt collection currently, the Bureau lacks evidence to show 
that a debt collector sending an email pursuant to the proposed safe 
harbor would have a reasonable expectation of actual notice to the 
consumer. The Bureau is thus declining to finalize the proposed safe 
harbor.
    The absence of the proposed safe harbor from the final rule does 
not preclude debt collectors from using email to deliver the validation 
notice information electronically within the initial communication if 
the debt collector is able to satisfy the requirements of the FDCPA and 
Regulation F, in particular the requirement that the communication be

[[Page 76855]]

sent in a manner that is reasonably expected to provide actual notice 
and in a form that the consumer may keep and access later. The Bureau 
will monitor whether debt collectors who electronically provide 
validation notice information within initial communications do so in a 
manner that does not violate these requirements.
    As noted above, the Bureau is finalizing Sec.  1006.42, including 
Sec.  1006.42(a)(1), to implement and interpret FDCPA section 809(a) 
and (b) and pursuant to its authority under FDCPA section 814(d) to 
prescribe rules with respect to the collection of debts by debt 
collectors.
    The Bureau is also finalizing Sec.  1006.42(a)(1) to implement and 
interpret FDCPA section 808's prohibition on using unfair or 
unconscionable means to collect a debt. A few industry commenters 
objected to the proposal's initial conclusion that it may be unfair or 
unconscionable under FDCPA section 808 for a debt collector to deliver 
a disclosure using a method that is not reasonably expected to provide 
actual notice to the consumer or that does not allow the consumer to 
retain the disclosure and access it later.\587\ These commenters argued 
that it is not unfair or unconscionable to send an electronic notice to 
a consumer that the debt collector has no reason to believe is 
addressed incorrectly or will be returned.
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    \587\ See 84 FR 23274, 23356 (May 21, 2019).
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    The Bureau concludes that the proposal's analysis under FDCPA 
section 808 is consistent with these commenters' position. Whether a 
debt collector has a reasonable expectation of actual notice depends 
upon the specific facts and circumstances, which may include the debt 
collector's knowledge concerning the accuracy of the electronic address 
used or knowledge regarding the likelihood that the electronic 
communication will be returned. As proposed, therefore, the Bureau is 
finalizing Sec.  1006.42(a)(1) as, among other things, an 
interpretation of FDCPA section 808's prohibition on using unfair or 
unconscionable means to collect a debt.
Subpart C--Reserved
Subpart D--Miscellaneous
Section 1006.100 Record Retention
    For the purpose of promoting the effective and efficient 
enforcement and supervision of Regulation F, the Bureau proposed in 
Sec.  1006.100 to require a debt collector to retain evidence of 
compliance with Regulation F. Specifically, the Bureau proposed in 
Sec.  1006.100(a) to require a debt collector to retain evidence of 
compliance with Regulation F starting on the date that the debt 
collector begins collection activity on a debt and ending three years 
after: (1) The debt collector's last communication or attempted 
communication in connection with the collection of the debt; or (2) the 
debt is settled, discharged, or transferred to the debt owner or to 
another debt collector. The proposed commentary would have clarified 
certain details, including that nothing in the proposed record 
retention provision required a debt collector to record telephone 
calls, but that, if a debt collector recorded telephone calls, the debt 
collector needed to retain the recordings if the recordings were 
evidence of compliance with Regulation F.\588\ To address feedback 
received, the Bureau is finalizing Sec.  1006.100(a) with revisions and 
is adding new Sec.  1006.100(b) to create a special rule regarding 
retention of telephone call recordings.
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    \588\ See 84 FR 23274, 23367-68 (May 21, 2019).
---------------------------------------------------------------------------

100(a)
    Industry commenters expressed concern regarding the potential 
burden of a retention requirement, especially for smaller debt 
collectors. Both industry and consumer advocate commenters offered 
suggestions on how the proposed requirement should be modified, as 
follows.
Trigger To Begin Retaining Records
    As proposed, the final rule's record retention provision would have 
required a debt collector to begin retaining records ``on the date that 
the debt collector begins collection activity on a debt.'' Most 
commenters who addressed the issue stated that that requirement 
provides sufficient clarity. Some consumer advocate commenters 
suggested that the retention period begin as soon as a debt collector 
obtains a debt from a creditor (or prior debt collector)--as opposed 
to, as proposed, when collection activity begins--so that the debt 
collector retains evidence relevant to disparate impacts in who the 
debt collector targets for collection or for particular types of 
collection. The Bureau declines to start the record retention 
requirement at the time the debt collector obtains the debt.\589\ The 
Bureau therefore is finalizing Sec.  1006.100(a) to provide, as 
proposed, that a debt collector must begin to retain records on the 
date that collection activity begins on a debt.
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    \589\ Regulation B, 12 CFR 1002, which implements the Equal 
Credit Opportunity Act, imposes its own record retention 
requirements.
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Running of Retention Period
    Industry commenters suggested a number of alternatives to, or 
requested clarity regarding, the Bureau's proposal to tie the running 
of the retention period to (at the debt collector's option) either the 
date of the debt collector's last communication or attempted 
communication regarding the debt or the date that the account was 
settled, transferred, discharged or otherwise closed.\590\ First, some 
industry commenters suggested that the proposed retention period should 
run from the debt collector's last communication or attempted 
communication with the consumer rather than, as proposed, with anyone. 
These commenters asserted that the purpose of the FDCPA is to protect 
consumers from unfair, deceptive, and abusive debt collection practices 
by debt collectors and that a record retention requirement based on a 
debt collector's last communication or attempted communication with a 
consumer would be more consistent with this statutory purpose than the 
proposed approach of the last communication with anyone. Other industry 
commenters stated that the definitions of ``communication'' and 
``attempted communication'' should be clarified for purposes of the 
rule's record retention requirement.
---------------------------------------------------------------------------

    \590\ In addition to the comments discussed in this section-by-
section analysis, commenters raised concerns about the unique record 
retention burdens associated with telephone call recordings. The 
Bureau discusses those comments in the section-by-section analysis 
of Sec.  1006.100(b) below, and addresses retention of all other 
types of records here.
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    Second, industry commenters stated that, with respect to many 
accounts, a debt collector will undertake initial collection activity 
soon after receiving the account, but the account might then sit 
dormant for months or years before being settled, transferred, 
discharged, or otherwise closed on the debt collector's books.\591\ 
These commenters stated that, as proposed, there would be uncertainty 
and burden associated with maintaining records for dormant accounts for 
time periods potentially well beyond three years from the last 
collection activity on the accounts because the accounts have not been 
closed. To alleviate this problem, some industry commenters suggested 
that the final rule's record retention requirement should require debt 
collectors to retain records for three years from the earlier of the 
date of the last communication or the date on which the account is 
closed.
---------------------------------------------------------------------------

    \591\ Some commenters suggested that the record retention 
provision in the regulation refer to the date on which an account is 
``closed'' rather than ``transferred.''
---------------------------------------------------------------------------

    Third, some industry commenters, as well as the U.S. SBA Office of

[[Page 76856]]

Advocacy, requested more clarity as to when the three-year retention 
clock would start to run. Some of these commenters noted that, for 
discharged debts, it was not clear from the proposal whether the 
retention requirement would run from the date of the discharge or of 
some later terminal event. Others stated that the proposal was unclear 
whether, if there is a judgment, the three-year period runs from the 
final court order, the date that the judgment is paid, or the date the 
account is closed. Separately, some industry commenters stated that the 
date of initiating collection activity sufficiently set forth the 
expectation for when debt collectors should start retaining records 
with respect to an account.
    Some consumer advocates likewise requested that the date on which 
the three-year retention clock starts to run be more definitive. These 
commenters suggested that the three-year period run from the time at 
which a debt collector sends a notice to the consumer stating that the 
debt has been fully paid or settled, or extinguished, or that the debt 
collector has ceased all collection activities related to the debt. 
These commenters stated their belief that most debt collectors do not 
currently provide such final notices today and suggested that the 
Bureau require such notices to provide clarity to consumers and to 
trigger the start of the three-year record retention clock.
    The Bureau agrees that, as proposed, the record retention 
requirement could have imposed an unintended burden as a result of the 
variability of the length of the life cycles of various debt collection 
accounts and the long dormancy of many accounts after the first 
communication (and related initial activity). The Bureau, however, 
declines to address these concerns by taking the suggested approach of 
making the three-year retention period run from the earlier of the last 
communication or the closure of the debt file. If debt file closure 
occurred prior to the last communication, such an approach could result 
in the debt collector not being required to retain the record of the 
last communication for a sufficient time to permit effective 
supervision and enforcement, because the three-year retention period 
would have begun to run upon closure of the debt file. The Bureau also 
declines to require, as suggested by some consumer advocate commenters, 
a debt collector to provide a notice to a consumer that the debt 
collector has ceased all collection activity with respect to a debt. 
The Bureau did not propose such a requirement and therefore did not 
receive comments on the benefit or burden of such a requirement. For 
these reasons, the Bureau is finalizing Sec.  1006.100(a) to provide 
that, except for telephone call recordings (as discussed in the 
section-by-section analysis of Sec.  1006.100(b)), the retention period 
begins to run on the date of the last collection activity on the 
account. Final comment 100(a)-4 provides clarity regarding when the 
last collection activity on an account occurs and, thus, when the 
three-year record retention clock starts to run. The Bureau determines 
that having the retention period begin to run with the last collection 
activity on the account strikes the right balance between encompassing 
the activities and documents necessary to adequately supervise and 
enforce the requirements of the FDCPA and Regulation F, providing 
sufficient clarity for compliance, and not being overly burdensome.
    The Bureau declines to base the running of the retention period, as 
suggested by industry commenters, on the debt collector's last 
communication with the consumer. Nothing in the statute's statement of 
its purposes in FDCPA section 802(e) suggests that the statute's 
protections are limited to debt collectors' communications with 
consumers. Further, the FDCPA's protections against harassment or abuse 
(FDCPA section 806), false or misleading representations (section 807), 
and unfair practices (section 808) are not limited to communications or 
activities directed to the consumer alleged to owe a debt. For example, 
FDCPA section 806 states that a debt collector may not harass, oppress, 
or abuse ``any person'' in connection with the collection of a debt. 
Finally, the FDCPA's limitations on acquisition of location information 
(FDCPA section 804) and communication with third parties (section 
805(b)) are specifically targeted at communications with persons other 
than the consumer.
Length of Retention Period
    Industry commenters expressed differing views as to the proposed 
three-year record retention period. Some commenters stated that the 
proposed period strikes the right balance between cost and burden on 
the one hand and the need to ensure adequate supervision and 
enforcement on the other. Some stated that the period should be one 
year, consistent with the FDCPA's one-year statute of limitations. 
Other industry commenters recommended that the retention period be two 
years, consistent with Regulation X, 12 CFR 1024, and Regulation Z, 12 
CFR 1026. Others suggested that the proposed three-year period should 
be amended to be ``at least'' or ``no less than'' three years to 
clarify that maintaining records for more than three years would not be 
a violation.
    Many consumer advocates stated that the record retention period 
should be longer than three years. Some consumer advocates stated that 
the retention period should last at least as long as a debt collector 
might continue collection attempts. Others said that it should be seven 
years, paralleling the length of time that information generally may 
stay in consumer credit reports under the FCRA and the time periods for 
actions under certain State laws. Others recommended that the rule 
clarify that debt collectors who furnish information to consumer 
reporting agencies pursuant to the FCRA also must comply with the 
recordkeeping requirements of the FCRA.
    For the reasons discussed below, the Bureau has decided to finalize 
a three-year record retention period, as proposed. First, as to 
comments about the FDCPA's ``one-year statute of limitations,'' the 
Bureau notes that that timeframe refers to FDCPA section 813(d), which 
applies only to private actions brought under the FDCPA. FDCPA section 
814(b) and (c) set forth the basis for Federal agencies, including the 
Bureau, to bring administrative enforcement actions for violations of 
the FDCPA. The Bureau also declines to make the Regulation F retention 
period match the period set forth in Regulations X and Z (two years), 
because those regulations implement statutes (respectively, RESPA and 
the Truth in Lending Act \592\) that serve different purposes than the 
FDCPA. The Bureau also declines to adopt a record retention time period 
longer than three years because retention for such a time period is 
unnecessary for effective supervision and enforcement and is not 
typical under the consumer financial services laws.
---------------------------------------------------------------------------

    \592\ 15 U.S.C. 1601 et seq.
---------------------------------------------------------------------------

    A three-year retention period will provide the Bureau and other 
Federal and State enforcement agencies with a sufficient but limited 
amount of time to examine and conduct enforcement investigations. In 
addition, it will facilitate effective supervisory examinations, which 
depend critically on having access to the information necessary to 
assess operations, activities, practices, and legal compliance. If the 
record retention period were reduced, it could be considerably more 
difficult to ensure that the necessary information and records would 
remain routinely

[[Page 76857]]

available for proper supervisory oversight of debt collectors. The 
Bureau is in a position to evaluate such issues from its near-decade of 
experience exercising supervision and enforcement authority over the 
debt collection industry.\593\ That experience supports the conclusion 
that a three-year record retention period is necessary and warranted.
---------------------------------------------------------------------------

    \593\ To facilitate Bureau supervision of nonbank covered 
persons active in the consumer debt collection market, the Bureau 
published in 2012 a rule defining larger participants in that 
market. 77 FR 65775 (Oct. 31, 2012).
---------------------------------------------------------------------------

    The Bureau also concludes that a three-year retention period will 
not impose an undue cost or burden on debt collectors, particularly 
when viewed in light of the marginal difference in cost or burden 
between, for example, a two-year period and a three-year period. Based 
on the comments received and its own experience in supervision and law 
enforcement, the Bureau concludes that many debt collectors have 
already incorporated record retention policies and procedures into 
their budgets and daily operations and already maintain records for a 
sufficient length of time to comply with the time period in the final 
rule. The Bureau also determines that a three-year retention period is 
unlikely to impose undue burden on debt collectors because it is 
increasingly common, even for smaller entities, to maintain records 
electronically either on their own computers or using ever cheaper 
cloud storage options.
    The Bureau agrees with consumer advocate commenters that debt 
collectors who are furnishers under the FCRA must also, in addition to 
complying with the Regulation F record retention requirement, comply 
with the recordkeeping requirements of the FCRA. In particular, 
Regulation V, 12 CFR part 1022, requires furnishers to incorporate its 
guideline to ``maintain[ ] records for a reasonable period of time, not 
less than any applicable recordkeeping requirement, in order to 
substantiate the accuracy of any information about consumers it 
furnishes that is subject to a direct dispute.'' \594\ Records 
reasonably substantiating a debt collector's claims that a consumer 
owes a debt are records that are evidence of the debt collector's 
compliance or noncompliance with the FDCPA's prohibition against unfair 
or deceptive debt collection practices, as discussed in more detail 
below. Accordingly, if a debt collector is also a furnisher under 
Regulation V, a three-year Regulation F record retention requirement 
would be the minimum amount of time for purposes of the Regulation V 
record retention guideline, since that guideline specifically 
incorporates ``any applicable recordkeeping requirement.'' Under the 
final rule, there are no consumer debts or record types associated with 
those debts for which the rule requires record retention for more than 
three years beyond the last collection activity. The final rule 
therefore does not preclude debt collectors from adopting policies and 
procedures under which records are deleted three years after the last 
collection activity on an account. However, if a debt collector deletes 
an account's records (other than call recordings, which are discussed 
below) at that time, then a violation of the record retention provision 
would occur if the debt collector undertook any further collection 
activity with respect to that account.\595\ Moreover, the Bureau 
concludes it is clear that a debt collector must have (or have access 
to) records reasonably substantiating its claim that a consumer owes a 
debt in order to avoid engaging in deceptive or unfair collection 
practices in violation of the FDCPA when it attempts to collect the 
debt.\596\ Thus, records reasonably substantiating a debt collector's 
claim that a consumer owes a debt are records that are evidence of 
compliance or non-compliance with the FDCPA and Regulation F. As a 
result, although the record retention requirement does not mandate 
retention of any records beyond three years after the debt collector's 
last collection activity on the debt, restarting debt collection 
activity at any time would mean that the last collection activity on 
the debt had not yet occurred.
---------------------------------------------------------------------------

    \594\ 12 CFR 1022, app. E, para. III(c).
    \595\ This is because further collection activity on the account 
after deletion of some of the account's records would necessarily 
mean that the debt collector had failed to retain records, per Sec.  
1006.100(a), ``starting on the date that the debt collector begins 
collection activity on a debt until not less than three years after 
the debt collector's last collection activity on the debt.''
    \596\ FDCPA section 807 states that ``[a] debt collector may not 
use any false, deceptive, or misleading representation or means in 
connection with the collection of any debt.'' Section 808 states 
that ``[a] debt collector may not use unfair or unconscionable means 
to collect or attempt to collect any debt.''
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Records To Be Retained
    Consumer advocates generally recommended that, rather than require 
that debt collectors retain ``evidence of compliance,'' the record 
retention provision should require debt collectors to retain more types 
of documents. Specifically, these commenters said, the provision should 
reflect the types of documents described in the record retention 
provision of the Bureau's SBREFA Outline, which would have 
``encompass[ed] all records the debt collector relied upon for the 
information in the validation notice and to support claims of 
indebtedness, for example, the information the debt collector obtained 
before beginning to collect, the representations the debt collector 
received from the creditor before beginning to collect, and the records 
the debt collector relied upon in responding to a dispute.'' \597\
---------------------------------------------------------------------------

    \597\ Small Business Review Panel Outline, supra note 36, at 35.
---------------------------------------------------------------------------

    As the Bureau intended with its proposal to require a debt 
collector to retain ``evidence of compliance,'' the final rule 
clarifies that a debt collector must retain records that are evidence 
of compliance or noncompliance with the FDCPA and Regulation F, which 
includes records that evidence that the debt collector refrained from 
conduct prohibited by the FDCPA and Regulation F. See final comment 
100(a)-1. The Bureau declines, however, to go further and to apply the 
final rule's record retention requirement to all of the types of 
records that were described in the Bureau's 2016 SBREFA Outline. At 
that time, the Bureau was considering a broader set of possible 
regulatory provisions, pursuant to legal authorities including the 
Bureau's Dodd-Frank Act section 1031 unfair, deceptive, or abusive or 
acts or practices (UDAAP) authority, which could have applied to 
parties including creditors, and which could have resulted in creditors 
being required to ensure that they pass complete and accurate 
information about consumer debts to debt collectors. In contrast, the 
Bureau is now adopting a final rule, pursuant primarily to its FDCPA 
authority,\598\ that is narrower in scope and that applies only to 
FDCPA debt collectors. Accordingly, the Bureau determines that the 
record retention requirement that was described in the Bureau's SBREFA 
Outline is neither necessary nor warranted to accomplish the 
requirement's purpose, which is to promote effective and efficient 
enforcement and supervision of the requirements of the FDCPA and 
Regulation F, thereby promoting compliance with the law which is 
beneficial to consumers.
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    \598\ Although the final rule uses certain authorities provided 
to the Bureau by the Dodd-Frank Act, the rule relies primarily on 
the Bureau's FDCPA authority and does not rely at all on the 
Bureau's Dodd-Frank Act UDAAP authority.
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Burden for Smaller Debt Collectors
    Several industry commenters, as well as the U.S. SBA Office of 
Advocacy expressed concern about the potential burden of the proposed 
requirement on

[[Page 76858]]

small debt collectors. These commenters noted that the cost of 
retaining electronic debt collection records, including telephone call 
recordings and scanned images, can be significant. Some of these 
commenters observed that most debt collectors have incorporated record 
retention procedures and costs into their daily operations, but that 
any additional requirements to retain records beyond three years could 
impose significant expense. Others stated their belief that a recorded 
telephone call would almost always constitute ``evidence of 
compliance'' and that, to reduce burden, the Bureau should consider 
imposing a tiered recordkeeping requirement for call recordings that 
takes into account the costs of maintaining recorded calls for small 
debt collectors.
    As discussed above, the Bureau concludes that its revisions to 
Sec.  1006.100(a) (and its addition of Sec.  1006.100(b) for a special 
rule regarding telephone calls, as discussed below) address the 
concerns of commenters, including small businesses, regarding the 
burdens of a record retention requirement, including for small 
businesses. In addition, the Bureau in the final rule has added comment 
100(a)-2 to make clear that a debt collector need not create and 
maintain, for the sole purpose of evidencing compliance, additional 
records that the debt collector would not have created in the ordinary 
course of its business in the absence of the record retention 
requirement in Sec.  1006.100(a). For these reasons, the Bureau 
determines that most debt collectors of all sizes will be able to 
comply with the final rule's record retention requirement without 
making significant changes to their existing record retention policies 
and procedures.\599\ Accordingly, the Bureau concludes that the final 
record retention requirement will not impose a significant burden on 
debt collectors.
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    \599\ As in the proposal, the final recordkeeping requirement 
does not require a debt collector to record telephone calls. 
However, as discussed below, if a debt collector's practice is to 
record telephone calls, then the such records are evidence of 
compliance or noncompliance and the debt collector must retain them.
---------------------------------------------------------------------------

    For all of the reasons discussed above, the Bureau is finalizing 
Sec.  1006.100(a) to provide that, except as provided in Sec.  
1006.100(b), a debt collector must retain records that are evidence of 
compliance or noncompliance with the FDCPA and Regulation F starting on 
the date that the debt collector begins collection activity on a debt 
until three years after the debt collector's last collection activity 
on the debt. Comment 100-1 states that nothing in Sec.  1006.100 
prohibits a debt collector from retaining records that are evidence of 
compliance or noncompliance with the FDCPA and Regulation F for more 
than three years after the applicable date.
    Comment 100(a)-1 clarifies that, if a record is of a type that 
could evidence compliance or noncompliance depending on the conduct of 
the debt collector that is revealed within the record, then the record 
is one that is evidence of compliance or noncompliance and the debt 
collector must retain it. The comment also provides examples.\600\ As 
noted above, comment 100(a)-2 clarifies that a debt collector need not 
create and maintain, for the sole purpose of evidencing compliance, 
additional records that the debt collector would not have created in 
the ordinary course of its business in the absence of the record 
retention requirement in Sec.  1006.100(a). Comment 100(a)-3 states, as 
was proposed, that Sec.  1006.100(a) does not require retaining actual 
paper copies of documents and that records may be retained by any 
method that reproduces them accurately and ensures the debt collector 
can easily access them (including the debt collector having a 
contractual or other legal right to access records possessed by another 
entity). And final comment 100(a)-4 provides clarity regarding when the 
last collection activity on an account occurs and, thus, when the 
retention clock starts to run.
---------------------------------------------------------------------------

    \600\ Final comment 100(a)-1 includes an example that refers, in 
part, to disclosures required by the FDCPA, as implemented by Bureau 
regulation. The Bureau expects that, in the Bureau's disclosure-
focused final rule, this reference will be updated to refer to 
disclosures required by Sec.  1006.34.
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100(b)
    As noted in the section-by-section analysis of Sec.  1006.100(a), 
the Bureau received a number of comments regarding the unique concerns 
associated with retaining telephone call recordings. Industry 
commenters stated that the lifespan of debt collection accounts can 
vary significantly, with some remaining open only for months and others 
remaining open for many years. These commenters further stated that 
many debt collectors' systems store telephone call recordings in large 
batch files based on date (e.g., a debt collector creates and stores 
one batch file each day that contains all of the call recordings for 
that day) and that, under the Bureau's proposal, a debt collector would 
need to retain a given date's call recordings for at least three years 
beyond the lifespan of the longest-lifespan account for which a call 
was recorded on that date. These commenters expressed concern that, as 
a result, there could be significant burden associated with retaining 
many call recordings for well beyond three years.
    To alleviate this problem, some industry commenters suggested that 
the final rule take an approach to record retention under which debt 
collectors would be required to retain a record, including a call 
recording, for three years from the unique or discrete event--such as a 
telephone call or letter, report to a credit bureau, or a payment or 
credit--that generated the record. These commenters also noted that the 
suggested event-specific approach would help reduce burden in the area 
of healthcare debt collection, because healthcare debts are usually 
packaged by patient rather than by account or debt.
    The Bureau agrees that the potential unique burdens associated with 
retaining telephone call recordings (for debt collectors who record 
telephone calls) merits a special rule regarding their retention. The 
Bureau therefore is finalizing Sec.  1006.100(b) to set forth a 
separate retention time period for telephone call recordings. Section 
1006.100(b) states that, if a debt collector records telephone calls 
made in connection with the collection of a debt, the debt collector 
must retain the recording of each such telephone call for three years 
after the date of the call.\601\ Thus, in contrast to other record 
types, a debt collector could delete a call recording after three years 
and yet collection activity on the relevant account could continue 
after that time.\602\ The Bureau concludes that this approach to call 
recordings addresses industry commenters' concerns regarding 
potentially having to retain some call recordings for much longer than 
three years, due to debt collectors' batch file call recording systems.
---------------------------------------------------------------------------

    \601\ Final comment 100(b)-1 clarifies that, while nothing in 
Sec.  1006.100 requires a debt collector to make call recordings, if 
a debt collector records telephone calls, the recordings are 
evidence of compliance or noncompliance with the FDCPA and 
Regulation F and the debt collector must retain the recording of 
each such telephone call for three years after the date of the call.
    \602\ For example, if a call recording occurred at month six in 
the life of an account, the call recording could be deleted three 
years later; and, collection activity on that account could continue 
past the account's three-and-a-half-year mark, notwithstanding that 
the call recording had been deleted. Further, as noted above, 
comment 100-1 provides that nothing in Sec.  1006.100 prohibits a 
debt collector from retaining records that are evidence of 
compliance or noncompliance with the FDCPA and Regulation F for more 
than three years after the applicable date.
---------------------------------------------------------------------------

    The Bureau declines to adopt this event-specific approach for 
retention of

[[Page 76859]]

record types other than call recordings, as suggested by some 
commenters. This is because the Bureau determines, based on comments 
received and its own experience, that the burden of retaining call 
recordings can be significant, such that it is appropriate to give debt 
collectors a date certain on which call recordings may be deleted--
three years after the date of the telephone call--notwithstanding that 
collection activity on the relevant account might continue after that 
time. As discussed above, however, the Bureau concludes that it is 
generally inappropriate for a debt collector to continue collection 
activity on an account after the debt collector has begun to delete its 
records related to that account. Further, the Bureau believes based on 
feedback received that the burden of retaining other record types for 
the record retention period is not as significant as that of retaining 
call recordings. The Bureau therefore believes that an event-specific 
approach to record retention is neither necessary nor warranted for 
records other than call recordings.\603\
---------------------------------------------------------------------------

    \603\ The Bureau has considered comments received regarding the 
different structure of medical debt accounts and records relative to 
other debt types. The Bureau declines to adopt a record retention 
provision specific to medical debt.
---------------------------------------------------------------------------

    For the reasons described above, the Bureau is finalizing Sec.  
1006.100 to facilitate supervision of, and to assess and detect risks 
to consumers posed by debt collectors, including debt collectors who 
are larger participants of the consumer debt collection market, as 
defined in 12 CFR part 1090, and to enable the Bureau to conduct 
enforcement investigations to identify and help prevent and deter 
abusive, unfair, and deceptive debt collection practices.
    The Bureau is finalizing Sec.  1006.100 pursuant to its authority 
under title X of the Dodd-Frank Act. Specifically, the Bureau is 
finalizing Sec.  1006.100 pursuant to Dodd-Frank Act section 
1022(b)(1), which, among other things, 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. The Bureau also is finalizing Sec.  
1006.100 pursuant to Dodd-Frank Act section 1024(b)(7)(A), which 
authorizes the Bureau to prescribe rules to facilitate supervision of a 
person described in Dodd-Frank Act section 1024(a)(1) including a 
person identified as a larger participant 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; \604\ and Dodd-Frank Act 
section 1024(b)(7)(B), which 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 a person and assessing 
and detecting risks to consumers.
---------------------------------------------------------------------------

    \604\ 12 CFR 1090.105 defines larger participants of the 
consumer debt collection market.
---------------------------------------------------------------------------

    Title X of the Dodd-Frank Act does not provide a private right of 
action. Accordingly, the Bureau has determined that Sec.  1006.100 does 
not provide a private right of action if a debt collector were to fail 
to comply with the requirements of Sec.  1006.100.
Section 1006.104 Relation to State Laws
    FDCPA section 816 provides that the FDCPA does not annul, alter, or 
affect, or exempt any person subject to the provisions of the FDCPA 
from complying with the laws of any State with respect to debt 
collection practices, except to the extent that those laws are 
inconsistent with any provision of the FDCPA, and then only to the 
extent of the inconsistency. FDCPA section 816 also provides that, for 
purposes of that section, a State law is not inconsistent with the 
FDCPA if the protection such law affords any consumer is greater than 
the protection provided by the FDCPA.\605\ The Bureau proposed Sec.  
1006.104 to implement FDCPA section 816.\606\ Proposed Sec.  1006.104 
mirrored the statute, except that proposed Sec.  1006.104 referred to 
both the provisions of the FDCPA and the corresponding provisions of 
Regulation F. Proposed comment 104-1 would have clarified that a 
disclosure required by applicable State law that describes additional 
protections under State law does not contradict the requirements of the 
FDCPA or the corresponding provisions of Regulation F.
---------------------------------------------------------------------------

    \605\ 15 U.S.C. 1692n.
    \606\ See 84 FR 23274, 23368 (May 21, 2019).
---------------------------------------------------------------------------

    Several industry and consumer advocate commenters expressed overall 
support for proposed Sec.  1006.104 and its related commentary and did 
not request changes. For instance, at least one commenter stated that 
the proposal appropriately recognized the ability of States to enact 
laws that offer greater protections than those the FDCPA provides.
    A State Attorney General commenter expressed concern about how the 
proposal would interact with State unfair or deceptive acts or 
practices laws that exempt from liability acts or transactions 
permitted or affirmatively authorized by Federal law. The commenter was 
particularly concerned that debt collectors might argue that compliance 
with the proposal's safe harbor provisions constitutes a defense to 
liability under State consumer protection laws. To mitigate this 
possibility, the commenter asked the Bureau to clarify that it does not 
intend to exempt debt collectors from State law requirements that 
afford equal or greater protection to consumers. Further, the commenter 
asked the Bureau to clarify that an act or transaction that satisfies 
the proposal's safe harbor provisions is not affirmatively authorized 
or permitted with regard to any other law, such that the act or 
transaction would be exempt from liability under State law pursuant to 
an exemption for federally permitted transactions.
    Some commenters asked the Bureau to clarify how proposed Sec.  
1006.104 and its related commentary would impact State law disclosure 
requirements. According to these commenters, proposed comment 104-1 did 
not track FDCPA section 816's statutory language and therefore would be 
susceptible to competing interpretations. These commenters expressed 
concern that proposed comment 104-1 could be interpreted to mean that 
proposed Sec.  1006.104 would preempt State law disclosure requirements 
that afford the same protections as the FDCPA and the corresponding 
provisions of Regulation F. These commenters opposed such an 
interpretation as being inconsistent with FDCPA section 816.
    The Bureau notes that the final rule implements the FDCPA, a 
Federal law. The final rule does not interpret State law. Regarding the 
effect of the final rule on State law, the Bureau will apply the 
standard Congress set forth in FDCPA section 816. Under FDCPA section 
816, debt collectors are only relieved of an obligation to comply with 
State law if that law is inconsistent with the FDCPA or the 
corresponding provisions of Regulation F, and then only to the extent 
of that inconsistency (and, as noted above, a State law that affords 
consumers greater protection than the FDCPA and Regulation F would not 
be inconsistent). For example, a State law that affords greater 
protection to consumers by imposing a call frequency limit is not 
preempted by Sec.  1006.14(b), which sets a presumption of compliance 
or violation as to call frequency only with respect to the FDCPA and 
Regulation F. Thus, this final rule does not affirmatively permit debt 
collectors to comply with the presumption regarding call frequency in 
Sec.  1006.14 instead of an applicable State-law frequency limit that 
affords greater protection to consumers. Further, the

[[Page 76860]]

Bureau emphasizes that any safe harbor provided by Regulation F is a 
safe harbor only for purposes of compliance with the FDCPA and 
Regulation F and is not a safe harbor with regard to State laws, unless 
States choose to incorporate those Federal standards into their State 
legal frameworks. Moreover, as discussed in their respective section-
by-section analyses, the Bureau is not finalizing the safe harbors that 
were set forth in proposed Sec. Sec.  1006.18(g) and 1006.42(e)(2), 
which were specifically cited by commenters as being potentially 
problematic vis-a-vis State laws. As a result, the final rule contains 
fewer safe harbors that could interrelate with States' laws prohibiting 
unfair, deceptive, or abusive acts and practices.
    After considering the comments, and pursuant to its authority under 
FDCPA section 814(d) to prescribe rules with respect to the collection 
of debts by debt collectors, the Bureau is finalizing Sec.  1006.104 as 
proposed to implement FDCPA section 816. Because Sec.  1006.104 largely 
restates the FDCPA, the provision appropriately accommodates State debt 
collection laws, including those laws that afford consumers greater 
protections than the FDCPA and the corresponding provisions of 
Regulation F.
    The Bureau is not finalizing proposed comment 104-1 at this time. 
Because proposed comment 104-1 specifically addressed how State law 
disclosure requirements might interact with the FDCPA and Regulation F, 
the Bureau expects to determine whether and how to finalize proposed 
comment 104-1 as part of its disclosure-focused final rule.
Section 1006.108 Exemption for State Regulation and Appendix A 
Procedures for State Application for Exemption From the Provisions of 
the Act
    FDCPA section 817 provides that the Bureau shall by regulation 
exempt from the requirements of the FDCPA any class of debt collection 
practices within any State if the Bureau determines that, under the law 
of that State, that class of debt collection practices is subject to 
requirements substantially similar to those imposed by the FDCPA, and 
that there is adequate provision for enforcement.\607\ Sections 1006.1 
through 1006.8 of existing Regulation F implement FDCPA section 817 and 
set forth procedures and criteria whereby States may apply to the 
Bureau for exemption of debt collection practices within the applying 
State from the provisions of the Act.\608\ The Bureau proposed to 
retain these procedures and criteria, reorganized as Sec.  1006.108 and 
appendix A, and with minor changes for clarity.\609\
---------------------------------------------------------------------------

    \607\ 15 U.S.C. 1692o.
    \608\ 12 CFR part 1006.
    \609\ See 84 FR 23274, 23368 (May 21, 2019).
---------------------------------------------------------------------------

    Consistent with existing Sec.  1006.2, proposed Sec.  1006.108(a) 
provided that any State may apply to the Bureau for a determination 
that, under the laws of that State, any class of debt collection 
practices within that State is subject to requirements that are 
substantially similar to, or provide greater protection for consumers 
than, those imposed under FDCPA sections 803 through 812 and the 
corresponding provisions of Regulation F, and that there is adequate 
provision for State enforcement of such requirements. Proposed Sec.  
1006.108(b) stated that the procedures and criteria whereby States may 
apply for such an exemption are set forth in appendix A.
    Proposed appendix A set forth the procedures and criteria whereby 
States may apply to the Bureau for the exemption described in proposed 
Sec.  1006.108. Proposed appendix A largely mirrored existing 
Sec. Sec.  1006.1 through 1006.8, with certain revisions, including 
clarifying in proposed paragraph IV(a)(1)(i) that the ``substantially 
similar'' standard in FDCPA section 817 applies to the Bureau's 
consideration of all aspects of the State law for which the exemption 
is sought, including defined terms and rules of construction.\610\ 
Accordingly, proposed paragraph IV(a)(1)(iv) used the phrase 
``substantially similar'' rather than ``the same'' as in existing 
Regulation F.
---------------------------------------------------------------------------

    \610\ The Bureau also proposed several additional changes to 
existing Regulation F. The Bureau proposed to define the terms 
``applicant State law'' and ``relevant Federal law'' in proposed 
paragraph I(b). Proposed appendix A would have stricken existing 
Sec.  1006.3(c) as redundant of proposed paragraph III(a) as 
revised. Proposed paragraph III(d) of appendix A would have repeated 
existing Sec.  1006.3(e) with certain clarifications. Proposed 
paragraph VI(b) would have repeated existing Sec.  1006.6(b) with 
certain clarifications.
---------------------------------------------------------------------------

    Some commenters expressed general support for proposed Sec.  
1006.108 and proposed appendix A. However, some commenters raised 
various concerns about incorporating the existing language of Sec.  
1006.2 and urged the Bureau to change the proposed language. For 
instance, an individual commenter argued that the term substantially 
similar is ambiguous and should be removed from both Sec.  1006.108 and 
appendix A. Under this approach, Sec.  1006.108 would permit exemptions 
only for State laws that provide greater protection for consumers than 
those imposed under FDCPA sections 803 through 812 and the 
corresponding provisions of Regulation F. Conversely, at least one 
industry commenter stated that the proposal (and existing Regulation F) 
deviated from the statutory language of FDCPA section 817 by allowing 
States to receive an exemption for State laws that ``provide greater 
protection for consumers'' than the FDCPA and Regulation F. According 
to this commenter, this language could permit States to supplant the 
requirements of the FDCPA and Regulation F and expose debt collectors 
to a patchwork of inconsistent State laws. This commenter urged the 
Bureau to revise proposed Sec.  1006.108 and proposed appendix A 
consistent with FDCPA section 817 to permit exemptions only for State 
laws whose requirements are substantially similar to the FDCPA and the 
corresponding provisions of Regulation F.
    The Bureau declines to adopt the recommendation to remove the 
phrase ``substantially similar'' from Sec.  1006.108 and appendix A. 
FDCPA section 817 uses ``substantially similar,'' so removing that 
phrase from proposed Sec.  1006.108 and proposed appendix A would 
deviate from the FDCPA. Further, the Bureau disagrees that the phrase 
is ambiguous. As discussed in the section-by-section analysis of Sec.  
1006.38(d)(2)(ii), the concept of ``substantially the same,'' which is 
analogous to ``substantially similar,'' is sufficiently clear and is a 
concept that is present in other regulations.
    However, the Bureau agrees with commenters that proposed Sec.  
1006.108 and proposed appendix A should be modified to refer only to 
State laws with substantially similar requirements as the FDCPA and the 
corresponding provisions of Regulation F. The Bureau recognizes the 
prerogative of States to establish debt collection laws within their 
jurisdictions. The Bureau notes that FDCPA section 816, which is 
implemented by Sec.  1006.104, accommodates State laws that afford 
greater protections to consumers than the FDCPA as long as they are not 
inconsistent with the Act. The Bureau is also skeptical that the 
proposed language, which is consistent with existing Sec.  1006.2, 
would have resulted in an irreconcilable patchwork of inconsistent 
State laws since only one State has applied for and received an 
exemption pursuant to FDCPA section 817 since 1995.\611\ Nevertheless, 
FDCPA section 817 refers only to exempting State laws with requirements 
that are substantially similar to those imposed by the Act and does not 
mention exempting State laws that afford greater protections to 
consumers. Accordingly,

[[Page 76861]]

the Bureau is modifying Sec.  1006.108(a) to remove the reference to 
State requirements that ``provide greater protection for consumers 
than'' FDCPA sections 803 through 812 and the corresponding provisions 
of Regulation F. At the same time, the Bureau is not modifying 
paragraph IV(a)(2). Paragraph IV(a)(2) states that, when assessing 
whether an applicant State law is substantially similar to relevant 
Federal law, the Bureau will not consider adversely any additional 
requirements of State law that are not inconsistent with the purpose of 
the Act or the requirements imposed under relevant Federal law. Thus, 
while the Bureau's exemption standard is whether the State law has 
``substantially similar'' requirements, exemptions may be available for 
State laws that are both substantially similar to the FDCPA and afford 
greater consumer protections. The Bureau also is finalizing conforming 
changes to appendix A.
---------------------------------------------------------------------------

    \611\ See 60 FR 66972 (Dec. 27, 1995).
---------------------------------------------------------------------------

    Commenters also provided feedback specific to proposed appendix A. 
An industry commenter objected to proposed paragraph IV(a)(1)(i)'s use 
of the phrase ``substantially similar'' rather than ``the same,'' which 
appears in existing Sec.  1006.4(a)(1)(i). According to the commenter, 
the Bureau's proposal to permit variation from FDCPA-defined 
definitions and rules of construction would create uncertainty. The 
commenter therefore suggested that the Bureau finalize paragraph 
IV(a)(1)(i) using the language in existing Regulation F.
    The Bureau declines to adopt this recommendation. As discussed 
above, FDCPA section 817 and final Sec.  1006.108(a) expressly permit 
exemptions for State regulation when, under the laws of that State, any 
class of debt collection practices within that State is subject to 
requirements that are substantially similar to those imposed under 
FDCPA sections 803 through 812 and the corresponding provisions of this 
final rule. To best reflect FDCPA section 817's statutory language and 
to ensure consistency throughout Regulation F, the Bureau uses the 
phrase ``substantially similar'' in Sec.  1006.108 and appendix A. 
Thus, the Bureau is finalizing paragraph IV(a)(1)(i) of appendix A as 
proposed.
    Trade associations asked the Bureau to mandate a timeframe for when 
the Bureau would act on State exemption applications. According to 
these commenters, such a timeframe would benefit States by reducing the 
likelihood that their requests would become outdated and would provide 
certainty to consumers and debt collectors. The Bureau declines to 
adopt this recommendation. The Bureau cannot, in advance, anticipate 
the questions raised by a given State exemption application. While the 
Bureau intends to act expeditiously on applications, it is not feasible 
to commit to a mandatory timeframe for responses, particularly as only 
one State has obtained an exemption since the FDCPA was passed.\612\ 
Notably, other Federal consumer financial laws that involve Bureau 
determinations regarding State law do not impose response 
timeframes.\613\ In addition, the Bureau notes that State government 
commenters, which commenters stated would benefit from a mandatory 
timeframe, did not request one. Pursuant to paragraph VI(a) of appendix 
A, a final rule granting an exemption under this provision becomes 
effective 90 days after the date of the publication of such rule in the 
Federal Register. This 90-day grace period provides sufficient time for 
debt collectors and consumers to adjust to an exemption, which will 
bolster certainty in the market. Thus, the Bureau concludes that a 
mandatory timeframe is unnecessary.
---------------------------------------------------------------------------

    \612\ The FTC granted Maine the exemption in 1995. See 60 FR 
66972 (Dec. 27, 1995).
    \613\ See, e.g., 12 CFR 1024.5(c)(3).
---------------------------------------------------------------------------

    A consumer advocate recommended that the Bureau expressly require 
that, when a State informs the Bureau about a change in applicable 
State laws pursuant to paragraph (VI)(b)(i) of appendix A,\614\ or the 
Bureau informs a State about an amendment to the FDCPA or Regulation F 
pursuant to paragraph (VI)(c) of appendix A, the State must provide a 
report outlining its continued eligibility for the exemption and that 
the Bureau conduct a review in light of these changes. The Bureau 
declines to adopt this recommendation. The purpose of paragraphs 
(VI)(b) and (c) of appendix A is to help the Bureau monitor whether an 
exemption granted pursuant to FDCPA section 817 and the corresponding 
provisions of Regulation F continues to be appropriate. That the Bureau 
would review reports and information provided pursuant to these 
paragraphs is implicit in the framework of Sec.  1006.108 and appendix 
A. Thus, no additional clarification or modification is necessary.
---------------------------------------------------------------------------

    \614\ Paragraph (VI)(b)(i) of proposed appendix A would have 
required a State to provide a report to the Bureau within 30 days of 
any change in the applicant State law.
---------------------------------------------------------------------------

    Trade associations stated that the proposal did not specify what 
steps a State would need to take if, after applying, a State withdraws 
and resubmits its exemption application. The Bureau declines to address 
this comment as part of the rulemaking but notes that, if such a 
scenario occurred, it would work with the State to ensure that the 
State's application received appropriate consideration. These 
commenters also asked whether a State that currently has an exemption 
under FDCPA section 817 and existing Regulation F will need to reapply 
or whether the Bureau would grandfather such an exemption. No 
modification to the proposed appendix text is necessary in response to 
this comment. Appendix A sections VI and VIII, respectively, provide 
frameworks for evaluating and revoking existing exemptions. As noted 
above, to date, only one State has been granted an exemption. Pursuant 
to the procedures established in sections VI and VIII, the Bureau 
intends to review in due course whether that exemption remains 
appropriate in light of this final rule and the upcoming disclosure-
focused final rule.
    A consumer advocate commenter asked the Bureau to clarify in 
proposed paragraph VI(d) of appendix A that, if an exemption is 
granted, the State law provisions that parallel the FDCPA and the 
corresponding provisions of Regulation F constitute Federal law. The 
Bureau declines to adopt this recommendation. As noted in the proposal, 
the Bureau did not propose to change existing Sec.  1006.2 language in 
proposed appendix A because it did not seek to make substantive changes 
to the requirements for State requests for exemptions.\615\ Because the 
commenter did not explain what purpose this clarification would serve, 
the Bureau adopts paragraph VI(d) of appendix A as proposed.
---------------------------------------------------------------------------

    \615\ See 84 FR 23274, 23369 (May 21, 2019).
---------------------------------------------------------------------------

    For the reasons described above, the Bureau is finalizing Sec.  
1006.108 and appendix A largely as proposed, but with modifications to 
mirror the statutory language. Accordingly, pursuant to Sec.  1006.108 
and appendix A, a State may apply to the Bureau for a determination 
that, under the laws of that State, any class of debt collection 
practices within that State is subject to requirements that are 
substantially similar to those imposed under FDCPA sections 803 through 
812 and the corresponding provisions of Regulation F.
    The Bureau is finalizing Sec.  1006.108 and appendix A to implement 
and interpret FDCPA section 817 and pursuant to its authority under 
FDCPA section 814(d) to prescribe rules with respect to the collection 
of debts by debt collectors.

[[Page 76862]]

Appendix C to Part 1006--Issuance of Advisory Opinions
    FDCPA section 813(e) provides that provisions in the FDCPA that 
impose liability do not apply to any act done or omitted in good faith 
in conformity with any advisory opinion of the Bureau, notwithstanding 
that, after such act or omission has occurred, such opinion is amended, 
rescinded, or determined by judicial or other authority to be invalid 
for any reason.\616\
---------------------------------------------------------------------------

    \616\ 15 U.S.C. 1692k(e).
---------------------------------------------------------------------------

    The Bureau proposed to add appendix C to Regulation F to publish a 
list of any advisory opinions that the Bureau issues pursuant to FDCPA 
section 813(e).\617\ Proposed appendix C also would have clarified that 
any act done or omitted in good faith in conformity with any advisory 
opinion issued by the Bureau, including those referenced in appendix C, 
provides the protection from liability for FDCPA-based violations 
afforded under FDCPA section 813(e). Proposed appendix C also included 
instructions for requesting an advisory opinion.
---------------------------------------------------------------------------

    \617\ 84 FR 23274, 23370 (May 21, 2019).
---------------------------------------------------------------------------

    The Bureau received several comments regarding appendix C from 
industry trade groups and a group of consumer advocates. The comments 
uniformly supported including appendix C, and a list of advisory 
opinions, in the regulation.
    Industry commenters suggested adopting a timeline component that 
would require the Bureau to respond to requests for advisory opinions 
within a certain period of time and publish draft opinions for notice 
and comment before finalizing. The group of consumer advocates 
suggested that the Bureau clarify that advisory opinions issued by the 
FTC prior to the Bureau's creation no longer have any validity. They 
also suggested that the Bureau engage in notice and comment rulemaking 
to amend the regulation or its commentary instead of relying on 
advisory opinions, or, if the Bureau continues to issue advisory 
opinions, to do so only in extremely limited circumstances that 
includes publishing the draft opinion for notice and comment with a 
minimum review period of 60 days, as well as publishing any denials of 
requests for advisory opinions.
    With respect to the commenter's request to clarify that FTC 
advisory opinions no longer have any validity, the Bureau declines to 
do so. As explained in the Bureau's 2011 Identification of Enforceable 
Rules and Orders,

for laws with respect to which rulemaking authority will transfer to 
the CFPB, the official commentary, guidance, and policy statements 
issued prior to July 21, 2011, by a transferor agency with exclusive 
rulemaking authority for the law in question (or similar documents 
that were jointly agreed to by all relevant agencies in the case of 
shared rulemaking authority) will be applied by the CFPB pending 
further CFPB action. The CFPB will give due consideration to the 
application of other written guidance, interpretations, and policy 
statements issued prior to July 21, 2011, by a transferor agency in 
light of all relevant factors, including: Whether the agency had 
rulemaking authority for the law in question; the formality of the 
document in question and the weight afforded it by the issuing 
agency; the persuasiveness of the document; and whether the document 
conflicts with guidance or interpretations issued by another 
agency.\618\
---------------------------------------------------------------------------

    \618\ Identification of Enforceable Rules and Orders, 76 FR 
43569, 43570 (July 21, 2011).

The Bureau is the first Federal agency to possess authority to issue 
substantive rules for debt collection under the FDCPA. However, the 
Bureau considers FTC advisory opinions issued before July 21, 2011, to 
be ``other written guidance, interpretations, and policy statements.'' 
Thus, to the extent that this rulemaking does not supersede any such 
interpretations, the Bureau will continue to give due consideration in 
light of all relevant factors.
The Bureau is finalizing appendix C with revisions to update the 
process for submitting a request for an advisory opinion. In June 2020, 
the Bureau launched a new pilot advisory opinion program and, at the 
same time, proposed a procedural rule for a permanent advisory opinion 
program.\619\ The pilot advisory program allows entities seeking to 
comply with any of the Bureau's regulations, including this final rule, 
to submit a request if uncertainty exists.\620\
---------------------------------------------------------------------------

    \619\ 85 FR 37331 (June 22, 2020).
    \620\ The proposed permanent advisory opinion program 
contemplates expanding the program to allow other individuals and 
entities to request guidance.
---------------------------------------------------------------------------

    Final appendix C reflects this new process. It states that a 
request for an advisory opinion may be submitted in accordance with the 
instructions regarding submission and content of requests applicable to 
any relevant advisory opinion program that the Bureau offers. The 
Bureau will review requests for advisory opinions and will make 
advisory opinions public consistent with the process outlined in such a 
program.
    The Bureau is finalizing appendix C pursuant to its authority under 
FDCPA sections 813(e) and 814(d). Final appendix C will facilitate 
compliance with Regulation F by ensuring that participants who have 
questions know how to request clarification and any interested party 
can easily locate each advisory opinion addressing questions relating 
to Regulation F.
Supplement I to Part 1006--Official Interpretations
    The Bureau proposed to add Supplement I to Regulation F to publish 
official interpretations of the regulation (i.e., commentary).\621\ 
Proposed comment I-1 explained that the commentary is the Bureau's 
vehicle for supplementing Regulation F and has been issued pursuant to 
the Bureau's authority to prescribe rules under 15 U.S.C. 1692l(d) and 
in accordance with the notice-and-comment procedures for informal 
rulemaking under the APA. Proposed comment I-2 set forth the procedure 
for requesting that an official interpretation be added to Supplement 
I, and proposed comment I-3 described how the commentary is organized 
and numbered.\622\ The Bureau is finalizing comment I-3 with certain 
technical corrections and, as discussed below, is revising comments I-1 
and -2 in response to feedback.
---------------------------------------------------------------------------

    \621\ 84 FR 23274, 23370 (May 21, 2019).
    \622\ Proposed commentary relating to specific sections of the 
regulation is addressed in the section-by-section analyses of those 
sections, above.
---------------------------------------------------------------------------

    The Bureau is revising comment I-1 to clarify that the provisions 
of the commentary are issued under the same authorities as the 
corresponding provisions of Regulation F. In particular, this amendment 
has the effect of clarifying that some provisions of the commentary are 
issued under sections 1022 and 1032 of the Dodd-Frank Act, instead of 
or in addition to authorities under the FDCPA. The Bureau is also 
revising comment I-1 for clarity to expressly reference the notice-and-
comment procedures of section 553 of the APA,\623\ rather than 
referring to such requirements as ``the notice-and-comment procedures 
for informal rulemaking.''
    The Bureau is revising comment I-2 to clarify that only revisions 
to the commentary, rather than all Bureau interpretations of the 
regulation, will be incorporated into the commentary. The Bureau is 
making this revision to reserve the possibility that the Bureau may 
interpret the regulation without necessarily adopting such 
interpretations into the commentary. The Bureau is also revising 
comment I-2 to clarify that revisions to the commentary made in 
accordance with the rulemaking procedures of section 553 of the APA (5 
U.S.C. 553) will be incorporated in the commentary after

[[Page 76863]]

publication in the Federal Register. As proposed, the comment 
referenced publication in the Federal Register, but not the other 
requirements of the APA.

VI. Effective Date

    The Bureau proposed that the final rule take effect one year after 
publication in the Federal Register. The Bureau received several 
comments on this aspect of the proposal. A few industry commenters 
supported the proposed effective date, stating that a one-year 
implementation period would provide debt collectors with enough time to 
comply with the rule. An industry commenter supported an 18-month 
implementation period, stating that the rule, as proposed, would 
require updated policies and procedures and significant employee 
training and programming changes that will take time to identify, 
program, and test. Another industry commenter requested a 24-month 
implementation period. A government commenter encouraged the Bureau to 
provide small entities with more than one year to comply, if such 
entities were not exempted from the rule altogether. Several industry 
commenters asked the Bureau to clarify that a debt collector is 
permitted to comply with all or part of the final rule before the 
effective date.
    The Bureau has considered these comments and has determined that, 
as proposed, the final rule will become effective one year after 
publication in the Federal Register. The Bureau determines that the 
revisions made to the proposal and discussed in detail in part V will 
permit debt collectors to meet this effective date period.
    As discussed in part V, the Bureau intends to issue a disclosure-
focused final rule to address all aspects of proposed Sec. Sec.  
1006.26 and 1006.34 and certain related topics, as noted in part V. The 
Bureau recognizes that all stakeholders may benefit if the effective 
dates for both rules are harmonized; accordingly, the Bureau will 
assess the effective date of the disclosure-focused final rule and, if 
necessary, will consider adjusting the effective date for this final 
rule.
    The Bureau notes that debt collectors may, but are not required to, 
comply with the final rule's requirements and prohibitions before the 
effective date. Until that date, the FDCPA and other applicable law 
continue to govern the conduct of FDCPA debt collectors. Similarly, to 
the extent the final rule establishes a safe harbor from liability for 
certain conduct or a presumption that certain conduct complies with or 
violates the rule, those safe harbors and presumptions are not 
effective until the final rule's effective date.

VII. Dodd-Frank Act Section 1022(b) Analysis

A. Overview

    In developing the rule, the Bureau has considered the potential 
benefits, costs, and impacts as required by section 1022(b)(2)(A) of 
the Dodd-Frank Act.\624\
---------------------------------------------------------------------------

    \624\ Specifically, section 1022(b)(2)(A) of the Dodd-Frank Act 
(12 U.S.C. 5512(b)(2)(A)) requires the Bureau to consider the 
potential benefits and costs of the regulation to consumers and 
covered persons, including the potential reduction of access by 
consumers to consumer financial products or services; the impact of 
the rule on insured depository institutions and insured credit 
unions with $10 billion or less in total assets as described in 
section 1026 of the Dodd-Frank Act (12 U.S.C. 5516); and the impact 
on consumers in rural areas.
---------------------------------------------------------------------------

    Debt collectors play a critical role in markets for consumer 
financial products and services. Credit markets function because 
lenders expect that borrowers will pay them back. In consumer credit 
markets, if borrowers fail to repay what they owe per the terms of 
their loan agreement, creditors often engage debt collectors to attempt 
to recover amounts owed, whether through the court system or through 
less formal demands for repayment.
    In general, third-party debt collection creates the potential for 
market failures. Consumers do not choose their debt collectors, and, as 
a result, debt collectors do not have the same incentives that 
creditors have to treat consumers fairly.\625\ Certain provisions of 
the FDCPA may help mitigate such market failures in debt collection, 
for example by prohibiting unfair, deceptive, or abusive debt 
collection practices by third-party debt collectors.
---------------------------------------------------------------------------

    \625\ Consumers do choose their lenders, and, in principle, 
consumer loan contracts could specify which debt collector would be 
used or what debt collection practices would be in the event a loan 
is not repaid. Some economists have identified potential market 
failures that prevent loan contracts from including such terms even 
when they could make both borrowers and lenders better off. For 
example, terms related to debt collection may not be salient to 
consumers at the time a loan is made. Alternatively, if such terms 
are salient, a contract that provides for more lenient collection 
practices may lead to adverse selection, attracting a 
disproportionate share of borrowers who know they are more likely to 
default. See Thomas A. Durkin et al., Consumer Credit and the 
American Economy 521-25 (Oxford U. Press 2014) (discussing potential 
sources of market failure and potential problems with some of those 
arguments). See also Erik Durbin & Charles Romeo, The Economics of 
Debt Collection: With attention to the issue of salience of 
collections at the time credit is granted (Sept. 4, 2020), Journal 
of Credit Risk (discussing how rules that limit debt collection 
affect consumer welfare when debt collection is not salient to 
consumers when they borrow).
---------------------------------------------------------------------------

    Any restriction on debt collection may reduce repayment of debts, 
providing a benefit to some consumers who owe debts and an offsetting 
cost to creditors and debt collectors. A decrease in repayment will in 
turn lower the expected return to lending. This can lead lenders to 
increase interest rates and other borrowing costs and to restrict 
availability of credit, particularly to higher-risk borrowers.\626\ 
Because of this, policies that increase protections for consumers with 
debts in collection involve a tradeoff between the benefits of 
protections for those consumers and the possibility of increased costs 
of credit and reduced availability of credit for all consumers. Whether 
there is a net benefit from such protections depends on whether 
consumers value the protections enough to outweigh any associated 
increase in the cost of credit or reduction in availability of credit.
---------------------------------------------------------------------------

    \626\ See Thomas A. Durkin et al., Consumer Credit and the 
American Economy 521-25 (Oxford U. Press 2014) (discussing theory 
and evidence on how restrictions on creditor remedies affect the 
supply of credit). Empirical evidence on the impact of State laws 
restricting debt collection is discussed in section G below. The 
provisions in this final rule could also affect consumer demand for 
credit, to the extent that consumers contemplate collection 
practices when making borrowing decisions. However, there is 
evidence suggesting that consumer demand for credit is generally not 
responsive to differences in creditor remedies. See James Barth et 
al., Benefits and Costs of Legal Restrictions on Personal Loan 
Markets, Journal of Law & Economics, 29(2) (1986).
    See 15 U.S.C. 1692(e).
---------------------------------------------------------------------------

    The final rule will further the FDCPA's goals of eliminating 
abusive debt collection practices and ensuring that debt collectors who 
refrain from such practices are not competitively disadvantaged.\627\ 
However, as discussed below, it is not clear based on the information 
available to the Bureau whether the net effect of the final rule will 
be to make it more costly or less costly for debt collectors to recover 
unpaid amounts, and therefore not clear whether the rule will tend to 
increase or decrease the supply of credit. The final rule will benefit 
both consumers and debt collectors by increasing clarity and certainty 
about what the FDCPA prohibits and requires. When a law is unclear, it 
is more likely that parties will disagree about what the law requires, 
that legal disputes will arise, and that litigation will be required to 
resolve disputes. Since 2010, consumers have filed approximately 8,000 
to 12,000 lawsuits under the FDCPA each year, some of which involve 
issues on which the law is unclear.\628\ The

[[Page 76864]]

number of disputes settled without litigation has likely been much 
greater.\629\ Perhaps more important than the costs of resolving legal 
disputes are the steps that debt collectors take to prevent legal 
disputes from arising in the first place. This includes direct costs of 
legal compliance, such as auditing and legal advice, as well as 
indirect costs from avoiding collection practices that might be both 
effective and legal but that raise potential legal risks. In some 
cases, debt collectors seeking to follow the law and avoid litigation 
have adopted practices that appear to be economically inefficient, with 
costs that exceed the benefits to consumers or even impose net costs on 
consumers.\630\
---------------------------------------------------------------------------

    \627\ See id.
    \628\ See WebRecon LLC, WebRecon Stats for Dec 2019 & Year in 
Review, https://webrecon.com/webrecon-stats-for-dec-2019-and-year-in-review-how-did-your-favorite-statutes-fare/ (last visited Oct. 4, 
2020). Greater clarity about legal requirements could reduce 
unintentional violations and could also reduce lawsuits because, 
when parties can better predict the outcome of a lawsuit, they may 
be more likely to settle claims out of court.
    \629\ Some debt collectors have reported that they receive 
approximately 10 demand letters from attorneys asserting a violation 
of the FDCPA for each lawsuit filed. See Small Business Review Panel 
Outline, supra note 36, at 69 n.105.
    \630\ For example, as discussed further below, many debt 
collectors currently avoid leaving voicemail messages for consumers 
or communicating with consumers by email because sending voicemail 
messages or emails may create legal risks, notwithstanding that 
consumers may prefer such messages to receiving multiple telephone 
calls in which no message is left.
---------------------------------------------------------------------------

    Several provisions of the final rule will likely change the way 
debt collectors communicate with consumers, and these provisions are 
likely to interact with each other in ways that make their net impact 
difficult for the Bureau to predict. Most significant of these are the 
provisions related to telephone call frequencies, limited-content 
messages, and electronic disclosures, although other provisions might 
fall into this category as well. The communication provisions 
collectively are likely to reduce the number of telephone calls from 
debt collectors. Currently many, though by no means all, debt 
collectors communicate with consumers strictly through live telephone 
calls and mail, with limited or no communication by voicemail message, 
email, text message, or other electronic media such as website portals.
    It is possible that the net effect of the communication provisions 
will be to make debt collection more effective. Debt collectors who 
currently communicate by live telephone calls in excess of the rule's 
presumption of compliance for telephone call frequencies could 
substitute for some of the excessive telephone call volume by leaving 
limited-content messages (which are voicemail messages) and sending 
email or text messages. Consumers could respond to this change in 
communication media by engaging with such debt collectors as much as or 
more than they currently do by telephone. If this occurs, consumers 
could benefit from a reduction in telephone calls that may annoy, 
abuse, or harass them, as well as from resolving their outstanding 
debts in a more timely fashion. At the same time, debt collectors could 
benefit from reduced time spent making telephone calls and from 
increased revenue. There is some reason to believe this may occur--as 
noted below, a substantial fraction of consumers prefer to communicate 
by email, and consumers may well be more likely to return a voicemail 
message from an identified caller than to answer their telephones in 
response to a call from an unknown caller.
    Alternatively, the provisions of the final rule might make debt 
collection less effective. Debt collectors could comply with the 
telephone call frequency provisions, reducing outbound calling for some 
debt collectors, but not increase contact with consumers by using other 
communication media. This might occur if debt collectors still fear 
some legal risk from using other media, or if they find the new 
communication media are not effective in reaching consumers. In this 
case, although the number of telephone calls would be reduced, it would 
come at the cost of making it more difficult for debt collectors to 
reach some consumers, reducing revenue and potentially imposing costs 
on both consumers and debt collectors from increased litigation to 
recover debts.
    The effect of the final rule on debt collectors would likely lie 
somewhere in between these two extremes, and the Bureau finds these 
effects will likely vary by debt collector and type of debt. Some firms 
will likely adopt or expand use of newer communication media due to the 
reduced legal risk and find less need for telephone calls, while other 
firms may not do so or may not experience the same effect. Still other 
firms may be largely unaffected by the communication-related 
provisions. As discussed below, some debt collectors currently place 
only one or two telephone calls per week to any consumer. Such debt 
collectors are unlikely to change their calling practices and may not 
find it cost-effective to develop the information-technology 
infrastructure necessary to communicate by email or text message. 
Relatedly, the Bureau is aware of at least one mid-sized collection 
firm that primarily uses email for communication currently, and such 
firms also will be unlikely to alter their practices, although they may 
benefit from reduced litigation costs.
    In short, the provisions related to communications will likely 
reduce the overall number of telephone calls per consumer, while at the 
same time potentially reducing the number of calls required to reach 
each consumer. Although the Bureau believes it is likely that consumers 
will benefit directly from a reduction in telephone calls that annoy, 
abuse, or harass them, the Bureau cannot predict the net effect of 
these provisions on debt collectors' costs and revenues or the net 
change in indirect costs to consumers if debt collectors cannot reach 
them from, for example, litigation.
    In developing the final rule, the Bureau has consulted, or offered 
to consult with, the appropriate prudential regulators and other 
Federal agencies, including regarding consistency with any prudential, 
market, or systemic objectives administered by such agencies.

B. Provisions To Be Analyzed

    The analysis below considers the potential benefits, costs, and 
impacts to consumers and covered persons of key provisions of the final 
rule (provisions), which include:
    1. Prohibited communications with consumers.
    2. Telephone call frequencies3
    3. Limited-content messages.
    4. Prohibition on the sale or transfer of certain debts.
    5. Electronic disclosures and communications.
    In addition to the provisions listed above, the rule restates 
nearly all of the FDCPA's substantive provisions and adds certain 
clarifying commentary.

C. Data Limitations and Quantification of Benefits, Costs, and Impacts

    The discussion in this part VII relies on publicly available 
information as well as other information the Bureau has obtained. To 
better understand consumer experiences with debt collection, the Bureau 
developed its 2015 Debt Collection Consumer Survey, which provides the 
first comprehensive and nationally representative data on consumers' 
experiences and preferences related to debt collection.\631\ The Bureau

[[Page 76865]]

also relies on its consumer complaint data, its Consumer Credit Panel, 
the Credit Card Database,\632\ and other sources to understand 
potential benefits and costs to consumers of the rule.\633\ To better 
understand potential effects of the rule on industry, the Bureau has 
engaged in significant outreach to industry, including through the 
Operations Study.\634\ In July 2016, the Bureau consulted with small 
entities as part of the SBREFA process and obtained important 
information on the potential impacts of proposals that the Bureau was 
considering at the time, many of which are included in the final 
rule.\635\
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    \631\ The Bureau's survey was conducted between December 2014 
and March 2015. Consumers with and without debts in collection were 
asked to complete this survey in order to provide the Bureau with 
data necessary to understand the experience and demographics of 
consumers who have been contacted by debt collectors. Consumers were 
selected using the Bureau's Consumer Credit Panel, a de-identified 
1-in-48 sample of Americans with consumer reports at one of the 
nationwide CRAs. See CFPB Debt Collection Consumer Survey, supra 
note 16, at 7-10.
    \632\ The Credit Card Database is a compilation of de-identified 
loan-level information from the credit card portfolios of large 
banks. See Bureau of Consumer Fin. Prot., Credit Card Agreement 
Database, https://www.consumerfinance.gov/credit-cards/agreements/ 
(last visited Oct. 15, 2020).
    \633\ For more information about Bureau data sources, see 
Sources and Uses of Data at the Bureau of Consumer Financial 
Protection (Sept. 26, 2018), https://www.consumerfinance.gov/data-research/research-reports/sources-and-uses-data-bureau-consumer-financial-protection/.
    \634\ See CFPB Debt Collection Operations Study, supra note 34.
    \635\ See Small Business Review Panel Report, supra note 37.
---------------------------------------------------------------------------

    The sources described above, together with other sources of 
information and the Bureau's market knowledge, form the basis for the 
Bureau's consideration of the likely impacts of the rule. The Bureau 
makes every attempt to provide reasonable estimates of the potential 
benefits and costs to consumers and covered persons of the rule. While 
the Debt Collection Consumer Survey provides representative data on 
consumer experiences with debt collection, the survey responses 
generally do not permit the Bureau to quantify, in dollar terms, how 
particular provisions will affect consumers. With respect to industry 
impacts, much of the Bureau's existing data come from qualitative input 
from debt collectors and other entities that operate in the debt 
collection market rather than representative sampling that would allow 
the Bureau to estimate total benefits and costs.
    General economic principles and the Bureau's expertise in consumer 
financial markets, together with the data and findings that are 
available, provide insight into the potential benefits, costs, and 
impacts of the final rule. Where possible, the Bureau has made 
quantitative estimates based on these principles and the data 
available. Some benefits and costs, however, are not amenable to 
quantification, or are not quantifiable given the data available to the 
Bureau. The Bureau provides a qualitative discussion of those benefits, 
costs, and impacts. In the proposed rule, the Bureau requested 
additional data or studies that could help quantify the benefits and 
costs of the rule to consumers and covered persons. The Bureau 
summarizes comments on this subject below, but few comments explicitly 
addressed quantifying the costs and benefits of the rule or provided 
additional data or studies. Comments on the benefits and costs of the 
rule are also discussed in part V above.

D. Baseline for Analysis

    In evaluating the potential benefits, costs, and impacts of the 
final rule, the Bureau takes as a baseline the current legal framework 
governing debt collection. This includes the requirements of the FDCPA 
as currently interpreted by courts and law enforcement agencies, other 
Federal laws, and the rules and statutory requirements promulgated by 
the States. In the consideration of benefits and costs below, the 
Bureau discusses its understanding of practices in the debt collection 
market under this baseline and how those practices are likely to change 
under the final rule.
    Until the creation of the Bureau, no Federal agency was given the 
authority to write substantive regulations implementing the FDCPA, 
meaning that many of the FDCPA's requirements are subject to 
interpretations in court decisions that are not always consistent or do 
not always definitely resolve an issue, such as a single district court 
opinion on an issue. Debt collectors' practices reflect their 
interpretations of the FDCPA and their decisions about how to balance 
effective collection practices against litigation risk. Many of the 
impacts of the final rule relative to the baseline would arise from 
changes that debt collectors would make in response to additional 
clarity about the most appropriate interpretation of what conduct is 
permissible and not permissible under the FDCPA's provisions.
    The Bureau received no comments regarding this choice of baseline 
for its section 1022(b) analysis.

E. Goals of the Rule

    The final rule is intended to further the FDCPA's goals of 
eliminating abusive debt collection practices and ensuring that debt 
collectors who refrain from such practices are not competitively 
disadvantaged. To these ends, an important goal of the rule is to 
benefit both consumers and debt collectors by increasing clarity and 
certainty about what the FDCPA prohibits and requires, which could 
improve compliance with the FDCPA while reducing unnecessary litigation 
regarding the FDCPA's requirements.
    As discussed in part V and in this part VII, the goals of the 
rule's provisions regarding telephone call frequency include reducing 
consumer annoyance, abuse, or harassment attributable to repeated or 
continuous debt collection telephone calls, while minimizing 
inadvertent negative impacts on debt collectors' ability to collect, by 
establishing presumptions that, with certain exceptions, debt 
collectors who place telephone calls at or below specified frequency 
levels comply with the FDCPA, and debt collectors who place telephone 
calls exceeding specified frequency levels violate the FDCPA. The 
provisions regarding limited-content messages are intended to reduce 
debt collectors' need to rely on repeated telephone calls to establish 
contact with consumers by clarifying how a debt collector may leave a 
voicemail message while minimizing the risk of third-party disclosure.
    The rule is also intended to protect consumers from the risks 
associated with electronic communications while also facilitating the 
use of such communications in debt collection, including by: (1) 
Clarifying how the FDCPA's communication restrictions apply to 
technologies that have developed since the statute was passed, such as 
mobile telephones, email, text messaging, and social media; (2) 
enabling consumers who do not wish to engage in electronic 
communications to opt out of such communications easily; and (3) 
clarifying how debt collectors can engage in email or text message 
communications in a way that limits the risk of third-party 
disclosures. The rule also sets a general standard for sending required 
disclosures that is intended to provide consumers with the same 
protection whether the debt collector sends the disclosure in writing 
or electronically.

F. Coverage of the Rule

    The final rule will apply to debt collectors as defined in the 
FDCPA. This definition encompasses a number of types of businesses, 
which can be generally categorized as: Collection agencies, which 
collect payments owed to their clients, often for a contingency fee; 
debt buyers, which collect debts that they purchase and own and either 
regularly collect or attempt to collect debts owned by others or have 
as their principal purpose the collection of consumer debt; collection 
law firms that either have as their principal purpose the collection of 
consumer debt or

[[Page 76866]]

regularly collect or attempt to collect consumer debt owed to others; 
and loan servicers when they acquire servicing of loans already in 
default.
    Although creditors that collect on debts they own generally will 
not be affected directly by the rule, they may experience indirect 
effects. Creditors that hire or sell debts to FDCPA-covered debt 
collectors may experience higher costs if debt collectors' costs 
increase and if those costs are passed on to creditors. As described 
below, the Bureau believes that many compliance costs on FDCPA-covered 
debt collectors will be one-time costs to come into compliance rather 
than ongoing costs to stay in compliance. To the extent compliance 
costs are incurred only once to adjust existing debt collectors' 
systems and do not increase costs for new entrants, they are unlikely 
to be passed on to creditors because they will not affect either 
marginal costs or the number of firms in the market.

G. Potential Benefits and Costs to Consumers and Covered Persons

    The Bureau discusses the benefits and costs of the rule to 
consumers and covered persons (generally FDCPA-covered debt collectors) 
in detail below.\636\ The Bureau believes that an important benefit of 
many of the provisions to both consumers and covered persons--compared 
to the baseline of the FDCPA as currently interpreted by courts and law 
enforcement agencies--is an increase in clarity and precision of the 
law governing debt collection. Greater certainty about legal 
requirements can benefit both consumers and debt collectors, making it 
easier for consumers to understand and assert their rights and easier 
for firms to ensure they are in compliance. The Bureau discusses these 
benefits in more detail with respect to certain provisions below but 
believes that they generally apply, in varying degrees, to all of the 
provisions discussed below.
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    \636\ For purposes of the section 1022(b)(2) analysis, the 
Bureau considers any consequences that consumers perceive as harmful 
to be a cost to consumers. In considering whether consumers might 
perceive certain activities as harmful, the Bureau is not analyzing 
whether those activities would be unlawful under the FDCPA or the 
Dodd-Frank Act.
---------------------------------------------------------------------------

    Some commenters urged the Bureau to consider other particular costs 
and benefits to consumers of restrictions on debt collection beyond 
those discussed explicitly below. One commenter encouraged the Bureau 
to consider the effect of aggressive debt collection practices on 
marital stability and on consumer privacy. A law firm commenter 
representing low-income and underserved individuals and families noted 
that stress resulting from debt collection efforts can have detrimental 
effects on consumer health. The Bureau acknowledges that, to the extent 
that the final rule reduces aggressive debt collection, consumers may 
receive benefits such as those discussed by these commenters. The 
Bureau does not discuss these benefits explicitly below, as these 
benefits are not readily quantified, but the qualitative discussion 
below should be understood to include all consumer benefits.
1. Prohibited Communications With Consumers
    Section 1006.6(b) generally implements FDCPA section 805(a)'s 
prohibition on a debt collector communicating with a consumer at 
unusual or inconvenient times and places, with a consumer represented 
by an attorney, and at a consumer's place of employment. This section 
also expressly prohibits attempts to make such communications, which 
debt collectors already must avoid given that a successful attempt 
would be an FDCPA violation. Section 1006.14(h)(1) interprets FDCPA 
section 806's prohibition on a debt collector engaging in any conduct 
the natural consequence of which is to harass, oppress, or abuse any 
person in connection with the collection of a debt to prohibit debt 
collectors from communicating or attempting to communicate with a 
person through a medium of communication if the person has requested 
that the debt collector not use that medium to communicate with the 
person.
    Debt collectors are already prohibited from communicating with 
consumers at a time or place that is known or should be known to be 
inconvenient to the consumer. The Bureau therefore expects that debt 
collectors already keep track of what consumers tell them about the 
times and places that they find inconvenient and avoid communicating or 
attempting to communicate with consumers at those times or places. 
Similarly, the provisions regarding communication with attorneys and at 
the consumer's place of employment track requirements that debt 
collectors are already required to comply with under the FDCPA. The 
Bureau understands that many debt collectors currently employ systems 
and business processes designed to limit communication attempts to 
consumers at inconvenient times and places and that many debt 
collectors also use these systems and processes to prevent 
communications with consumers through media that consumers have told 
them not to use. The provisions may benefit consumers and debt 
collectors by further clarifying the requirements of FDCPA sections 
805(a) and 806, but the Bureau does not expect that the provisions will 
cause significant changes to debt collectors' existing practices.
2. Telephone Call Frequencies
    Section 1006.14(b)(1) prohibits a debt collector from, in 
connection with the collection of a debt, placing telephone calls or 
engaging in telephone conversations repeatedly or continuously with 
intent to annoy, abuse, or harass any person at the called number. 
Section 1006.14(b)(2)(i) provides for a rebuttable presumption of 
compliance for a debt collector who places a telephone call to a 
particular person in connection with the collection of a particular 
debt neither: (A) More than seven times within seven consecutive days; 
nor (B) within a period of seven consecutive days after having had a 
telephone conversation with the person in connection with the 
collection of such debt, subject to the exclusions in Sec.  
1006.14(b)(3). Section 1006.14(b)(2)(ii) sets forth a rebuttable 
presumption of a violation for a debt collector who places a telephone 
call to a particular person in connection with the collection of a 
particular debt: (A) More than seven times within seven consecutive 
days; or (B) within a period of seven consecutive days after having had 
a telephone conversation with the person in connection with the 
collection of such debt.
    By establishing in the final rule a rebuttable presumption of 
compliance or of a violation, the Bureau provides additional 
flexibility relative to the proposal to debt collectors in cases where 
there may be a good reason to call, or to have a live communication 
with, a person, more frequently than the bright-line limits in the 
proposed rule. Debt collectors will also need to determine whether, 
under the circumstances, their calling might violate the FDCPA and the 
rule despite a telephone call frequency within the presumption of 
compliance. The Bureau anticipates that debt collectors will generally 
choose to call no more often than the specified telephone call 
frequencies in order to reduce legal risks. Therefore, the discussion 
below generally assumes that the practical effect of the final rule 
will be to cause debt collectors to reduce telephone calling frequency, 
in most cases, to at most the placement of seven telephone calls in a 
seven-day period and one live

[[Page 76867]]

telephone conversation in a seven-day period. Thus, many of the 
benefits and costs of the provision are similar to those under the 
bright-line rule that was included in the proposal. At the same time, 
the final rule provides additional flexibility to debt collectors but 
reduces the legal certainty compared to the proposed bright-line 
telephone call frequency limits, which will affect the benefits and 
costs of the call frequency provisions as discussed further below.
    As discussed above in part V, commenters who addressed the 
telephone call frequency limits in the proposal strongly opposed the 
seven-telephone call weekly frequency limit. Consumer advocates, some 
State Attorneys General, and multiple other commenters argued that the 
limit was too high, while industry commenters and other commenters 
believed that the limit was too low. Several commenters argued that a 
bright-line cap conceptually was a good idea for clarity, but that a 
cap of seven telephone calls was variously too low, too high, not 
supported by rigorous evidence, or not supportable under the FDCPA. 
Some industry commenters argued that bright lines are not helpful and 
that the proposed limits were too low in part because of the need to 
try multiple telephone numbers. Supporters of a lower limit often also 
argued that the limits on calling should be per-person. One commenter 
argued that the proposed limit was a reasonable compromise between 
preventing consumer harm and minimizing industry burden. Commenters 
were generally more supportive of the proposed limit of one live 
conversation per seven-day period, although some industry commenters 
argued that this limit should be higher, or that the proposed 
exceptions to the limit were unclear or should be expanded to include 
circumstances specified by the commenters, such as where there was 
active litigation or as required by applicable law.
    Many commenters said that the Bureau did not have evidence to 
support the specific proposed call limit of seven call attempts in a 
seven-day period. The Bureau requested data from industry that could 
provide further evidence on the effects of particular frequency limits 
but did not receive data that would permit it to quantify the costs and 
benefits of different frequency limits. The Bureau believes that 
providing for a rebuttable presumption of compliance or of a violation, 
rather than a bright-line limit, will reduce the cost to consumers or 
to industry of selecting a limit that is too high or too low. In 
addition, other provisions, such as those that address limited-content 
messages and electronic communications, provide industry with 
additional tools for reaching consumers.
Potential Benefits to Consumers
    Telephone calls debt collectors make with intent to annoy, abuse, 
or harass consumers are likely to cause consumers harm, and the Bureau 
has evidence, discussed below and in part V above, that many consumers 
perceive harm from debt collectors' repeated telephone calls.\637\ The 
Bureau expects the provision to limit this harm by reducing the 
frequency of telephone calls and telephone conversations.\638\ FDCPA 
section 806 already generally prohibits conduct the natural consequence 
of which is to harass, oppress, or abuse any person. FDCPA section 
806(5) also specifically prohibits repeated or continuous calling and 
telephone conversations with ``intent to annoy, abuse, or harass any 
person at the called number.'' These prohibitions have been interpreted 
differently by different courts, and, while some debt collectors call 
consumers less frequently than seven times in a given seven-day period, 
many debt collectors place telephone calls to consumers or engage 
consumers in telephone conversations more frequently than this.
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    \637\ The FDCPA's standard of liability for repeated calling is 
not perceived harm by consumers, but rather depends on the debt 
collector's intent or the ``natural consequence'' of the conduct. 
See FDCPA section 806(5) and 806, 15 U.S.C. 1692d(5) and 1692d. 
Nonetheless, section 1022(b)(2)(A) of the Dodd-Frank Act requires 
the Bureau to consider the potential benefits and costs of its 
regulation to consumers and covered persons, which may include 
potential benefits or costs that were not contemplated or intended 
by the FDCPA.
    \638\ By leading some debt collectors to further limit telephone 
calls, the rule could have the ancillary effect of preventing some 
calls that are not intended to annoy, abuse, or harass consumers and 
could in fact prevent some calls that consumers would find 
beneficial, as discussed below under ``Potential costs to 
consumers.'' This ancillary effect may be ameliorated by the 
provision being structured as a rebuttable presumption of violation. 
Telephone calls that consumers would find beneficial are more likely 
to have facts that would overcome the presumption of a violation. 
See comment 14(b)(2)(ii)-2.
---------------------------------------------------------------------------

    To quantify consumer benefits from the provision, the Bureau would 
need information regarding both how much the provision would reduce the 
number of calls debt collectors place to consumers and the benefit (or 
harm) each consumer would receive as a result of this reduction. 
Although the Bureau's data do not permit it to reliably quantify either 
the reduction in call frequency or how much consumers would value this 
reduction in dollar terms, the discussion below summarizes the data 
available to the Bureau on these two points.
    Data from the Bureau's Debt Collection Consumer Survey indicate 
that debt collectors often may attempt to contact consumers more 
frequently than seven times per week. In the survey, 35 percent of 
consumers who had been contacted by a debt collector said the debt 
collector had contacted or attempted to contact them four or more times 
per week, including 14 percent who said the debt collector had 
contacted or attempted to contact them eight or more times per 
week.\639\ Another 29 percent said that the debt collector had 
attempted to contact them one to three times per week.\640\ The survey 
question did not ask respondents to distinguish between actual contacts 
and contact attempts, and consumers are likely not aware of all 
unsuccessful contact attempts.\641\ Still, the survey responses suggest 
that it is not uncommon for debt collectors to place telephone calls to 
consumers more than seven times per week, and the responses would be 
consistent with many debt collectors having live telephone 
conversations with consumers more frequently than one time per week, 
which would be presumed to be a violation under the final rule.\642\ 
Based on this, it is reasonable to estimate that at least 6.9 million 
consumers \643\ are

[[Page 76868]]

called by debt collectors more than seven times in a week during a 
year.
---------------------------------------------------------------------------

    \639\ CFPB Debt Collection Consumer Survey, supra note 16 at 44 
n.5.
    \640\ Id.
    \641\ The survey also did not ask respondents to distinguish 
between calls about a single debt and calls about multiple debts.
    \642\ The survey questions did not distinguish among different 
types of contact, and survey responses may have included contacts 
such as letters or email that would not be subject to the provision. 
The survey suggests that contact attempts from debt collectors other 
than by telephone or letter are relatively uncommon. CFPB Debt 
Collection Consumer Survey, supra note 16. at 42, table 22. The 
Bureau understands that debt collectors seldom send letters more 
than once per week, so a large majority of contact attempts likely 
were by telephone. Information from industry also confirms that debt 
collectors sometimes place telephone calls to consumers more than 
seven times per week. See discussion under ``Costs to covered 
persons'' below.
    \643\ This is calculated as 14 percent of an estimated 49 
million consumers contacted by debt collectors each year. The Bureau 
estimates that about 32 percent of consumers with a credit file, or 
about 67 million, are contacted each year by a creditor or debt 
collector attempting to collect a debt. Of those, 23 percent were 
most recently contacted by a creditor, 63 percent by a debt 
collector, and 15 percent did not know whether the contact was from 
a creditor or debt collector. Based on this, the Bureau estimates 
that 73 percent of consumers were contacted by a debt collector, 
assuming that the share of consumers contacted by a debt collector 
is the same in this group as it is among consumers who did know 
whether the most recent contact was from a debt collector. See CFPB 
Debt Collection Consumer Survey, supra note 16 at 13, 40-41.
---------------------------------------------------------------------------

    The Bureau's Debt Collection Consumer Survey supports an inference 
that many consumers would benefit if they received fewer calls from 
debt collectors, although it does not provide evidence with which to 
estimate the dollar value of those benefits. Most respondents who had 
been contacted by a debt collector at least once per week said they had 
been contacted too often. As shown in Table 1, 95 percent of 
respondents who said debt collectors had contacted or attempted to 
contact them four or more times per week and 76 percent of those 
reporting contact or attempted contact one to three times per week said 
that they had been contacted too often by the debt collector, whereas 
22 percent of those contacted less than once a week said they had been 
contacted too often.

   Table 1--Consumers Indicating They Had Been Contacted Too Often, by
                            Contact Frequency
                                [Percent]
------------------------------------------------------------------------
                                                              Consumers
                                                               who said
                     Contact frequency                        they were
                                                              contacted
                                                              too often
------------------------------------------------------------------------
Less than once per week....................................           22
One to three times per week................................           76
Four or more times per week................................           95
------------------------------------------------------------------------

    A State Attorney General commenter and another commenter 
interpreted the statistic that many consumers contacted at least once 
per week reported being contacted too often as evidence that the 
Bureau's proposed telephone call frequency limits were too high and 
allowed too much calling. The Bureau notes again that the survey did 
not distinguish between contact attempts and live conversations. And, 
given that many debt collectors do not currently leave voicemails, many 
survey respondents may not have been aware of (and therefore the survey 
results may not reflect consumers' views about) contact attempts that 
did not result in a conversation. The survey also did not explicitly 
ask whether the consumers who say they were contacted too often felt 
harassed. That said, the Bureau agrees that some consumers may consider 
some telephone call frequencies that would have been permitted under 
the proposal to be too frequent, but notes that, as discussed elsewhere 
in this part, restrictions on call frequency can also have negative 
consequences for consumers.
    Multiple consumer advocate and other commenters noted that, because 
the proposed frequency limits were per debt rather than per person, 
consumers with multiple debts in collection could be called 
significantly more than seven times in each seven-day period and may be 
harmed as a result. The Bureau acknowledges that many consumers have 
multiple debts, and in some cases multiple debts may be collected by 
the same debt collector, although the Bureau does not have data to show 
how frequently consumers are called when they have multiple debts being 
collected by the same debt collector.
    An industry trade group commenter criticized the Debt Collection 
Consumer Survey and argued that the Bureau should not rely on the 
survey's results. Specifically, the commenter asserted that the 
survey's sample size was too small to be reliable and that the 
estimates of the survey were not statistically significant. The 
commenter also objected to some of the subsample comparisons made by 
the Bureau in the study or in the proposed rule. The commenter also 
argued that the fact that the survey did not distinguish between 
attempted contacts and actual live contacts made the data unreliable. 
Finally, the commenter argued that consumer surveys are inherently 
unreliable.
    With respect to the size of the survey sample, the Bureau notes 
that, for binary or categorical outcomes such as those in the survey, a 
sample size of a few hundred to a thousand is generally sufficient to 
obtain results that are within a few percentage points of what one 
would find in the general population, so long as the sampling procedure 
is random and designed to ensure a representative sample.\644\ The 
survey included around 1,000 consumers who had experience with debt 
collection,\645\ meaning the sample was large enough for the Bureau to 
make reasonable statistical inferences based upon it, including for 
subsamples of that group, such as consumers who reported being 
contacted one to three times per week.
---------------------------------------------------------------------------

    \644\ Indeed, the Bureau's use of its Consumer Credit Panel as a 
sampling frame for the survey allowed the Bureau to make the sample 
more representative of the U.S. population than is usually possible 
in a survey. See CFPB Debt Collection Consumer Survey, supra note 
16, for more details.
    \645\ As noted in the survey report, the Bureau oversampled 
consumers that it expected to be more likely to have experience with 
debt collection. Oversampling is a standard procedure in survey 
methodology that is used when the researcher is interested in 
analyzing a particular sub-population but also wants to analyze the 
population as a whole. Groups that are oversampled are assigned a 
lower weight when analyzing the whole sample but can be treated as 
individuals with equal weight when analyzing the subsample. Thus, 
although based upon the survey weights the Bureau estimated that 32 
percent of all consumers had experience with debt collection, the 
survey data included over 1,000 consumers who reported having 
experience with debt collection in the past year. The commenter 
mistakenly quotes the size of the subsample as 632 individuals. 
While incorrect, this is largely beside the point--as long as the 
sampling was done correctly, even a sample of 600 individuals can be 
used to make inferences about the whole population, albeit with a 
larger confidence interval or margin of error.
---------------------------------------------------------------------------

    With respect to statistical significance, the commenter is 
incorrect in stating that the results of the survey were statistically 
insignificant. The Bureau did not explicitly report measures of 
statistical precision in the survey report, as the report was intended 
for a general audience. However, the Bureau calculated measures of 
statistical significance for all of its estimates and took care in the 
report to discuss only comparisons that were statistically significant 
at a 95 percent confidence level or higher.\646\ Moreover, in general, 
the 95 percent confidence interval for the statistics cited above is on 
the order of between three and 10 percentage points, with smaller 
subsamples having a wider margin.\647\ For the statistics relied on by 
the Bureau and discussed above, a difference of plus or minus three to 
10 percentage points would not meaningfully change the Bureau's 
conclusions. For instance, the survey found that, among consumers who 
reported being contacted between one and three times per week by debt 
collectors, 76 percent said they were contacted too often. If the true 
percentage in the population were 66 percent, or 86 percent, the basic 
conclusion would be the same. Finally, with respect to the commenter's 
assertion that the limitations of the survey make it inherently 
unreliable, the Bureau disagrees. Although the phrasing of the question 
about contact frequency does not specifically track the structure of 
the rule's telephone call frequency provisions, the Bureau nonetheless 
believes the survey provides useful information about consumers' 
experience with debt collection and about the benefits consumers may 
receive from the final

[[Page 76869]]

rule's presumptions regarding telephone call frequencies.
---------------------------------------------------------------------------

    \646\ The Bureau followed the same approach in its recent report 
on its disclosure testing, where it disclosed the approach more 
explicitly. See CFPB Quantitative Testing Report, supra note 33.
    \647\ While these statistics were not explicitly reported in the 
survey report, the Bureau notes that the margin of error on a survey 
of this nature is largely a function of the sample size of the 
survey, and that margins of error on surveys with sample sizes in 
the range of 600-1,000 will be familiar to many lay readers. For 
instance, political polls with sample sizes of 600-1,000 respondents 
are often reported in the news and have margins of error that are 
generally in the range of 3 to 5 percentage points.
---------------------------------------------------------------------------

    The Bureau's consumer complaint data also indicate that consumers 
find frequent or repeated calls harmful. Communication tactics ranked 
third in debt collection complaints submitted to the Bureau during 2018 
and fourth in 2019, and the majority of complaints in this category--55 
percent in both years, or about 6,000 complaints across both years--
were about frequent or repeated telephone calls.\648\
---------------------------------------------------------------------------

    \648\ See Bureau of Consumer Fin. Prot., Consumer Complaint 
Database, https://www.consumerfinance.gov/data-research/consumer-complaints/search/?dataNormalization=None&date_received_max=2019-12-30&date_received_min=2018-01-01&issue=Communication%20tactics%E2%80%A2Frequent%20or%20repeated%20calls&product=Debt%20collection&searchField=all&tab=Map (last visited 
Oct. 23, 2020). Consumers can identify only one issue to categorize 
their complaints, so these numbers do not include cases in which a 
consumer chose a different issue (such as ``I don't owe the debt'') 
but also complained about call frequency. Note that consumers who 
complain about frequent or repeated telephone calls may not be 
receiving a frequency of calls that would violate the Rule.
---------------------------------------------------------------------------

    Several industry and other commenters disputed the reliability and 
representativeness of the Bureau's complaint data. Some of these 
commenters pointed to reports of inaccuracies in the complaint data 
themselves, while others argued that complaints only represent a tiny 
fraction of all consumers contacted by debt collectors. The Bureau 
acknowledges that, as in most industries, a relatively small percentage 
of consumers in collection file formal complaints. The Bureau also 
notes that not all consumers who have problems with a debt collector 
file complaints with the Bureau--many may not formally complain at all, 
and others may file complaints with another source, such as the Federal 
Trade Commission or their State Attorney General's office. Nonetheless, 
the Bureau believes that the rate of consumer complaints provides a 
useful benchmark as to the importance of the problem of frequent or 
repeated calls. That is, among the consumers who complain to the Bureau 
about debt collection communication tactics (one of the most 
complained-about categories), more than half complain about repeated 
calls, indicating that frequent or repeated telephone calls represent a 
large share of debt collection problems.\649\
---------------------------------------------------------------------------

    \649\ Note that not all of the consumers making these complaints 
would be helped by the rule, as they may have received a frequency 
of telephone calls that would not violate the rule.
---------------------------------------------------------------------------

    Although the Bureau does not have evidence that could be used to 
estimate the monetary value consumers attach to a reduction in 
telephone call frequency, there is indirect evidence of costs consumers 
are willing to bear to avoid unwanted calls. One leading service that 
offers to block inbound ``robocalls'' to a consumer's mobile telephone 
charges $1.99 per month for the service.\650\ Such services are an 
imperfect analogy to the rule's telephone call frequencies for at least 
two different reasons: First, they are intended to completely block 
calls rather than limit their frequency; and second, such services 
block telemarketing calls in addition to debt collection calls, while 
not blocking all debt collection calls. Given these differences, the 
price of this service does not provide a precise analog for the value 
to consumers of the telephone call frequencies. Nonetheless, the 
example does provide evidence that many consumers are willing to pay 
prices in the range of $24 per year to avoid unwanted telephone 
calls.\651\
---------------------------------------------------------------------------

    \650\ Nomorobo, https://www.nomorobo.com (last visited Oct. 22, 
2020).
    \651\ Another source of indirect evidence of the value to 
consumers of reduced telephone call frequency is the Bureau's 
consumer complaints. Based on the Bureau's records, the average time 
for a consumer to file a complaint with the Bureau by telephone or 
through the web portal is approximately 15 minutes, although this 
varies over time and across complaint categories. Valuing consumers' 
time using the average U.S. private sector wage of approximately $27 
per hour suggests that some consumers are willing to give up 
approximately $6.75 worth of their time in hopes of reducing call 
frequency from one debt collector. See Bureau of Labor Statistics, 
U.S. Dep't of Labor, Economic News Release: Employment Situation, 
table B-3 (Feb. 1, 2019), https://www.bls.gov/news.release/empsit.t19.htm.
---------------------------------------------------------------------------

    Some of the benefits from the final rule's telephone call frequency 
provisions could be obtained if consumers used protections they already 
have under the FDCPA to help them avoid too-frequent debt collection 
calls. Debt collectors must cease most communications in response to a 
written request from the consumer to do so. Furthermore, because 
section 805(a)(1) of the FDCPA prohibits debt collectors from 
communicating about a debt at any time or place that the debt collector 
knows or should know is inconvenient to the consumer, debt collectors 
risk violating section 805(a)(1) if they do not take heed when 
consumers say they do not want to communicate at certain times or 
places. However, many consumers may not want to completely cease 
communication about a debt because, for example, debt collectors who 
cannot recover through such communications may initiate litigation to 
recover on the debt. Additionally, consumers who tell debt collectors 
to cease communication orally may not benefit because some debt 
collectors may not honor consumers' requests to cease communications 
unless they are made in writing. In the Debt Collection Consumer 
Survey, 42 percent of respondents who had been contacted about a debt 
in collection reported having requested that a creditor or debt 
collector stop contacting them.\652\ These respondents generally did 
not make the request in writing.\653\ Of these consumers, approximately 
75 percent reported that the creditor or debt collector did not stop 
attempting to contact them.\654\
---------------------------------------------------------------------------

    \652\ CFPB Debt Collection Consumer Survey, supra note 16, at 
35, table 17.
    \653\ Of consumers who asked not to be contacted, 87 percent 
said they made the request by telephone or in person only. Id. at 
34-35.
    \654\ Id.
---------------------------------------------------------------------------

    As discussed above, technological solutions are also increasingly 
available to consumers who want to avoid certain telephone calls and 
may be used to screen out calls from some debt collectors. However, 
such solutions may be under-inclusive (in that they do not screen out 
telephone calls from all debt collectors) or over-inclusive (in that a 
consumer may want to maintain some telephone contact with a debt 
collector rather than eliminating all calls from that debt collector).
Potential Costs to Consumers
    Consumers may benefit from communicating with debt collectors about 
their debts. For consumers being contacted about a debt they in fact 
owe, communicating with the debt collector may help consumers resolve 
the debt, which could help avoid further fees and interest, adverse 
credit reporting, or lawsuits. A few commenters made these points, 
saying that the proposed bright-line limits on telephone call frequency 
would affect access to and the cost of credit and would lead to more 
negative credit reporting and litigation. For consumers being contacted 
about a debt they do not owe, communications from debt collectors may 
alert consumers to errors in their credit reports or that they are 
victims of identity theft. During the meeting of the Small Business 
Review Panel, some debt collectors said that the frequency limits that 
were then under consideration could extend the period needed to 
establish contact with a consumer, as further discussed below under 
``Potential costs to covered persons.'' If the telephone call 
frequencies in the final rule mean that debt collectors are less able 
to reach some consumers, or that communication with some consumers is 
delayed, those consumers may be harmed by missing

[[Page 76870]]

an opportunity to resolve a debt or to resolve a debt sooner.
    To quantify any such harm, the Bureau would need data to estimate 
how the telephone call frequencies in the final rule will affect 
whether and when debt collectors communicate with consumers as well as 
the harm consumers experience if they do not communicate with debt 
collectors. In its discussion below of costs to covered persons, the 
Bureau discusses the available evidence about how the telephone call 
frequencies in the final rule will affect whether debt collectors 
communicate with consumers. As discussed there, the data are limited, 
but evidence the Bureau does have suggests that, if debt collectors 
limit their calling to the frequency levels specified in final Sec.  
1006.14(b)(2), it might somewhat reduce the number of consumers reached 
by telephone within a few months after a debt collector starts 
attempting contact, but that the reduction is likely to be limited to a 
relatively small fraction of debts.
    The Bureau does not have representative data that can be used to 
quantify the harm consumers experience when they do not communicate 
with debt collectors, or when those communications are delayed. If 
consumers do not communicate with debt collectors about debts, they 
could suffer additional harm from debt collection in some cases, 
particularly if the debt collector or creditor initiates a lawsuit. A 
suit could lead to increased fees, legal costs, and the possibility of 
a judgment that could lead to garnishment of wages or other legal steps 
to recover the debt.
    One large debt buyer's comment included an analysis of its own 
data, which found that delaying contacting a consumer by two, four, or 
12 months increased the probability of litigation by 15, 19, and 35 
percent, respectively. This commenter did not state how much the 
proposed bright-line limits on telephone call frequencies would delay 
consumer contact but did state that raising the proposed seven 
telephone call weekly frequency limit to 15 calls per week would reduce 
its number of referrals to litigation by 2,459 consumers per year. 
These data confirm the general principle above, that some consumers may 
face litigation costs as a consequence of the telephone call frequency 
levels, but they do not provide enough information for the Bureau to 
assess the size of the effect. To assess this, the Bureau would need to 
know how much the rule would be expected to delay consumer contact. For 
instance, as discussed below, the Bureau estimated in the proposal 
based on one debt collector's calling data that the proposed bright-
line telephone call frequency limits would increase the time to first 
contact by an average of about one week. Even taking the commenter's 
analysis as given, if the average delay is approximately a week, this 
would have very different implications for litigation overall compared 
to an average delay of approximately six months. In addition, both the 
Bureau's calling data and the commenter's litigation likelihood data 
are each from a single firm and thus unlikely to be representative of 
the market as a whole. The Bureau expects the delay in making contact, 
and any resulting increase in litigation, to vary by the age of debt, 
the type of debt, and firm-specific practices.
    To the extent that some debt collectors currently call less than 
the final rule's telephone call frequencies to avoid legal risks, such 
debt collectors could perceive a reduction in legal risk that leads 
them to increase their calling frequency as a result of the final rule. 
This would result in costs to some consumers if they find the increase 
in call frequency harmful. Some consumer advocate commenters echoed 
this point but did not provide any data to help quantify potential 
increases in telephone call frequency or the effects of such increases 
on consumers. Because consumers can rebut the presumption that 
telephone call frequencies below those in final Sec.  1006.14(b)(2) 
comply with FDCPA section 806(5), any increase in harassment as a 
result of the provision may also be limited, compared to the bright-
line limit in the proposal that the commenters expressed concern about.
Potential Benefits to Covered Persons
    As with several other provisions of the rule, the rebuttable 
presumptions of compliance and violation with Sec.  1006.14(b)(1) and 
FDCPA section 806(5) based on the frequencies with which debt 
collectors placed telephone calls may reduce legal uncertainty about 
the interpretation of existing FDCPA language. Frequent telephone calls 
are a consistent source of consumer-initiated litigation and consumer 
complaints to Federal and State law enforcement agencies. By 
establishing a standard for call frequency, this provision makes it 
easier for debt collectors to know what calling patterns are permitted 
and reduce the costs of litigation and threats of litigation. To the 
extent that some debt collectors currently call less than the telephone 
call frequencies to avoid legal risks, they may call more frequently if 
they see the provision as reducing those legal risks, potentially 
increasing collection revenue.
    Some debt collectors might also benefit from a reduction in calls 
made by other debt collectors. The Bureau understands that many 
consumers have multiple debts being collected by different debt 
collectors.\655\ In seeking payments from consumers, multiple debt 
collectors compete with each other to obtain consumers' attention and 
seek payment, which can lead to a large aggregate number of debt 
collection calls, potentially overwhelming some consumers and making 
them less likely to answer calls or otherwise engage with debt 
collectors.\656\ This in turn could make it harder for each debt 
collector to recover outstanding debt.\657\ Thus, one potential benefit 
to debt collectors of the provision's telephone call frequencies is a 
lower frequency of telephone calls by other debt collectors, which 
could make consumers more likely to engage and repay.
---------------------------------------------------------------------------

    \655\ The Bureau's survey indicates that 72 percent of consumers 
with a debt in collection were contacted about two or more debts in 
collection, and 16 percent were contacted about five or more debts. 
Id. at 13, table 1.
    \656\ For example, borrowers could simply ignore telephone calls 
or could adopt call screening or blocking technology.
    \657\ In other words, debt collectors may face a ``prisoner's 
dilemma,'' in which each debt collector has incentives to call more 
frequently even though debt collectors might collectively benefit 
from a mutual reduction in call frequency.
---------------------------------------------------------------------------

    In addition, some debt collectors specialize in approaches to 
collection that do not rely on frequent call attempts, and these debt 
collectors may benefit from the telephone call frequency provision. In 
particular, debt collectors who focus on litigation and those who 
communicate with consumers primarily by media not covered by the 
provision, such as letters and email, may be more effective in 
communicating with consumers relative to debt collectors who focus on 
communicating by telephone. This, in turn, may increase their market 
share at the expense of debt collectors who are more dependent on 
frequent calls.
Potential Costs to Covered Persons
    This provision imposes at least two categories of costs on debt 
collectors. First, it means that debt collectors must track the 
frequency of outbound telephone calls, which will require many debt 
collectors to bear one-time costs to update their systems and train 
staff, and which will create ongoing costs for some debt collectors. 
Second, for some debt collectors, the provision may lead to a reduction 
in the frequency with which they place telephone calls to consumers, 
which could make it harder

[[Page 76871]]

to reach consumers and delay or reduce collections revenue.
    With respect to one-time implementation costs, many debt collectors 
will incur costs to revise their systems to track telephone call 
frequencies. Such revisions could range from small updates to existing 
systems to the introduction of completely new systems and processes. 
The Bureau understands that larger debt collectors generally already 
implement system limits on call frequency to comply with client 
contractual requirements, debt collector internal policies, and State 
and local laws.\658\ Such debt collectors might need only to revise 
existing calling restrictions to ensure that existing systems track 
telephone calls in a manner consistent with the new provision. Larger 
collection agencies might also need to respond to client requests for 
additional reports and audit items to verify that they comply with the 
provision, which could require these agencies to make systems changes 
to alter the reports and data they currently produce for their clients 
to review.
---------------------------------------------------------------------------

    \658\ See CFPB Debt Collection Operations Study, supra note 34, 
at 28-29.
---------------------------------------------------------------------------

    Smaller debt collectors and collection law firms are less likely to 
have existing systems that track or limit calling frequency and may 
therefore face larger costs to establish systems to do so. However, 
many smaller debt collectors report that they generally attempt to 
reach each consumer by telephone only one or two times per week and 
generally do not speak to a consumer more than one time per week, which 
suggests that their practices would afford them a presumption of 
compliance (and actual compliance, depending on the circumstances) with 
respect to telephone call frequencies under the final rule.\659\ For 
such debt collectors, existing policies may be sufficient to ensure 
compliance with the provision, although they may incur one-time costs 
to establish systems for documenting compliance.
---------------------------------------------------------------------------

    \659\ See id. at 29.
---------------------------------------------------------------------------

    With respect to ongoing costs of compliance, the Bureau expects 
that the telephone call frequencies specified in Sec.  
1006.14(b)(2)(i)(A) could reduce some debt collectors' ability to reach 
consumers, particularly when the debt collector has not yet established 
contact with a consumer. These impacts are discussed below. The 
Bureau's understanding, based on feedback from small entity 
representatives and other industry outreach, is that the frequency of 
one telephone conversation per week in final Sec.  1006.14(b)(2)(i)(B) 
is unlikely to affect debt collectors' ability to communicate with 
consumers in most cases.\660\
---------------------------------------------------------------------------

    \660\ The impact might be greater if consumers could not consent 
to more frequent contact. For example, if a debt collector reached a 
consumer on the telephone and the consumer said it was not a good 
time to speak, then the rule would permit the debt collector and 
consumer to agree to speak again at a specified time within less 
than one week. See the section-by-section analysis of Sec.  
1006.14(b)(3)(i); see also comment 14(b)(2)(ii)-2.iii, which 
clarifies that a factor that may rebut the presumption of a 
violation is whether, if the exclusion in Sec.  1006.14(b)(3)(i) 
does not apply, the debt collector placed a telephone call in 
response to the consumer's request for information. Similarly, the 
Bureau expects that debt collectors will be largely unaffected by 
the application of the telephone call frequencies to location 
contacts with third parties because the Bureau understands that, 
while location calls may be made to several numbers, they do not 
generally involve frequently calling each number.
---------------------------------------------------------------------------

    Several industry commenters noted ambiguities regarding how the 
proposed telephone call frequency limits would work if a consumer has 
multiple debts or if there are multiple consumers on an account. These 
commenters argued that managing these ambiguities would lead to 
additional ongoing costs of compliance. As discussed in part V, in the 
final rule the Bureau has clarified in the official commentary how debt 
collectors should count calls in various circumstances. This should 
reduce the ongoing costs of compliance with these provisions compared 
to the proposal.
    The final telephone call frequency provisions may cause many debt 
collectors to place telephone calls less frequently than they currently 
do. This decrease in telephone calls may impose ongoing costs on debt 
collectors by increasing the time it takes to establish contact with 
consumers, all else equal. Most debt collectors currently rely heavily 
on telephone calls as a means of establishing contact with consumers, 
although other provisions of this final rule are intended to facilitate 
debt collectors' use of electronic communications. While debt 
collectors generally send letters in addition to calling,\661\ the 
Bureau understands that response rates to letters can be quite low. If 
contact with consumers is delayed, it will delay collection revenue and 
may reduce revenue if consumers who are reached later are less willing 
or able to repay the debt. In addition, if the debt collector is unable 
to reach the consumer during the period that the owner of the debt 
permits the debt collector to attempt to collect the debt, then 
reducing call frequency in accordance with the provision might prevent 
a debt collector from reaching the consumer entirely.\662\
---------------------------------------------------------------------------

    \661\ In the Bureau's survey, 85 percent of respondents who had 
been contacted by a debt collector said that they had been contacted 
by telephone and 71 percent said that they had been contacted by 
letter. Respondents were asked to select all ways in which they had 
been contacted. CFPB Debt Collection Consumer Survey, supra note 16, 
at 29-30, table 14.
    \662\ If the provision were to cause some debt collectors to 
lose revenue for this reason, the amounts not collected would 
generally be transferred to another party: either to consumers (if 
the amounts were never collected) or to another debt collector (if 
the amounts were collected through further collection efforts, 
including through a lawsuit).
---------------------------------------------------------------------------

    A creditor trade association commenter provided some data that 
helps to characterize the delays in collection that result from reduced 
calls made by creditors. The commenter cited two unrelated randomized 
controlled trials conducted by two of its members, both automotive 
lenders. The trials estimated the impact on the likelihood of accounts 
becoming more severely delinquent (i.e., roll rates) by randomly 
reducing calls to consumers at risk of becoming 31, 61, or 85 days past 
due on their accounts.\663\ The first trial reduced calling from an 
average of 1.06 call attempts per day to an average of 0.76 call 
attempts per day. The figures presented showed substantial increases in 
roll rates, but no confidence intervals were presented. The second 
trial reduced calling from three calls per telephone number per day to 
three calls per consumer per day then to two calls per consumer per 
day. The reduction in calls generally increased roll rates, but the 
differences were often not statistically significant.
---------------------------------------------------------------------------

    \663\ Because these trials were conducted by first-party 
creditors seeking to collect on accounts in relatively early stages 
of delinquency, their results may not apply to accounts subject to 
third-party debt collection.
---------------------------------------------------------------------------

    One debt collection industry commenter stated that it requires an 
average of 16 calls to reach each consumer. This commenter argued for a 
limit of 16 calls per week on the basis that most consumers have 
multiple numbers that have to be tried before a right-party contact 
(RPC) is achieved, but the commenter did not provide any information as 
to the expected impact of the proposed frequency limits. Another 
industry commenter, a large debt buyer, stated that, when searching for 
a consumer, it places between 50 and 75 calls per debt before achieving 
RPC. This commenter argued for 15 calls per week, again noting that 
consumers having multiple telephone numbers increases the number of 
calls needed to achieve an RPC. The commenter reported that, if the 
proposed limits were increased to 15 per week, 9,629 more of their 
consumers would enter a repayment plan and 2,459 fewer would have their 
account forwarded for litigation. The commenter, however, did

[[Page 76872]]

not provide any insights into its methodology or the statistical 
precision of its estimated effects.
    Some debt collectors do not place telephone calls frequently enough 
to be affected by the telephone call frequencies that establish a 
presumption of a violation. While the Bureau understands that some debt 
collectors regularly call consumers two to three times per day or more, 
other debt collectors have told the Bureau that they seldom call more 
than once or twice per week. These differences may reflect different 
debt types and collection strategies. For example, smaller debt 
collectors frequently retain debts indefinitely, and they may face less 
pressure to reach consumers quickly than debt collectors who collect 
debts for a limited period. Debt collectors who focus on litigation may 
also place less emphasis on establishing telephone communication with 
consumers.
    Some debt collectors have indicated that frequent calling is 
especially important if the debt collector has multiple potential 
telephone numbers and does not know the best way to reach the 
consumer.\664\ Additionally, some debt collectors specialize in 
attempting to collect debts for which the creditor has lost contact 
with the consumer, and frequent call attempts to establish contact with 
the consumer may be especially important for such debt collectors.
---------------------------------------------------------------------------

    \664\ See, e.g., Small Business Review Panel Report, letter from 
FMA Alliance Ltd., supra note 37, at appendix A-6. Multiple industry 
and trade association commenters on the proposal echoed this 
sentiment.
---------------------------------------------------------------------------

    For debt collectors who currently call consumers more frequently 
than the presumptive cap but who will choose to limit their calling 
such that they receive a presumption of compliance, the telephone call 
frequencies could affect when and if they establish communication with 
consumers. The Bureau does not have representative data that permit it 
to quantify how the telephone call frequencies would impact how long it 
takes to establish contact or whether contact is established at all. 
However, the Bureau has analyzed microdata on outbound calling from one 
large collection agency (``Calling Data'') that helps illustrate the 
potential impact of the telephone call frequencies. While the data from 
this agency may not be representative of the market as a whole, the 
results of the Bureau's analysis of the data are generally consistent 
with summary information shared by other large collection 
agencies.\665\
---------------------------------------------------------------------------

    \665\ The summary information was shared with Bureau staff 
during industry outreach meetings that are part of the Bureau's 
routine market-monitoring efforts. Although most debt collectors are 
small firms, evidence suggests that a majority of debt collected is 
collected by collection agencies with 100 or more employees. See 
CFPB Debt Collection Operations Study, supra note 34, at 7.
---------------------------------------------------------------------------

    The Calling Data show that, in the first eight weeks of 
collections, the overall frequency of call attempts to consumers who 
have not yet spoken with the debt collector declines slowly. Roughly 40 
percent of consumers receive more than seven calls per week in the 
first four weeks, but this drops to 27 percent by week eight. Although 
the overall distribution of contact attempts changes slowly from week 
to week, the data show that, over time, some consumers get called more, 
while others get called less. Consumers with whom an RPC has been 
established and who made no payment and consumers for whom RPC has not 
been achieved tend to receive the most collection calls. Consumers who 
have engaged but made a partial payment receive fewer calls. Moreover, 
the debt collector who provided the Calling Data engages in ``call 
sloping,'' meaning that it places fewer total calls each week that it 
works a portfolio of debts.
    The Calling Data show that, for the debts included in that data 
set, consumers who take longer to reach are not less likely to pay. 
Although the probability that each call results in an RPC declines with 
successive calls, the rate at which RPCs are translated into payments 
increases steadily through at least the first 50 calls. As a result, an 
RPC that is achieved in any of the first 50 calls is approximately 
equal in value to the debt collector as an RPC that is achieved with 
fewer calls, suggesting that call attempts remain important to debt 
collection even after many calls have been attempted.
    Summary data provided by some other large debt collectors indicate 
that the number of calls needed to reach consumers can vary 
considerably, but that the majority of debts would not be affected or 
would be affected very little by reducing current telephone call 
frequencies to levels that would afford the debt collector a 
presumption of compliance under the final rule. These data indicate 
that 50 percent or more of consumers who are ultimately reached by 
these debt collectors are reached within the first seven calls overall 
(not per week), though other debt collectors have indicated that it 
takes 15 to 21 calls to reach 50 percent of such consumers. These data 
also indicate that reaching 95 percent of consumers may take between 50 
and 60 calls, meaning that 5 percent of consumers reached are contacted 
only after more than 50 or 60 calls have been placed.
    There are limitations to using the data discussed above to make 
inferences about how the telephone call frequencies in the final rule 
may affect debt collectors' ability to reach consumers. This is in part 
because establishing contact depends on factors other than the number 
of calls made (e.g., the time of day called) and in part because debt 
collectors who wish to operate within the presumption of compliance 
might change their contact behavior in ways that permit them to reach a 
given number of consumers with fewer calls, as discussed further below. 
In addition, other aspects of the rule, including the provision that 
clarifies the legal status of limited-content messages, could make it 
easier for debt collectors to reach consumers with fewer calls.
    The data discussed above may not be representative, meaning that 
some debt collectors might need more or fewer calls to reach similar 
numbers of consumers. Overall, however, the available data suggest that 
reducing telephone call frequencies to levels that afford a debt 
collector a presumption of compliance would somewhat reduce the ability 
of debt collectors to reach consumers by telephone within a few months, 
but that the reduction is likely to be limited to a relatively small 
fraction of debts. This could affect primarily debt collectors who 
receive placements of debts for four to six months and do not engage in 
litigation. Such debt collectors could lose revenue if they are unable 
to establish contact with consumers or if collections based on 
telephone calls become less effective and, as a result, creditors place 
more debts with debt collectors specializing in litigation.
    To illustrate potential effects of the provision on debt collector 
revenue, the Bureau used the Calling Data to simulate the effect of the 
provision under an assumption that the debt collector limits telephone 
call frequency such that it would receive a presumption of compliance 
under the rule, under specific assumptions about how limiting calls 
would affect collections. That is, the Bureau created a ``but-for'' 
version of the Calling Data in which calls that would exceed those 
limits were assumed to have been either delayed or eliminated, and the 
Bureau compared RPCs and payments in this ``but-for'' data with the 
actual outcomes achieved by the debt collector. This is at best a rough 
approximation of the effects of the provision, both because it relies 
heavily on the assumptions made and because it is based on the data of 
one particular debt collector, and may

[[Page 76873]]

not be representative of other firms in the industry.
    The Bureau created two versions of its simulation analysis, one of 
which uses more conservative assumptions as to the impact of limiting 
telephone calls on successful contacts and collections. However, the 
Bureau believes that even the more conservative version of this 
analysis likely overstates the potential effects of reducing call 
frequency because it cannot reflect any changes the debt collector 
would make to its calling strategy in response to the reduced 
frequency. That is, one would expect a rational collection firm to 
strategically choose which calls to eliminate or delay in order to 
reduce call frequency, while the Bureau's analysis must to some extent 
select calls arbitrarily. In particular, at least for the debt 
collector who provided data to the Bureau, debts with multiple 
telephone numbers would be most likely to be affected by a decision to 
limit call frequency. The Bureau is not able to identify telephone type 
(such as mobile vs. landline, or work vs. home) in the data, but debt 
collectors are often able to do so. The Bureau would expect debt 
collectors in similar situations to omit calls to less promising 
telephone numbers, rather than to call the same numbers, and to cease 
calling earlier in the process.
    In the first, more conservative version of the simulation (Version 
1), the Bureau assumed that all calls the debt collector did not make 
each week were simply shifted to the next week.\666\ The Bureau assumed 
that any successful RPCs that occurred after the 25th simulated week 
would never occur because in reality the debt collector was only 
contracted to collect on the debts in the data for up to 25 weeks. 
Version 1 implicitly assumes that the probability that a call results 
in an RPC does not depend on how much time has passed since collection 
began, only on the number of calls that have been made.
---------------------------------------------------------------------------

    \666\ For example, if the debt collector called a particular 
consumer 10 times in the first week, eight times in the second week, 
and five times in the third week, in the Bureau's simulation, the 
last three calls in the first week would become the first three 
calls in the second week. The second week would then have a total of 
11 calls, and the last four calls would become the first four calls 
in the third week. The third week would then have eight calls, so 
the last call would become the first call of the fourth week, and so 
on.
---------------------------------------------------------------------------

    In a second, more aggressive version of the simulation (Version 2), 
the Bureau assumed that any calls that would not be made because they 
exceed seven calls per week are eliminated, rather than shifted 
forward. When a consumer's first RPC would have occurred on a call that 
would not be made in a given week, the Bureau treats the data for that 
debt as censored as of that week.\667\
---------------------------------------------------------------------------

    \667\ That is, the Bureau assumes that it does not know when or 
whether that consumer would ever have a successful RPC, only that 
there was no RPC up until that week. The Bureau then calculates the 
percentage of debts with an RPC by the 25th week of collections 
using the Kaplan-Meier product limit estimator for the survival 
function, a standard tool for measuring rates of an outcome when 
some observations are censored. It is necessary to assume that such 
consumers are censored because in reality after an initial RPC, the 
debt collector generally changes its calling behavior, particularly 
if it obtains a promise to pay.
---------------------------------------------------------------------------

    The Bureau made additional assumptions that were common to both 
versions of the simulation. For inbound calls, that is, calls from 
consumers to the debt collector, the Bureau assumed that the calls were 
not delayed or eliminated. Thus, the Bureau is implicitly assuming that 
inbound calls are prompted by letters from the debt collector or other 
external factors, rather than by a number of calls.\668\ The Bureau 
made additional assumptions to simulate the effect on payments. The 
Calling Data indicate if the consumer ever paid and how much, but they 
do not always indicate when payment was received--the Bureau observes 
the timing of payments only if the consumer made payment over the 
telephone. About half of all consumers in the data who make at least a 
partial payment do so without ever having an RPC. For the simulation, 
the Bureau assumed that, if the debt collector achieved at least one 
RPC in the simulation, then the amount of any payments made by the 
consumer is unchanged. If the consumer received an RPC in the original 
data but did not receive any RPC in the simulation, the Bureau assumed 
that any payments recorded in the original data did not occur for 
purposes of the simulation.
---------------------------------------------------------------------------

    \668\ The debt collector who provided the data does not leave 
voicemails, but it is possible that consumers eventually return a 
call in response to repeated missed calls on their telephones.
---------------------------------------------------------------------------

    Table 2 shows the results of the simulation analysis described 
above. Under Version 1, the reduced call frequency would reduce first 
RPCs by 2.76 percent of the first RPCs and dollars collected by 1 
percent.\669\ The average first RPC would be delayed by less than one 
week. These effects are not evenly distributed across consumers, 
however. In the simulation, the debt collector is much more likely to 
miss an RPC or payment if it calls multiple telephone numbers for a 
consumer.\670\ For consumers where the debt collector calls only one 
telephone number, hardly any miss an RPC in the simulation, and the 
average delay is almost zero. This is because the debt collector rarely 
calls a particular telephone more than seven times per week. In 
contrast, for consumers where the debt collector calls five or more 
telephone numbers, the simulation predicts that the reduced call 
frequency will eliminate more than 7 percent of RPCs and delay the 
remaining RPCs by almost two weeks.
---------------------------------------------------------------------------

    \669\ The change in payments is less than the change in RPCs 
both because some consumers pay without an RPC (and the Bureau 
assumed this did not change in the simulation) and because consumers 
in the data who had an earlier first RPC, and thus were less likely 
to be affected by the frequency limits, were also more likely to pay 
in full.
    \670\ The Bureau does not observe in the data how many telephone 
numbers the consumer has, only how many the debt collector chooses 
to call.
---------------------------------------------------------------------------

    The assumptions of Version 2 suggest a more substantial effect on 
RPCs and collections, although the Bureau notes again that even Version 
1 likely overstates the potential effect of the provision. The 
simulation predicts that RPCs would decline by 15.7 percent, and 
dollars collected would decline by 7.7 percent.

                                     Table 2--Results of Simulation Analysis
----------------------------------------------------------------------------------------------------------------
                                                                                                 Percent change
                                 Assumed effect of call    Percent change   Average delay  in      in dollars
            Version                frequency provision     in RPCs within     remaining RPCs    collected within
                                                              25 weeks          (in weeks)          25 weeks
----------------------------------------------------------------------------------------------------------------
Version 1......................  Calls above seven roll              -2.76               0.85              -1.04
                                  to next week.
Version 2......................  Calls above seven                   -15.7                  0               -7.7
                                  eliminated.
----------------------------------------------------------------------------------------------------------------

    Overall, there is reason to expect that the simulation analysis 
overstates the potential effect of the final rule's telephone call 
frequencies because the simulation ignores any changes debt collectors 
would make to mitigate the

[[Page 76874]]

effects of reduced call frequency. The simulation also assumes that 
debt collectors will not take advantage of the flexibility afforded by 
the rebuttable-presumption approach to call more frequently in certain 
circumstances. Nevertheless, certain assumptions that the Bureau makes 
for simplicity likely reduce the predicted impact of the provision. In 
particular, in Version 1 the Bureau assumes that a call with an RPC 
that is shifted later due to reduced call frequency will remain an RPC. 
This may not be true in practice. Empirically, the probability that a 
call results in an RPC declines over time--this is evident in the data 
examined by the Bureau and is consistent with input from industry 
stakeholders. If consumers are less likely to answer the telephone as 
time passes, irrespective of the number of calls debt collectors have 
made, reducing call frequency could reduce payments and revenue by a 
larger fraction than the simulation suggests (assuming no re-
optimization by debt collectors).\671\
---------------------------------------------------------------------------

    \671\ Another assumption that might reduce the predicted effect 
of reduced call frequency in both versions is the assumption that 
payment is tied to whether or not the first RPC occurs. For 
instance, in Version 1, the Bureau assumed that a consumer would not 
pay only if the first RPC would have occurred after the 25th week in 
the simulation. Yet about a quarter of consumers in the data who 
eventually pay some portion of their debt had at least two RPCs. It 
may be that the subsequent RPCs were necessary for the payment to 
occur, but the Bureau's analysis did not track whether subsequent 
RPCs occurred after the 25th week under the simulated frequency 
reductions. The Bureau also notes that there is an implicit 
assumption in both versions of the simulation that could lead to 
overstating the effect of the call frequency reduction. The 
simulation assumes that, if all RPCs for a consumer were eliminated, 
then the consumer would never pay. Given that, as noted above, a 
substantial number of consumers in the original data pay despite 
having no RPCs, it is possible that some consumers whose RPCs were 
eliminated by the reduced call frequencies would nonetheless pay 
eventually.
---------------------------------------------------------------------------

    A trade group commenter argued that the Bureau's analysis of the 
Calling Data was unreliable for several reasons. The commenter asserted 
that the Bureau's analysis was invalid because it did not describe the 
sample size, because it did not present ``methodology'' or 
``algorithms,'' and because it did not list assumptions. The Bureau 
believes the analysis does provide information relevant to 
understanding potential costs of the rule. The Calling Data contains 
proprietary information of the submitter that includes confidential 
commercial information and that is protected by the Bureau's 
regulations on the protection of confidential information.\672\ The 
Bureau's confidentiality regulations permit disclosure of materials 
derived from or created using confidential information to the extent 
that such materials do not identify, either directly or indirectly, any 
person to whom the confidential information pertains.\673\ As such, it 
would not be appropriate to identify the debt collector explicitly. In 
addition, disclosing the total number of calls likewise would be 
inappropriate because, for large debt collectors such as the one who 
provided the calling data, the total number of calls placed in a six-
month period is likely sufficient to identify the debt collector. The 
Bureau fully described the methods used to calculate its simulation 
analysis in the proposal and has repeated that description above. 
Finally, the discussion of the analysis in the proposal, repeated 
above, not only described the Bureau's assumptions but also discusses 
the effect that each assumption has on the outcome of the analysis in 
some detail. The Bureau acknowledges the limitations of the Calling 
Data, particularly for extrapolating to the market as a whole, but 
finds that these data provide useful information to at least 
characterize the scale of the probable effects of the final rule.
---------------------------------------------------------------------------

    \672\ See 12 CFR part 1070.
    \673\ See 12 CFR 1070.41.
---------------------------------------------------------------------------

    A State Attorney General commenter argued that the Bureau had no 
evidence that a frequency limit of seven call attempts per seven-day 
period would yield more consumer engagement and payments than a lower 
limit such as three call attempts per week. The Bureau acknowledges 
that it does not have sufficient evidence to quantify the differences 
in consumer engagement or payments from different telephone call 
frequencies. However, the Bureau notes that, in its analysis of the 
Calling Data, a limit of seven calls in a seven-day period led to 
measurable reductions in RPCs and payments, and that changing the 
assumptions in the simulation analysis of the calling data had a 
measurable effect on RPCs and payments even with the same weekly 
limits. This provides some basis for finding that limiting calls 
further would reduce payments further for debt collectors who are 
similar to the debt collector who provided the Calling Data.
    Debt collectors could take steps to reduce the number of calls 
necessary to establish contact and mitigate any lost revenue from 
limiting call frequency so that they maintain a presumption of 
compliance. As indicated, if multiple telephone numbers are available, 
debt collectors might reduce their calls to numbers that they can 
identify as being less likely to yield a successful contact. In 
addition, the Bureau understands that debt collectors can reduce the 
number of calls needed to establish an RPC by purchasing higher-quality 
contact information from data vendors. Such purchases will be 
worthwhile if their cost is less than the additional revenue expected 
from higher contact rates.
    In addition, and as discussed below, the Bureau's final rule also 
includes provisions that could reduce the legal risks associated with 
other means of communication, such as voicemail messages, text 
messages, or email, which could enable debt collectors to reach 
consumers more effectively with fewer calls. This could mitigate the 
impact of limiting telephone call frequencies to establish a 
presumption of compliance and might mean that the net effect of the 
rule would be to increase the likelihood that debt collectors are able 
to reach consumers. In addition, debt collectors who are unable to 
reach consumers because they wish to operate within the presumption of 
compliance might still pursue such debts through litigation. To the 
extent that frequent call attempts play a more important role in 
collecting certain types of debt relative to others, some debt 
collectors might shift their business toward collecting those types for 
which frequent calls are less important.
Alternative Approaches To Limiting the Frequency of Telephone Calls and 
Telephone Conversations
    The Bureau considered alternatives to the final rule's rebuttable-
presumption approach to telephone call frequencies on debt collector 
telephone calls and telephone conversations. The potential benefits and 
costs of those alternatives to consumers and covered persons relative 
to the final rule are discussed briefly below.
    The proposal would have established a bright-line limit on 
telephone call frequency rather than a rebuttable presumption. 
Specifically, proposed Sec.  1006.14(b)(1) set forth the general 
prohibition, Sec.  1006.14(b)(2) described bright-line frequency limits 
for telephone calls and telephone conversations during a seven-day 
period, and proposed Sec.  1006.14(b)(3), (4), and (5) described 
telephone calls excluded from the frequency limits, the effect of 
complying with the frequency limits, and a definition, respectively. A 
bright-line limit on telephone call frequency would provide greater 
clarity to consumers and debt collectors about whether calling 
practices comply with the FDCPA. For example, under the proposal, a 
debt collector who did not place telephone calls to consumers more than 
seven times in a seven-day period would know that it was complying with

[[Page 76875]]

the provision, whereas, under the final rule, a debt collector 
following the same practice would also need to consider whether the 
presumption of compliance might be rebutted in the case of particular 
consumers or accounts. This could result in greater compliance costs 
and greater risk of litigation for debt collectors compared with the 
proposal. On the other hand, the final rule may provide greater 
flexibility to debt collectors and additional benefits to consumers 
compared with the proposal. For consumers, the final rule may provide 
additional benefits in cases where seven or fewer telephone call 
attempts per week would be harassing, such as rapid succession calling. 
For debt collectors, the final rule may make it more possible to reach 
consumers if they are unable to make contact within seven call attempts 
in a week and additional calls would not be harassing.
    The Bureau also considered a broader version of Sec.  1006.14(b)(1) 
that would have set a numerical prohibition on repeated or continuous 
attempts to contact a person by other media, such as by sending 
letters, emails, or text messages to a person in connection with the 
collection of a debt. Such an approach could provide additional 
benefits to consumers if they are harassed or abused by frequent 
communication from debt collectors through such media.
    However, during the SBREFA process, some small entity 
representatives suggested that compliance with a rule that limited the 
frequency of communications by media other than telephone calls would 
be more costly than compliance with a rule that applied only to calls. 
These small entity representatives indicated that, while many existing 
debt collection systems already track the frequency of telephone calls, 
modifying systems to track communication by other media would be 
significantly more expensive.
    As discussed in part V, because debt collectors do not presently 
engage in widespread use of electronic communications, the Bureau 
concludes that it does not have sufficient information to warrant 
applying numeric limitations to electronic communications.\674\ Debt 
collectors will still need to ensure that their communications other 
than telephone calls do not violate the FDCPA section 806's general 
prohibition on harassment, oppression, and abuse, but the final rule 
will not require them to develop systems that treat telephone calls and 
other communications equivalently for purposes of tracking contact 
frequency.
---------------------------------------------------------------------------

    \674\ The Bureau received no comments advocating that any 
frequency limits be applied to mailed communications, and the Bureau 
is unaware of other evidence suggesting that would support such a 
limit.
---------------------------------------------------------------------------

    The Bureau also considered a proposal that would have limited the 
number of calls permitted to any particular telephone number (e.g., at 
most two calls to each of a consumer's landline, mobile, and work 
telephone numbers). The Bureau considered such a limit either instead 
of or in addition to an overall limit on the frequency of telephone 
calls to one consumer. Such an alternative could potentially reduce the 
effect of frequency limits on debt collector calls if it permitted more 
total calls when consumers have multiple telephone numbers. Such an 
approach could impose smaller costs on debt collectors in some cases 
compared to the final rule by making it easier to contact consumers for 
whom debt collectors have multiple telephone numbers. At the same time, 
such an approach might provide smaller consumer benefits compared to 
the final rule by potentially permitting a high frequency of calls in 
some cases. Some consumers could receive (and some debt collectors 
could place) more telephone calls simply based on the number of 
telephone numbers that certain consumers happened to have (and that 
debt collectors happened to know about). Such an approach also could 
create incentives for debt collectors, for example, to place telephone 
calls to less convenient telephone numbers after exhausting their 
telephone calls to consumers' preferred numbers.
3. Limited-Content Messages
    Section 1006.2(j) defines limited-content message as a voicemail 
message for a consumer that includes all of the content described in 
Sec.  1006.2(j)(1), that may include any of the content described in 
Sec.  1006.2(j)(2), and that includes no other content. In particular, 
Sec.  1006.2(j)(1) provides that a limited-content message must include 
all of the following: 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 that the consumer 
can use to reply to the debt collector. Section 1006.2(j)(2) provides 
that a limited-content message also may include one or more of the 
following: A salutation, the date and time of the message, suggested 
dates and times for the consumer to reply to the message, and a 
statement that if the consumer replies, the consumer may speak to any 
of the company's representatives or associates. Section 1006.2(b) and 
(d), which define the terms attempt to communicate and communication, 
respectively, provide that a limited-content message is an attempt to 
communicate but is not a communication.
Potential Benefits and Costs to Consumers
    As discussed below under ``potential benefits and costs to covered 
persons,'' many debt collectors currently do not leave voicemail 
messages for consumers because of the risk of litigation. The Bureau 
expects that, by clarifying that ``communication'' for purposes of the 
FDCPA does not include the limited-content message, the rule will make 
debt collectors more likely to leave voicemail messages if they are 
unable to reach consumers by telephone.
    In general, an increased use of voicemail messages should make it 
more convenient for consumers to communicate with debt collectors 
because consumers will be better able to arrange a discussion at a time 
that is convenient for them rather than at a time when the debt 
collector happens to reach them. Related to this, some consumers 
express annoyance at receiving repeated calls from callers who do not 
leave messages. To the extent that debt collectors respond to the rule 
by leaving messages when a consumer does not answer the telephone, the 
provision might help address that problem.
    If more debt collectors are willing to leave messages, it may lead 
to an indirect benefit to consumers by reducing the number of unwanted 
call attempts without reducing the likelihood that consumers 
communicate with debt collectors. Although some debt collectors may 
leave frequent messages or continue to call frequently despite having 
left messages, an industry trade publication recommends a best practice 
of waiting three to seven days after leaving a message to give the 
consumer an opportunity to return the call.\675\ During the meeting of 
the Small Business Review Panel, small entity representatives indicated 
that limited-content messages would reduce the need for frequent 
calling.\676\ One commenter on the proposal, a large debt buyer, 
indicated the same. Thus, some consumers may experience reduced numbers 
of calls if more debt collectors

[[Page 76876]]

leave messages and wait for a return call.
---------------------------------------------------------------------------

    \675\ insideARM, Operations Guide: Call Volume 10 (Nov. 14, 
2014).
    \676\ Small Business Review Panel Report, supra note 37, at 25.
---------------------------------------------------------------------------

    Debt collectors cannot be certain that a voicemail message will be 
heard only by the consumer for whom it was left. Some consumers could 
be harmed by an increase in limited-content messages, either because 
they are harassed by frequent messages or because the messages increase 
the risk of third-party disclosure. Although the message itself would 
not convey any information about the debt, the message will include a 
business name for the debt collector that does not indicate that the 
debt collector is in the debt collection business and some third 
parties who hear the message may assume or discover that the caller is 
a debt collector attempting to collect a debt from the recipient. On 
the other hand, the provision might lead debt collectors who currently 
leave more detailed messages that pose greater risk of revealing the 
purpose of the call to third parties to switch to messages that pose 
less risk. In such instances, the impact of the provision may be to 
reduce the likelihood of third-party disclosures.
    Multiple consumer advocate and other commenters argued that the 
proposed limited-content message would quickly become associated with 
debt collectors, such that a third party overhearing a limited-content 
message would immediately recognize it as a message from a debt 
collector. These commenters asserted that as a result, consumers would 
suffer privacy harms from the use of limited-content messages. Whether 
or not the commenters are correct in their argument, the changes the 
Bureau has made to the required content of the limited-content message 
in the final rule should, on balance, reduce the privacy risks to 
consumers. By including the name of the company (that does not indicate 
that the debt collector is in the debt collection business) but not the 
consumer, the limited-content message will both sound less unique (the 
commenters noted that few legitimate businesses currently leave 
messages without leaving their business name) and will not identify the 
call as being intended for a particular consumer. In addition, the 
Bureau notes that the potential scope of harm from third parties 
overhearing voicemail messages is smaller than it may have been in past 
years and is shrinking. As more consumers transition away from landline 
telephones to personal mobile phones, the possibility of a third party 
overhearing a voicemail message becomes less likely, as voicemails on 
mobile devices generally are not played in a way that allows bystanders 
to overhear. A voicemail on a mobile device may have no more risk of 
third-party disclosure than other forms of communication, and in some 
circumstances may have less risk.
    Survey results indicate that consumers are concerned about third 
parties overhearing voicemail messages left by debt collectors, with 
nearly two-thirds of consumers saying it is very important that others 
do not hear or see a message from a creditor or debt collector, as 
shown in Table 3 below. However, most respondents also said that they 
would prefer that a voicemail message from a debt collector indicate 
that the caller is attempting to collect a debt. Even among consumers 
who said it was ``very important'' that others not see or hear messages 
about debt collection, 63 percent said they preferred that the purpose 
of the call be included in a message from a creditor or debt collector 
attempting to collect the debt. This suggests that many consumers 
either do not expect third parties to overhear voicemail messages left 
for them or attach greater importance to knowing what the call is about 
than to the risk a third party will overhear the message.

 Table 3--Preferences Regarding Others Seeing or Hearing Debt Collector
                                 Message
                                [Percent]
------------------------------------------------------------------------
                                                             Consumers
   Importance of others not seeing or                        contacted
            hearing a message              All consumers   about a debt
                                                           in collection
------------------------------------------------------------------------
Very important..........................              64              65
Somewhat important......................              23              24
Not at all important....................              14              10
------------------------------------------------------------------------

Potential Benefits and Costs to Covered Persons
    The Bureau understands that many debt collectors avoid leaving 
voicemail messages, or leave them only under limited circumstances, 
because of the legal risk associated with doing so. Currently, debt 
collectors leaving a voicemail message for a consumer either do not 
include the statement that the call is from a debt collector (the so-
called ``mini-Miranda'' warning) and risk being deemed in violation of 
FDCPA section 807(11) or include that statement and risk that the 
existence of a debt will be disclosed to a third party hearing the 
message and that they will be deemed in violation of FDCPA section 
805(b). The provision in the final rule will reduce both direct and 
indirect costs to some debt collectors by interpreting the FDCPA not to 
require the mini-Miranda warning in a limited-content message, which 
will reduce legal risks associated with such messages.
    Debt collectors may indirectly benefit from clarification of the 
type of messages that may be left because messages may make it easier 
to establish contact with consumers. Currently, many debt collectors 
limit or avoid leaving voicemail messages for fear of FDCPA 
liability.\677\ Leaving voicemail messages may be a more efficient way 
of reaching consumers than repeated call attempts without leaving such 
messages. For example, consumers who do not answer calls from callers 
they do not recognize might return a voicemail message. If so, the 
provision could permit debt collectors to reach such consumers with 
fewer contact attempts.
---------------------------------------------------------------------------

    \677\ In the Bureau's Debt Collection Operations Study, 42 of 58 
respondents reported sometimes leaving voice messages. Of those that 
do leave voice messages, many reported leaving them only under 
certain specific circumstances. See CFPB Debt Collection Operations 
Study, supra note 34, at 29-30.
---------------------------------------------------------------------------

    Commenters were divided on whether the proposed limited-content 
message would increase the ability of debt collectors to reach 
consumers. An industry trade group commenter and a State Attorney 
General commenter argued that consumers would not respond to the 
proposed limited-content messages and would treat them as spam calls. A 
different industry trade group commenter argued that the proposed 
limited-content message would in fact increase consumer engagement and 
reduce the need for repeated telephone

[[Page 76877]]

calls. As discussed above, the Bureau has revised the requirements for 
the limited-content message in ways that should decrease the likelihood 
that consumers treat the messages as spam, such as by requiring debt 
collectors to include the name of the collection firm that does not 
indicate that the debt collector is in the debt collection business. As 
such, the Bureau believes that it is more likely than not that the 
provision will make it easier for debt collectors to establish contact 
with consumers.
    The provision may also reduce the direct costs of voicemail-related 
litigation, which can be large.\678\ While the Bureau does not have 
data on the costs to debt collectors of defending such litigation, some 
debt collectors have suggested that resolving an individual lawsuit 
typically costs $5,000 to $10,000, and resolving a class action could 
cost much more. Moreover, debt collectors report that the large 
majority of threatened lawsuits are settled before a suit is filed, so 
the frequency of filed lawsuits substantially understates how often 
debt collectors bear costs from claimed FDCPA violations.\679\ The 
Bureau anticipates that the clarification of the definition of 
communication will significantly reduce the legal risk to debt 
collectors of leaving voicemail messages.
---------------------------------------------------------------------------

    \678\ There were at least 162 voicemail-related lawsuits filed 
in 2015 under section 805(b) of the FDCPA, which prohibits third-
party disclosures; of these, 11 cases were class actions. In 
addition, at least 125 voicemail-related lawsuits were pursued under 
section 807(11), which prohibits communicating with a consumer 
without providing the mini-Miranda disclosure; of these 49 cases 
were class actions. See Small Business Review Panel Outline, supra 
note 36 at 69 n.104 (citing data provided by WebRecon, LLC).
    \679\ Some debt collectors have reported that they receive 
approximately 10 demand letters for every lawsuit filed and that 
FDCPA claims are typically settled for $1,000 to $3,000. See id. at 
69 n.105.
---------------------------------------------------------------------------

    The provision generally does not require debt collectors to incur 
new costs because it does not require any debt collectors to change 
their policies regarding messages. However, in order to obtain benefits 
from the provision, debt collectors who plan to adopt the practice of 
leaving limited-content messages will incur one-time costs to develop 
policies and procedures to implement limited-content messages under the 
rule and to train employees on these policies and procedures.
4. Prohibition on the Sale or Transfer of Certain Debts
    Section 1006.30(b)(1) prohibits a debt collector from selling, 
transferring for consideration, or placing for collection a debt if the 
debt collector knows or should know that the debt was paid or settled 
or discharged in bankruptcy. Section 1006.30(b)(2) creates some 
exceptions to this prohibition.
    The Bureau understands, based on its market knowledge and outreach 
to debt collectors, that debt collectors generally do not sell, 
transfer, or place for collections debts (other than in circumstances 
covered in the exceptions) if they have reason to believe the debts 
cannot be validly collected because they have been paid or settled or 
discharged in bankruptcy. The final rule provides an exception for 
transfer of secured debt that has been discharged in bankruptcy, 
provided that the debt collector provides notice to the transferee that 
the debt has been discharged. The Bureau understands that, if debt 
collectors transfer such secured debt, they generally already provide 
such notice in the ordinary course of business. Therefore, the Bureau 
expects the benefits and costs of this provision to be minimal.
5. Electronic Disclosures and Communications
    The final rule includes provisions that clarify how debt collectors 
can communicate with consumers by email and text message in compliance 
with the FDCPA and the final rule. With respect to the validation 
notice, which most debt collectors currently provide by mail, Sec.  
1006.42 sets forth standards that debt collectors must meet if they 
send notices electronically. With respect to any communications about a 
debt, Sec.  1006.6(d)(3) through (5) specifies procedures that debt 
collectors may use to send an email or text message to a consumer about 
a debt such that the debt collector may obtain a safe harbor from civil 
liability under the FDCPA for an unintentional disclosure of the debt 
to a third party.
Potential Benefits and Costs to Consumers
    Today, most debt collectors generally communicate with consumers by 
letter and telephone. If the rule leads debt collectors to increase 
their use of email and text messages, it will benefit consumers who 
prefer electronic communications to letters or telephone calls.
    Many consumers appear to prefer to receive certain disclosures 
about financial products by electronic means rather than mail. In 2016, 
of a sample of 203 million active general purpose credit card accounts, 
approximately 141 million accounts (69 percent of all accounts) were 
enrolled in online servicing, of which approximately 80 million (39 
percent of all accounts) opted into delivery of periodic statements by 
electronic means only.\680\ Because consumers who experience debt 
collection differ from consumers who do not,\681\ these estimates would 
be more accurate if the Bureau knew how many consumers who experience 
debt collection have opted into receiving electronic-only (paperless) 
disclosures from their creditors. It is not clear whether consumers who 
experience debt collection would be more or less digitally engaged with 
disclosures than their counterparts without debt collection 
experience.\682\
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    \680\ These estimates are based on data reported in Bureau of 
Consumer Fin. Prot., The Consumer Credit Card Market, at 164-66 
(Dec. 2017), https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2017.pdf. This rate has 
increased every year since at least 2013. These rates were lower for 
private label and retail co-brand cards, suggesting that the 
product's use case, acquisition channel, and consumer base 
composition may all affect both provider practices and consumer 
behavior.
    \681\ See CFPB Debt Collection Consumer Survey, supra note 16, 
at 15-17. Consumers who have experienced debt collection tend to 
have lower incomes, be under age 62, and be non-white.
    \682\ An FDIC survey that addressed access to banking services 
found that the share of respondents accessing bank accounts through 
online or mobile methods generally increased with income and was 
lower for respondents aged 65 or more. See Fed. Deposit Ins. Corp., 
2017 FDIC National Survey of Unbanked & Underbanked Households at 27 
& table 4.4 (Oct. 2018), https://www.fdic.gov/householdsurvey/.
---------------------------------------------------------------------------

    Other data from the Debt Collection Consumer Survey show that about 
15 percent of consumers indicate that email is their most preferred 
method of being contacted about a debt in collection, with almost half 
of consumers indicating that a letter is their most preferred method, 
and about a quarter identifying a telephone as their most preferred 
method.\683\ At the time of the survey very few debt collectors 
communicated by email, whereas many debt collectors communicated by 
telephone and letter, so survey respondents may have found it more 
difficult to evaluate their preferences for receiving debt collection 
communications by email. That said, the lower percentage for email may 
suggest that consumers are more likely to prefer electronic 
communications for periodic statements and similar disclosures than for 
debt collection communications. Taken together, these data suggest that 
a minority of consumers--between 15 and 39 percent--might prefer 
electronic validation notices, while a majority--as many as 69 
percent--might prefer to receive electronic communications (other than 
the validation notice)

[[Page 76878]]

instead of or in addition to paper communications or telephone calls.
---------------------------------------------------------------------------

    \683\ CFPB Debt Collection Consumer Survey, supra note 16, at 
23.
---------------------------------------------------------------------------

    As discussed above with respect to the rule's provisions regarding 
call frequency, most consumers experiencing debt collection report that 
debt collectors call too often. The provisions regarding electronic 
communications may have the indirect effect of reducing call frequency. 
These provisions may cause debt collectors to substitute email or text 
messages for telephone calls, and email or text messages may provide an 
easier channel for consumers to ask debt collectors to call less often. 
The benefits to consumers of reduced call frequency generally are 
discussed above. While some consumers prefer not to receive electronic 
communications from debt collectors, the final rule's provisions 
requiring opt-out notices and specifying that consumers can limit the 
method of communication should reduce any harm to such consumers by 
making it relatively easy to stop or restrict attempts at electronic 
communication.
    Consumer advocates argued that some specific groups may be 
adversely impacted by specifying how validation notices may be sent by 
email, including by hyperlink. In particular, these commenters noted 
that older consumers and poorer consumers are generally less likely to 
have readily available access to the internet. The commenters expressed 
concern that these consumers, who may be vulnerable in other ways as 
well, might not receive required notices and be harmed as a result. The 
Bureau agrees that some consumers may be less likely than others to 
receive notices sent electronically. In addition, in quantitative 
testing completed by the Bureau after publication of the proposal, the 
Bureau found a strong preference among consumers for receiving 
validation notices through the mail and much less willingness by 
consumers to receive validation notices by email or text message.\684\
---------------------------------------------------------------------------

    \684\ See CFPB Quantitative Testing Report, supra note 33, at 
33.
---------------------------------------------------------------------------

    As discussed in part V, the Bureau is not finalizing the proposed 
exemption to the E-SIGN Act and the alternative procedures under which 
debt collectors could send required disclosures electronically, 
including through a hyperlink, and is not finalizing the specific safe 
harbor for sending a validation notice electronically in an initial 
communication with a consumer. When the validation notice is not part 
of the initial communication, debt collectors will not be permitted to 
send it electronically without having obtained the consumer's E-SIGN 
consent. The Bureau does not believe that consumers will generally 
provide E-SIGN consent if they do not have ready access to email and 
the internet. In addition, under the final rule (and consistent with 
the proposal), all required disclosures sent in writing or 
electronically (including the validation notice sent as an initial 
communication) must be sent in a manner that is reasonably expected to 
provide actual notice to the consumer, and in a form that the consumer 
may keep and access later. This requirement reduces the risk that debt 
collectors will send validation notices electronically unless they are 
able to show that the electronic method used to send the validation 
notice is reasonably expected to provide actual notice to the consumer.
    The risk of third-party disclosure may be different for electronic 
debt collection communications than for letters or telephone calls, 
although the Bureau is not aware of evidence that would indicate 
whether such risk is higher or lower. Bureau data suggests that almost 
two-thirds of consumers consider it very important that third parties 
do not hear or see a message from a creditor or debt collector.\685\ To 
the extent that information in an electronic disclosure is less likely 
or more likely to be seen or heard by third parties than communications 
by mail or telephone, consumers receiving validation notices 
electronically are likely to experience a benefit or a cost, 
respectively.
---------------------------------------------------------------------------

    \685\ See CFPB Debt Collection Consumer Survey, supra note 16, 
at 38.
---------------------------------------------------------------------------

    Receiving disclosures electronically rather than in the mail may 
affect the likelihood that consumers notice and read the disclosures, 
which could lead to benefits or costs for consumers if they become more 
or less likely to inadvertently ignore or miss important information. 
The Bureau does not have information about how frequently consumers 
currently read validation notices sent by mail or how often they would 
read disclosures sent electronically.\686\
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    \686\ One debt collector who currently communicates with 
consumers by email reports that 60 percent of consumers open at 
least one email and 25 percent click a link to review their options. 
See Small Business Review Panel Report, supra note 37, at 7. As of 
2015, about one-tenth of all mass-market credit card consumers 
accessed their online PDF periodic account statements in the final 
quarter of the year, which implies that fewer than one-half of 
consumers who receive only electronic statements viewed those 
statements. See Bureau of Consumer Fin. Prot., The Consumer Credit 
Card Market, at 134 figure 8 (Dec. 2015), https://files.consumerfinance.gov/f/201512_cfpb_report-the-consumer-credit-card-market.pdf. However, the Bureau does not have data about the 
frequency with which consumers open or otherwise access paper 
periodic statements. In addition, notices of debts in collection may 
seem more serious or important than periodic statements and may be 
more likely to be opened.
---------------------------------------------------------------------------

    Multiple commenters, including individual commenters, a State 
Attorney General commenter, and consumer advocate commenters, 
identified other potential costs to consumers of the proposed 
electronic communications provisions. Several commenters noted that 
sending validation notices through a hyperlink would be problematic 
because of the security risks of clicking on links in emails from 
unknown senders. In these commenters' view, consumers would either 
decline to click on the links and so would not receive important 
disclosures, or they would click and be more likely to click on 
dangerous links in the future. Multiple commenters raised the concern 
that debt collectors would make it difficult to opt out of electronic 
communications.
    Under the final rule, for validation notices that are not provided 
in the initial communication, the requirement to comply with the E-SIGN 
Act will mean that consumers have consented to receive electronic 
communications before the validation notice is sent electronically, 
which should help to address these commenters' concerns. In addition, 
under the final rule (and consistent with the proposal), all required 
disclosures sent in writing or electronically must be sent in a manner 
reasonably expected to provide actual notice, and in a form that the 
consumer may keep and access later. This should reduce the risk that 
debt collectors will send required communications in a manner that 
consumers are unlikely to read or are unable to keep and access later. 
In addition, the final rule requires debt collectors that use 
electronic communications to provide consumers with a reasonable and 
simple method to opt out of such communications.
Potential Benefits and Costs to Covered Persons
    Debt collectors who send required disclosures electronically rather 
than sending letters could benefit because they would no longer have to 
print and mail disclosures. The Bureau estimates that the marginal cost 
of mailing a validation notice is approximately $0.50 to $0.80, whereas 
the marginal cost of sending the same communication by email would be 
approximately zero. The Bureau estimates that approximately 140 million 
validation notices are mailed each year.\687\ Assuming average

[[Page 76879]]

mailing costs of $0.65, this would result in annual validation notice 
mailing costs of approximately $91 million per year. If the rule leads 
a significant percentage of validation notices to be sent 
electronically rather than by postal mail, it could reduce mailing 
costs for debt collectors by millions or tens of millions of dollars 
per year.
---------------------------------------------------------------------------

    \687\ The assumption of 140 million validation notices per year 
is based on an estimated 49 million consumers contacted by debt 
collectors each year and an assumption that each receives an average 
of approximately 2.8 notices during the year.
---------------------------------------------------------------------------

    Debt collectors who use electronic communications may also benefit 
to the extent that some consumers are more likely to engage with debt 
collectors electronically than by telephone or letter. During the 
SBREFA process, several small entity representatives said that 
communication by email or text was preferred by some consumers and 
would be a more effective way to engage with them about their 
debts.\688\ One debt collector who currently uses email to contact 
consumers reports that its collection rates are greater than those of 
traditional debt collectors. While collection rates are likely to vary 
according to debt collector, type of debt, and related factors, 
clarifying the legality of electronic communications and disclosures 
will make it easier for debt collectors to test the efficacy of 
electronic communication and use it if they find it effective, 
potentially lowering costs and increasing the overall effectiveness of 
collections.
---------------------------------------------------------------------------

    \688\ See, e.g., Small Business Review Panel Report, supra note 
37, at appendix A.
---------------------------------------------------------------------------

    Some commenters, including consumer advocates and individual 
commenters, disagreed with the principle of saving debt collectors 
money by explicitly providing alternative procedures and safe harbors 
for electronic communication at, according to these commenters, the 
expense of consumers. As discussed above, the Bureau believes that some 
consumers will benefit from electronic communications, and that it can 
be appropriate to reduce regulatory burden even in cases where there 
may be countervailing costs to some consumers.
    The Bureau understands that few debt collectors currently 
communicate with consumers using electronic means. For debt collectors 
who do communicate with consumers electronically, the rule requires 
them to provide a method for opting out of such communications. The 
Bureau understands that such methods are common features of services 
that provide the ability to send electronic communications to 
consumers. The Bureau therefore does not anticipate that these 
requirements will impose significant costs on debt collectors that 
choose to communicate with consumers electronically.

H. Potential Reduction of Access by Consumers to Consumer Financial 
Products and Services

    This rule contains a mix of provisions that will either restrict or 
encourage certain debt collection activities, the net impact of which 
is uncertain. Economic theory indicates that it is possible for changes 
in debt collection rules, such as those contained in this final rule, 
to affect consumers' access to credit positively or negatively. Theory 
says that creditors should decide to extend credit based on the 
discounted expected value of the revenue stream from that extension of 
credit. This entails considering the possibility that the consumer will 
ultimately default. Specifically, the discounted expected value of an 
extension of credit will be the discounted present value of the stream 
of interest payments under the terms of the credit agreement, 
multiplied by the probability that the consumer pays, plus the 
discounted expected value of the creditor's recovery should the 
consumer default, times the probability of default. A profit-maximizing 
creditor will only extend credit to a given consumer if this expected 
value is positive.\689\ Anything that reduces the expected value of a 
creditor's recovery in the event of default, in general, will lower the 
discounted expected value of the extension of credit as a whole. This, 
in turn, may make potential extensions of credit with a discounted 
expected value only slightly above zero to become negative, such that a 
creditor will be less willing to extend credit. Likewise, anything that 
increases the expected value of a creditor's recovery increases the 
discounted expected value of the credit extension and may change the 
sign of the expected value of potential credit extensions that had 
negative expected values, such that a profit-maximizing creditor will 
be more willing to extend credit.
---------------------------------------------------------------------------

    \689\ For purposes of this discussion, the Bureau ignores risk 
preferences and assumes that creditors are risk neutral. That is, 
while a risk-averse decision maker would prefer a certain payment of 
$100 to an uncertain investment with expected value of $100, the 
discussion in this section assumes creditors are indifferent between 
these options. Creditors may be risk averse to some degree, such 
that they would prefer the certain investment to the gamble, or even 
risk seeking, such that they prefer a gamble with the prospect of a 
higher return. The theoretical argument described here does not 
hinge on creditors' risk preferences--the Bureau makes this 
assumption solely for ease of exposition.
---------------------------------------------------------------------------

    There are a few ways that the rule might increase or decrease the 
expected value of creditors' recovery in the event of a consumer's 
default, although theory alone gives no indication whether any of these 
actual effects on recovery would be large enough to have practical 
significance. The additional clarity provided by the final rule 
regarding limited-content messages and the use of electronic 
communications should facilitate some communications and thereby tend 
to increase the expected value of recovery, while the call frequency 
presumption may reduce the expected value of recovery. First, to the 
extent that the rule raises costs for debt collectors, debt collectors 
in theory could pass these costs on to creditors, whether by charging 
higher contingency fees to creditors or by paying lower prices to 
creditors when buying debt.\690\ Second, the rule may reduce the amount 
of expected recovery, either by making it less likely that consumers 
ultimately pay, or by reducing the amount that consumers pay in the 
event of a settlement. Finally, the rule could increase the time it 
takes for debt collectors to recover. A rational creditor would 
discount future income more the further in the future it occurs, and so 
later payment of the same amount of money would reduce the discounted 
expected value of the payment. Alternatively, the rule might lower 
costs for debt collectors, increase expected recovery and decrease the 
time it takes for debt collectors to recover amounts owed.\691\
---------------------------------------------------------------------------

    \690\ The Bureau notes that the degree of this pass-through 
depends on the relative degree of market power held by debt 
collectors and creditors. If creditors have more market power, debt 
collectors will have limited ability to demand higher fees or lower 
wholesale prices. Many comments on the Small Business Review Panel 
Outline indicated that debt collectors have little market power in 
their interactions with creditors, which is consistent with little 
pass-through of additional costs. See, e.g., Small Business Review 
Panel Report, supra note 37, at 16-17.
    \691\ Because creditors are generally not subject to the FDCPA, 
creditors could also respond to changes to debt collection rules by 
changing their decisions about whether to use third-party debt 
collectors or to collect debts themselves. The option to move debt 
collection activities ``in house'' could reduce any impact of the 
final rule on the costs of recovering unpaid debts.
---------------------------------------------------------------------------

    If the rule reduces the expected value of extending credit, 
creditors might respond in three ways: (1) Increase their standards for 
lending, with an aim of reducing the probability of default; (2) reduce 
the amount of credit offered, thus reducing their losses in the event 
of a default; or (3) increase interest rates or other costs of credit 
such as fees, thus increasing their revenue from consumers who do not 
default. Which of these mechanisms any given creditor would pursue with 
respect to any given credit transaction depends on the specifics of the 
particular credit market.

[[Page 76880]]

    A number of industry and other commenters agreed with the general 
principle that debt collection restrictions may reduce access to 
credit, although these comments generally did not specifically address 
the analysis above. One commenter argued that access to credit is not 
always a good thing and asserted that debts under collection are more 
likely to be the result of high-interest, predatory lending.
    The Bureau is aware of three empirical, academic studies using 
modern data and methods that estimate the magnitude of the effect of 
debt collection restrictions on access to credit,\692\ one by a 
researcher affiliated with the Federal Reserve Bank of Philadelphia 
(Fedaseyeu Study),\693\ another by researchers at the Federal Reserve 
Bank of New York (Fonseca Study),\694\ and a third by researchers at 
the Bureau (Romeo-Sandler Study).\695\ All three empirical studies use 
changes in State or local debt collection laws and regulations to 
examine the effect of those laws on measures of credit access.
---------------------------------------------------------------------------

    \692\ In addition, earlier empirical research examined the 
relationship between restrictions on creditor remedies and the 
supply of credit. See Thomas A. Durkin et al., Consumer Credit and 
the American Economy 521-525 (Oxford U. Press 2014) (summarizing 
this empirical literature).
    \693\ Viktar Fedaseyeu, Debt Collection Agencies and the Supply 
of Consumer Credit, Journal of Financial Economics, 138 (2020).
    \694\ Julia Fonseca et al., Access to Credit and Financial 
Health: Evaluating the Impact of Debt Collection (Fed. Reserve Bank 
of N.Y. Staff Report No. 814, 2017).
    \695\ Charles Romeo & Ryan Sandler, The Effect of Debt 
Collection Laws on Access to Credit, Journal of Public Economics, 
(Forthcoming).
---------------------------------------------------------------------------

    The Fedaseyeu Study used aggregate data on new credit card accounts 
combined with credit union call report data to examine the effect of 
various State law changes between 1999 and 2012 on the number of new 
revolving lines of credit opened each year in each State. This study 
finds that an additional restriction on debt collectors decreases the 
number of new accounts by about two accounts per quarter per 1000 
consumers residing in a State. For comparison, the data used for the 
Fedaseyeu Study showed an average of 120 new accounts per quarter per 
1000 consumers. The Fedaseyeu Study finds no effect of debt collection 
laws on the average credit card interest rate.\696\ However, the 
Fedaseyeu Study has some important limitations, particularly regarding 
extrapolating its results to the effects of the rule. Most importantly, 
it considers a wide variety of types of debt collection laws, including 
provisions with limited consumer protection aspects. Specifically, a 
majority of the debt collection law changes included in the Fedaseyeu 
Study largely involve changes to licensing fees, bonds, or levels of 
statutory penalties for violations, rather than prohibiting or 
requiring specific conduct, and each such change is given the same 
weight as a law governing conduct.\697\ Leaving aside the question of 
whether monetary adjustments under State law are of a comparable 
magnitude to the final rule under Federal law, the final rule focuses 
on conduct, rather than State licensing fees, bonds, or penalty 
amounts. As such, the results of the Fedaseyeu Study are less 
informative as to the effects of the final rule than they would be if 
the legal changes at issue were more comparable to those in the final 
rule. The data analysis in the Fedaseyeu Study is also somewhat limited 
by the data that were available. The aggregate data used make it 
difficult to control for confounding factors, such as differences in 
credit scores among consumers.
---------------------------------------------------------------------------

    \696\ In addition to the results described here, the Fedaseyeu 
Study also examines the effect of debt collection laws on the number 
of debt collection firms per capita and a measure of the recovery 
rate from debt collection. The Bureau omits discussion of these 
results here because they are not directly relevant to the question 
of consumer access--the Bureau discusses potential effects on debt 
collection firms above.
    \697\ Specifically, Fedaseyeu created an index of debt 
collection regulation, with one point added for a tightening in any 
one of six categories of regulation, including licensing 
requirements, bonding requirements, and the creation of a board to 
regulate third-party debt collectors.
---------------------------------------------------------------------------

    The Fonseca Study follows a similar design as the Fedaseyeu Study 
and examines the same set of State law changes, but it employs 
microdata from the Federal Reserve Bank of New York's Consumer Credit 
Panel, a nationally representative sample of credit records from 
Equifax. The main results of the Fonseca Study focus on the initial 
loan amounts or limits for automobile loans, credit cards, and non-
traditional finance loans.\698\ The study finds a moderate effect on 
automobile loan amounts, and a small effect on initial credit card 
limits. Like the Fedaseyeu Study, a major limitation of the Fonseca 
Study is its focus on licensing requirements, which are not directly 
comparable to the provisions in the rule. That the Fonseca Study finds 
larger effects on automobile loans than credit cards also raises 
questions. Although third-party debt collectors are sometimes involved 
in collecting on automobile loans when the loan balance exceeds the 
value of the car, most delinquent automobile debt is resolved through 
repossession. The fact that the Fonseca Study nonetheless found a 
moderately large effect on automobile balances suggests that possibly 
the study's methodology was not successful in isolating the causal 
effect of the debt collection laws, but instead was picking up other, 
unrelated, factors.
---------------------------------------------------------------------------

    \698\ The Fonseca Study defines non-traditional finance loans as 
``retail cards, personal loans and a residual loan category.'' Like 
the Fedaseyeu Study, the Fonseca Study also examines the effect of 
the debt collection laws studied on the number of debt collectors 
present in each State; again, the Bureau omits discussion of those 
results in this section.
---------------------------------------------------------------------------

    The Romeo-Sandler Study uses microdata from two large 
administrative datasets: The Bureau's Consumer Credit Panel (CCP) \699\ 
and Credit Card Database (CCDB).\700\ This study focuses on four recent 
major changes in State or local laws and regulations that imposed 
additional conduct requirements on either debt buyers or on all debt 
collectors.\701\ By focusing on the effect of changes to laws that 
regulate debt collector conduct, the results of the Romeo-Sandler Study 
are arguably more applicable to understanding effects of the rule, 
although the specific changes to State or local laws studied differ 
considerably from the provisions of the rule.
---------------------------------------------------------------------------

    \699\ Although similar in nature, the Bureau's CCP is not the 
same as the Federal Reserve Bank of New York's Consumer Credit 
Panel, discussed above. The Bureau's CCP is an anonymized sample of 
credit records from one of the three nationwide CRAs, containing a 
1-in-48 representative sample of all adults with a credit record. 
The data contain all credit accounts (trade lines) and hard 
inquiries on a consumer's credit report, with a unique, anonymous 
identifier linking records belonging to the same consumer. This CCP 
does not contain any personally identifying information on 
individual consumers.
    \700\ The CCDB is a monthly panel describing balances, payments, 
and interest rates on all credit card accounts issued by a set of 
major banks, representing roughly 90 percent of the credit card 
market. As with the CCP, accounts are identified by an anonymous 
identifier, and the CCDB does not contain any personally identifying 
information.
    \701\ New laws were put into effect in North Carolina in October 
2009 and California in January 2014; both of these laws focused 
exclusively on debt buyers. In addition, New York City, in April 
2010, and New York State, in December 2014, introduced new debt 
collection restrictions through administrative regulations. These 
updated restrictions generally require debt collectors to take 
additional steps before collecting, including requiring additional 
documents to substantiate debts before collections can begin, 
requiring disclosures or additional documentation before lawsuits 
can be filed to enforce a debt, and requiring disclosures once the 
State's statute of limitations has run.
---------------------------------------------------------------------------

    The Romeo-Sandler Study assesses three main outcomes: The 
probability that a credit inquiry results in an open credit card 
account, the credit limit on newly opened credit card accounts, and 
initial interest rates on credit card accounts. As discussed above, 
creditors might limit any of these factors to adjust for the effects of 
a regulation such as the final rule. The Romeo-Sandler Study

[[Page 76881]]

controls for individual consumers' credit scores and census tract 
demographic information and flexibly adjusts for State-level trends 
over time that might otherwise bias the estimates of an analysis. As 
with the Fedaseyeu Study and Fonseca Study, the Romeo-Sandler Study 
found effects of debt collection laws that are in the direction 
predicted by theory (i.e., increased regulation increases the cost or 
decreases the availability of credit), but the effects are quite small 
in magnitude. Using the CCP, this study found that additional 
regulations on debt collectors' conduct caused the success rate of a 
credit inquiry to decline by less than 0.02 percentage points off a 
base rate of about 43 percent. The study concludes that one can 
statistically reject that the effect was as large as 0.7 percentage 
points. The study provides some context for these effects by comparing 
them to the effect of changing consumers' credit scores. The study 
found that each credit score point increases the probability of a 
successful credit inquiry for subprime borrowers by about 0.2 
percentage points. Thus, the estimated effect of a debt collection law 
is equivalent to lowering consumers' credit scores by less than one 
point.\702\ The Romeo-Sandler Study finds similarly small effects on 
credit limits, which are again equivalent to a very small change in 
credit score. The magnitude of the credit limit effect in the Romeo-
Sandler Study is smaller than that found in the Fonseca Study.
---------------------------------------------------------------------------

    \702\ The study notes, as a point of comparison, that this 
effect is considerably smaller than that of routine errors in credit 
reports. See Fed. Trade Comm'n, Report to Congress Under Section 319 
of the Fair and Accurate Credit Transactions Act of 2003, at 43 
(Dec. 2012), https://www.ftc.gov/sites/default/files/documents/reports/section-319-fair-and-accurate-credit-transactions-act-2003-fifth-interim-federal-trade-commission/130211factareport.pdf.
---------------------------------------------------------------------------

    The Romeo-Sandler Study also analyzes the effect of debt collection 
laws on credit card interest rates using the CCDB. The study finds that 
initial interest rates increase slightly following a State or local 
debt collection law or regulation, but that this entirely takes the 
form of a reduced frequency of accounts with an introductory APR of 0 
percent--the level of positive initial interest rates are essentially 
unchanged.
    The Romeo-Sandler Study is also able to shed light on potential 
areas of heterogeneity in the effects of State debt collection laws 
because of its access to rich microdata. The Romeo-Sandler Study 
explores the effects separately for consumers with high and low credit 
scores and finds somewhat larger (although still small) effects on 
consumers with sub-prime credit scores. This is consistent with theory. 
Even within the sub-sample of consumers with sub-prime credit scores, 
the effect of the laws is equivalent to a three-point decrease in sub-
prime borrowers' credit scores.
    The studies discussed above provide evidence that regulation of 
debt collection can affect consumer access to credit in ways consistent 
with economic theory. However, these studies do not speak directly to 
the likely effects of the final rule on consumer credit markets. The 
State or local laws analyzed in these studies implement a different set 
of consumer protections than those in the final rule. The final rule 
includes some provisions likely to increase debt collector costs, but 
also includes other provisions, such as those related to limited-
content messages and email and text messages, which could lower costs 
for some debt collectors. In addition, creditors and debt collectors 
might react differently to changes in State or local collection 
standards than the standards in the Bureau's rules, which could affect 
all U.S. consumers. For instance, a nationwide creditor might choose 
not to adjust its credit standards in response to a change in only one 
State's debt collection laws, but might find it optimal to change its 
standards if similar laws applied nationwide or to a large share of its 
potential borrowers.
    The Bureau received several comments from industry and trade 
association commenters generally asserting that restrictions on debt 
collection would have negative effects on access to credit and cited 
one or more of the studies above as support for this contention. None 
of these commenters addressed the Bureau's interpretation of the 
studies as showing that past restrictions had a quantitatively small 
effect on credit access, and none disagreed with the Bureau's 
observations about the limitations of the Fedaseyeu Study and the 
Fonseca Study.

I. Potential Specific Impacts of the Rule

1. Depository Institutions and Credit Unions With $10 Billion or Less 
in Total Assets, as Described in Dodd-Frank Act Section 1026
    Depository institutions and credit unions are generally not debt 
collectors under the FDCPA and therefore are generally not covered by 
the rule. However, as noted above, creditors could experience indirect 
effects from the rule to the extent they hire FDCPA-covered debt 
collectors or sell debt in default to such debt collectors. Such 
creditors could experience higher costs if debt collectors' costs 
increase and if debt collectors are able to pass those costs on to 
creditors. The Bureau understands that many depository institutions and 
credit unions with $10 billion or less in total assets rely on FDCPA-
covered debt collectors to collect debts, but the Bureau does not have 
data indicating whether such institutions are more or less likely than 
other creditors to do so. The Bureau did not receive any comments on 
this issue with respect to the final rule.
2. Impact of the Rule on Consumers in Rural Areas
    Consumers in rural areas may experience benefits from the rule that 
are different in certain respects from the benefits experienced by 
consumers in general. For example, consumers in rural areas may be more 
likely to borrow from small local banks and credit unions that may be 
less likely to outsource debt collection to FDCPA-covered debt 
collectors. Debts owed by consumers in rural areas may also be more 
likely to be collected by smaller debt collectors, which the Bureau 
understands are less likely to place telephone calls to consumers in 
excess of the call frequencies in the final rule. The telephone call 
frequencies may therefore have less of an impact on consumers in rural 
areas. The Bureau requested interested parties to provide data, 
research results, and other factual information on how the proposed 
rule, if finalized, would affect consumers in rural areas, but the 
Bureau did not receive any comments on this subject.

VIII. Final Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct an Initial Regulatory Flexibility Analysis (IRFA) and a 
Final Regulatory Flexibility Analysis (FRFA) of any rule subject to 
notice-and-comment rulemaking requirements.\703\ Section 604(a) of the 
RFA sets forth the required elements of the FRFA. Section 604(a)(1) 
requires a statement of the need for, and objectives of, the rule.\704\ 
Section 604(a)(2) requires a statement of the significant issues raised 
by the public comments in response to the IRFA, a statement of the 
assessment of the agency of such issues, and a statement of any changes 
made in the proposed rule as a result of such comments. Section 
604(a)(3) requires the response of the agency to any comments filed by 
the Chief Counsel for Advocacy of the Small Business Administration in 
response to the proposed rule and a

[[Page 76882]]

detailed statement of any change made to the proposed rule in the final 
rule as a result of the comments. Section 604(a)(4) requires a 
description of and, where feasible, an estimate of the number of small 
entities to which the rule will apply.\705\ Section 604(a)(5) requires 
a description of the projected reporting, recordkeeping, and other 
compliance requirements of the rule, including an estimate of the 
classes of small entities that will be subject to the requirement and 
the types of professional skills necessary for the preparation of the 
report or record.\706\ Section 604(a)(6) requires a description of any 
significant alternatives to the rule that accomplish the stated 
objectives of applicable statutes and that minimize any significant 
economic impact of the rule on small entities.\707\ Finally, section 
604(a)(7) requires a description of the steps the agency has taken to 
minimize any additional cost of credit for small entities.\708\
---------------------------------------------------------------------------

    \703\ 5 U.S.C. 604(a).
    \704\ 5 U.S.C. 604(a)(1).
    \705\ 5 U.S.C. 604(a)(4).
    \706\ 5 U.S.C. 604(a)(5).
    \707\ 5 U.S.C. 604(a)(6).
    \708\ Id.
---------------------------------------------------------------------------

A. Statement of the Need for, and Objectives of, the Final Rule

    The Bureau issues this rule primarily pursuant to its authority 
under the FDCPA and the Dodd-Frank Act.\709\ The objectives of the rule 
are to answer certain interpretive questions that have arisen since the 
FDCPA's passage and to further the FDCPA's goals of eliminating abusive 
debt collection practices and ensuring that debt collectors who refrain 
from abusive debt collection practices are not competitively 
disadvantaged.\710\ 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 issues this rule to clarify how 
debt collectors may appropriately employ newer communication 
technologies in compliance with the FDCPA and to address other 
communications-related practices that currently pose a risk of harm to 
consumers, legal uncertainty to industry, or both. The Bureau intends 
that these clarifications will help to eliminate abusive debt 
collection practices and ensure that debt collectors who refrain from 
abusive debt collection practices are not competitively 
disadvantaged.\711\
---------------------------------------------------------------------------

    \709\ See part IV, supra.
    \710\ See 15 U.S.C. 1692(e).
    \711\ See id.
---------------------------------------------------------------------------

    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 that term is defined in the FDCPA.\712\ 
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.'' \713\ ``Federal consumer financial 
law'' includes title X of the Dodd-Frank Act and the FDCPA. The legal 
basis for the rule is discussed in detail in the legal authority 
analysis in part IV and in the section-by-section analysis in part V.
---------------------------------------------------------------------------

    \712\ 15 U.S.C. 1692l(d).
    \713\ 12 U.S.C. 5512(a).
---------------------------------------------------------------------------

B. Significant Issues Raised by the Public Comments in Response to the 
Initial Regulatory Flexibility Analysis

    The Bureau received comments on the IRFA from the Acting Chief 
Counsel for Advocacy of the Small Business Administration, which are 
discussed in the next section. The Bureau did not receive other 
comments that referenced the IRFA specifically; however, several 
commenters did raise issues about the burdens of the proposed rule's 
provisions, and the Bureau's response to these issues is discussed in 
parts V and VI above and in this part below.

C. Response to Any Comments Filed by the Chief Counsel for Advocacy of 
the Small Business Administration

    The Acting Chief Counsel for Advocacy of the Small Business 
Administration filed a public comment letter on the proposed rule that 
discusses both the IRFA and certain of the proposed requirements (the 
``SBA letter''). This section first responds to comments on the IRFA 
and then responds to the substantive comments on the proposed rule's 
provisions.
    The SBA letter notes that the IRFA did not estimate the cost to 
small entities of establishing systems to comply with the proposed 
telephone call frequency limits. As discussed below and in the section 
1022(b)(2) analysis, the Bureau does not have representative data that 
can be used to reliably measure the one-time costs of revising systems 
to comply with the telephone frequency provisions, but does discuss the 
qualitative information it has. The SBA letter notes that some small 
entity representatives said that one-time costs to revise systems could 
range from $35,000 to $200,000 and argues that these estimates should 
be included in the analysis. These estimates refer to costs for system 
improvements that would have been required to comply with information 
transfer requirements that were in the proposals under consideration 
during the SBREFA process but that were not included in the proposed 
rule.\714\ While some small entity representatives said that it could 
be costly to modify their systems to comply with the contact limits 
then under consideration, they emphasized that those costs could be 
high in part because of the need to design limits that apply to forms 
of communication other than telephone calls, such as mail. The 
frequency limits in the proposed rule were limited to telephone calls, 
as are the telephone call frequency provisions in the final rule. The 
fact that these provisions apply only to the placement of telephone 
calls and to telephone conversations should limit the system 
investments that are required to track call frequency, because call 
frequency is something that many debt collectors already track in light 
of the FDCPA's existing prohibition on ``causing a telephone to ring or 
engaging any person in telephone conversation repeatedly or 
continuously with intent to annoy, abuse, or harass any person at the 
called number.''
---------------------------------------------------------------------------

    \714\ Small Business Review Panel Report, supra note 37, at 21.
---------------------------------------------------------------------------

    The SBA letter also notes that the proposed rule could impose costs 
to read, understand, and train employees in new practices. The Bureau 
discussed these costs in the IRFA in the context of some specific 
provisions of the proposal; the Bureau has added a more general 
discussion of these costs in section E of the FRFA, below.
    The SBA letter also notes that the Bureau claims some provisions 
will cause no significant impact because those provisions are already 
part of debt collectors' business practices and argues that the Bureau 
should clarify what the benefit of such provisions is to consumers if 
they will not change debt collector practices. As discussed in part V 
and the section 1022(b)(2) analysis, the Bureau believes that, by 
clarifying the FDCPA's requirements, the rule will benefit both 
consumers and debt collectors, including small entities. Many market 
participants have identified a need for greater clarity in interpreting 
many of the FDCPA's provisions. For example, an industry comment letter 
emphasized that ambiguities in the FDCPA lead to unnecessary and costly 
litigation. The Bureau believes that there is a benefit to clarifying 
the FDCPA's requirements even if the vast majority of debt collectors 
follow practices that meet those requirements. The additional clarity 
helps those debt collectors to avoid unnecessary litigation and to have

[[Page 76883]]

confidence in what practices do and do not violate the law. The 
additional clarity also makes it easier to establish whether less 
scrupulous debt collectors have violated the statute and to hold them 
accountable, which benefits debt collectors who do comply with the law 
as well as consumers.
    The SBA letter points out that the proposed rule's PRA section 
estimated 1,029,500 burden hours and argues that this could translate 
into millions of dollars in recordkeeping and reporting costs. Most of 
this burden is not attributable to the rule itself but rather to the 
requirements of the FDCPA. As discussed in the supporting statement 
accompanying the Bureau's information collection request, the PRA 
estimates include the burden not only of complying with the new 
requirements introduced by the final rule but also of complying with 
the FDCPA itself. These burdens had not previously been accounted for 
under the PRA. Thus, the large majority of the estimated burden hours 
represent the burden of complying with FDCPA requirements that exist 
independent of the rule, in particular the requirement to provide a 
validation notice under section 809(a) of the FDCPA and the requirement 
to respond to consumer disputes under section 809(b) of the FDCPA. 
There are, of course, burdens associated with other information 
collections that are being introduced or clarified by the final rule, 
and those burdens are discussed in this FRFA as well as in the 
supporting statement.
    The SBA letter also expressed several concerns about specific 
provisions of the proposed rule and recommended changes to those 
provisions. These concerns and recommendations, and the Bureau's 
response, are discussed in the section-by-section analysis of the 
relevant provisions in part V.

D. Description and, Where Feasible, Provision of an Estimate of the 
Number of Small Entities to Which the Final Rule Will Apply

    As discussed in the Small Business Review Panel Report, for the 
purposes of assessing the impacts of the rule on small entities, 
``small entities'' is defined in the RFA to include small businesses, 
small nonprofit organizations, and small government jurisdictions.\715\ 
A ``small business'' is determined by application of SBA regulations in 
reference to the North American Industry Classification System (NAICS) 
classifications and size standards.\716\ Under such standards, the 
Small Business Review Panel (Panel) identified four categories of small 
entities that may be subject to the provisions: Collection agencies 
(NAICS 561440) with $16.5 million or less in annual receipts, debt 
buyers (NAICS 522298) with $41.5 million or less in annual revenues, 
collection law firms (NAICS 541110) with $12.0 million or less in 
annual receipts, and servicers who acquire accounts in default. These 
servicers include depository institutions (NAICS 522110, 522120, and 
522130) with $600 million or less in annual receipts or non-depository 
institutions (NAICS 522390) with $22.0 million or less in annual 
receipts. The Panel did not meet with small nonprofit organizations or 
small government jurisdictions.\717\
---------------------------------------------------------------------------

    \715\ 5 U.S.C. 601(6).
    \716\ The current SBA size standards are found on SBA's website, 
https://www.sba.gov/content/table-small-business-size-standards.
    \717\ Small Business Review Panel Report, supra note 37, at 29.
---------------------------------------------------------------------------

    The following table provides the Bureau's estimate of the number 
and types of entities that may be affected by the final rule:

                  Table 4--Estimated Number of Affected Entities and Small Entities by Category
----------------------------------------------------------------------------------------------------------------
                                                                                                    Estimated
                                                                              Estimated  total  number of  small-
            Category                      NAICS             Small-entity       number of debt     entity  debt
                                                              threshold          collectors        collectors
                                                                               within category   within category
----------------------------------------------------------------------------------------------------------------
Collection agencies.............  561440..............  $16.5 million in                 9,000             8,800
                                                         annual receipts.
Debt buyers.....................  522298..............  $41.5 million in                   330               300
                                                         annual receipts.
Collection law firms............  541110..............  $12.0 million in                 1,000               950
                                                         annual receipts.
Loan servicers..................  522110, 522120, and   $600 million in                    700               200
                                   522130                annual receipts for
                                   (depositories);       depository
                                   522390 (non-          institutions; $22.0
                                   depositories).        million or less for
                                                         non-depositories.
----------------------------------------------------------------------------------------------------------------

    Descriptions of the four categories:
    Collection agencies. The Census Bureau defines ``collection 
agencies'' (NAICS code 561440) as ``establishments primarily engaged in 
collecting payments for claims and remitting payments collected to 
their clients.'' \718\ In 2012, according to the Census Bureau, there 
were approximately 4,000 collection agencies with paid employees in the 
United States. Of these, the Bureau estimates that 3,800 collection 
agencies have $16.5 million or less in annual receipts and are 
therefore small entities.\719\ Census Bureau estimates indicate that in 
2012 there were also more than 5,000 collection agencies without 
employees, all of which are presumably small entities.
---------------------------------------------------------------------------

    \718\ As defined by the U.S. Census Bureau, collection agencies 
include entities that collect only commercial debt, and the rule 
applies only to debt collectors of consumer debt. However, the 
Bureau understands that relatively few collection agencies collect 
only commercial debt.
    \719\ The U.S. Census Bureau estimates average annual receipts 
of $95,000 per employee for collection agencies. Given this, the 
Bureau assumes that all firms with fewer than 100 employees and 
approximately one-half of the firms with 100 to 499 employees are 
small entities, which implies approximately 3,800 firms.
---------------------------------------------------------------------------

    Debt buyers. Debt buyers purchase delinquent accounts and attempt 
to collect amounts owed, either themselves or through agents. The 
Bureau estimates that there are approximately 330 debt buyers in the 
United States, and that a substantial majority of these are small 
entities.\720\ Many debt buyers--particularly those that are small 
entities--also collect debt on behalf of other debt owners.\721\
---------------------------------------------------------------------------

    \720\ The Receivables Management Association, the largest trade 
group for this industry segment, states that it has approximately 
300 debt buyer members and believes that 90 percent of debt buyers 
are current members.
    \721\ The Bureau understands that debt buyers are generally 
nondepositories that specialize in debt buying and, in some cases, 
debt collection. The Bureau understands that debt buyers that are 
not collection agencies would be classified by the Census Bureau 
under ``all other nondepository credit intermediation'' (NAICS Code 
522298).
---------------------------------------------------------------------------

    Collection law firms. The Bureau estimates that there are 1,000 law 
firms in the United States that either have as their principal purpose 
the collection of consumer debt or regularly collect consumer debt owed 
to others, so that the rule would apply to them. The

[[Page 76884]]

Bureau estimates that 95 percent of such law firms are small 
entities.\722\
---------------------------------------------------------------------------

    \722\ The primary trade association for collection attorneys, 
the National Creditors Bar Association (NARCA), states that it has 
approximately 600 law firm members, 95 percent of which are small 
entities. The Bureau estimates that approximately 60 percent of law 
firms that collect debt are NARCA members and that a similar 
fraction of non-member law firms are small entities.
---------------------------------------------------------------------------

    Loan servicers. Loan servicers would be covered by the rule if they 
acquire servicing of loans already in default.\723\ The Bureau believes 
that this is most likely to occur with regard to companies that service 
mortgage loans or student loans. The Bureau estimates that 
approximately 200 such mortgage servicers may be small entities and 
that few, if any, student loan servicers that would be covered by the 
rule are small.\724\
---------------------------------------------------------------------------

    \723\ The Bureau understands that loan servicers are generally 
classified under NAICS code 522390, ``Other Activities Related to 
Credit Intermediation.'' Some depository institutions (NAICS codes 
522110, 522120, and 522130) also service loans for others and may be 
covered by the rule.
    \724\ Based on the December 2015 Call Report data as compiled by 
SNL Financial (with respect to insured depositories) and December 
2015 data from the Nationwide Mortgage Licensing System and Registry 
(with respect to non-depositories), the Bureau estimates that there 
are approximately 9,000 small entities engaged in mortgage 
servicing, of which approximately 100 service more than 5,000 loans. 
See 81 FR 72160, 72363 (Oct. 19, 2016). The Bureau's estimate is 
based on the assumption that all those servicing more than 5,000 
loans may acquire servicing of loans when loans are in default and 
that at most 100 of those servicing 5,000 loans or fewer acquire 
servicing of loans when loans are in default.
---------------------------------------------------------------------------

E. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements of the Rule, Including an Estimate of Classes of Small 
Entities That Will Be Subject to the Requirement and the Type of 
Professional Skills Necessary for the Preparation of the Report or 
Record

    The final rule will not impose new reporting requirements, but it 
will impose new recordkeeping and compliance requirements on small 
entities subject to the rule. The requirements and the costs associated 
with them are discussed below. In addition to the specific costs 
discussed below, all small entities will incur costs to read the rule 
and incorporate its provisions into their policies and procedures, and 
small entities with employees will need to train employees in new 
policies and procedures. The extent of training required will depend on 
debt collectors' existing practices and on the roles performed by 
individual employees. Debt collectors employ an estimated 123,000 
workers.\725\ If, on average, the rule required an additional hour of 
training for each of these employees, at an average cost of $22 per 
hour, the total training cost would be approximately $2,700,000.\726\
---------------------------------------------------------------------------

    \725\ 2020 FDCPA Annual Report, supra note 9, at 7.
    \726\ The estimated hourly cost is based on an estimated wage of 
$15 per hour and taxes, benefits, and incentives of $7 per hour. See 
CFPB Debt Collection Operations Study, supra note 34, at 17 
(describing estimated debt collector wages ranging from $10 to $20 
per hour).
---------------------------------------------------------------------------

1. Recordkeeping Requirements
    Section 1006.100 generally will require FDCPA-covered debt 
collectors to retain evidence of compliance or noncompliance with the 
FDCPA and Regulation F starting on the date that the debt collector 
begins collection activity on a debt and ending three years after the 
debt collector's last collection activity on the debt. For recordings 
of telephone calls, Sec.  1006.100(b) establishes a different retention 
period, under which the debt collector must retain the recordings for 
three years after the dates of the telephone calls. Thus, in contrast 
to other record types, a debt collector could delete a call recording 
after three years and yet collection activity on the relevant account 
could continue after that time.
    The Bureau believes that most debt collectors are already 
maintaining records for three or more years for legal purposes and 
therefore will not incur significant costs as a result of the record 
retention requirement. During the SBREFA process, nearly all small 
entity representatives stated that their current practices are already 
consistent with a three-year record retention requirement, and some 
said that they retain records for longer periods ranging from five to 
ten years.\727\ Some participants said, however, that they retain some 
information for a shorter period of time such as one year. Such small 
entities would incur additional costs for data storage and to update 
systems to reflect the longer storage period.
---------------------------------------------------------------------------

    \727\ Small Business Review Panel Report, supra note 37, at 28.
---------------------------------------------------------------------------

2. Compliance Requirements
    The rule contains a number of compliance requirements that will 
apply to FDCPA-covered debt collectors who are small entities. The 
anticipated costs of compliance for small entities of these 
requirements are discussed below.
    In evaluating the potential impacts of the rule on small entities, 
the Bureau takes as a baseline conduct in the debt collection markets 
under the current legal framework governing debt collection. This 
includes debt collector practices as they currently exist, responding 
to the requirements of the FDCPA as currently interpreted and other 
Federal laws as well as State statutes and rules. This baseline 
represents the status quo from which the impacts of this rule will be 
evaluated.
    The Bureau requested that interested parties provide data and 
quantitative analysis of the benefits, costs, or impacts of the 
proposed rule on small entities but did not receive any comments on 
this subject.
    The discussion here is limited to the direct costs to small 
entities of complying with the requirements of the final rule. Other 
impacts, such as the impacts of reduced call frequency on debt 
collectors' ability to contact consumers, are discussed at length in 
part VII. The Bureau believes that, except where otherwise noted, the 
impacts discussed in part VII apply to small entities.
(a) Prohibited Communications With Consumers
    Section 1006.6(b) generally implements FDCPA section 805(a)'s 
prohibition on a debt collector communicating with a consumer at 
unusual or inconvenient times and places, with a consumer represented 
by an attorney, and at a consumer's place of employment. This section 
also expressly prohibits attempts to make such communications, which 
debt collectors already must avoid given that a successful attempt 
would be an FDCPA violation. Section 1006.14(h)(1) interprets FDCPA 
section 806's prohibition on a debt collector engaging in any conduct 
the natural consequence of which is to harass, oppress, or abuse any 
person in connection with the collection of a debt to prohibit debt 
collectors from communicating or attempting to communicate with a 
person through a medium of communication if the person has requested 
that the debt collector not use that medium to communicate with the 
person.
    Debt collectors are already prohibited from communicating with 
consumers at a time or place that is known or should be known to be 
inconvenient to the consumer. The Bureau therefore expects that debt 
collectors already keep track of what consumers tell them about the 
times and places that they find inconvenient and avoid communicating or 
attempting to communicate with consumers at those times or places. 
Similarly, the provisions regarding communication with attorneys and at 
the consumer's place of employment track requirements that debt 
collectors are already required to comply with under the FDCPA. The 
Bureau understands that many debt collectors

[[Page 76885]]

currently employ systems and business processes designed to limit 
communication attempts to consumers at inconvenient times and places 
and that many debt collectors also use these systems and processes to 
prevent communications with consumers through media that consumers have 
told them not to use. For these reasons, the Bureau does not expect 
that the provisions will significantly impact small entities subject to 
the final rule.
(b) Telephone Call Frequencies
    Section 1006.14(b)(1) prohibits a debt collector from, in 
connection with the collection of a debt, placing telephone calls or 
engaging in telephone conversations repeatedly or continuously with 
intent to annoy, abuse, or harass any person at the called number. 
Section 1006.14(b)(2)(i) provides for a rebuttable presumption of 
compliance for a debt collector who places a telephone call to a 
particular person in connection with the collection of a particular 
debt neither: (A) More than seven times within seven-consecutive-days; 
nor (B) within a period of seven-consecutive-days after having had a 
telephone conversation with the person in connection with the 
collection of such debt, subject to the exclusions in Sec.  
1006.14(b)(3). Section 1006.14(b)(2)(ii) sets forth a rebuttable 
presumption of a violation for a debt collector who places a telephone 
call to a particular person in connection with the collection of a 
particular debt: (A) More than seven times within seven-consecutive-
days; or (B) within a period of seven-consecutive-days after having had 
a telephone conversation with the person in connection with the 
collection of such debt.
    The provision imposes at least two categories of costs on small 
entities subject to the final rule. First, it means that debt 
collectors must track the frequency of outbound telephone calls, which 
will require many debt collectors to bear one-time costs to update 
their systems and train staff, and which will create ongoing costs for 
some debt collectors. Second, for some debt collectors, the provision 
will require a reduction in the frequency with which they place 
telephone calls to consumers, which could make it harder to reach 
consumers and delay or reduce collections revenue.
    With respect to one-time implementation costs, many debt collectors 
will incur costs to revise their systems to track telephone call 
frequencies. Such revisions could range from small updates to existing 
systems to the introduction of completely new systems and processes. 
The Bureau understands that larger debt collectors (including those 
that are small entities) generally already implement system limits on 
call frequency to comply with client contractual requirements, debt 
collector internal policies, and State and local laws.\728\ Such debt 
collectors might need only to revise existing calling restrictions to 
ensure that existing systems track telephone calls in a manner 
consistent with the new provision. Larger collection agencies might 
also need to respond to client requests for additional reports and 
audit items to verify that they comply with the provision, which could 
require these agencies to make systems changes to alter the reports and 
data they currently produce for their clients to review.
---------------------------------------------------------------------------

    \728\ Id. at 26.
---------------------------------------------------------------------------

    Smaller debt collectors and collection law firms are less likely to 
have existing systems that track or limit communication frequency and 
may therefore face larger costs to establish systems to do so. However, 
many smaller debt collectors report that they generally attempt to 
reach each consumer by telephone only one or two times per week and 
generally do not speak to a consumer more than one time per week, which 
suggests that their practices would afford them a presumption of 
compliance with respect to telephone call frequencies under the final 
rule.\729\ For such debt collectors, existing policies may be 
sufficient to ensure compliance with the provision, although they may 
incur one-time costs to establish systems for documenting compliance.
---------------------------------------------------------------------------

    \729\ CFPB Debt Collection Operations Study, supra note 34, at 
29.
---------------------------------------------------------------------------

(c) Prohibition on the Sale or Transfer of Certain Debts
    Section 1006.30(b)(1) prohibits a debt collector from selling, 
transferring for consideration, or placing for collection a debt if the 
debt collector knows or should know that the debt was paid or settled 
or discharged in bankruptcy. Section 1006.30(b)(2) creates several 
exceptions to this prohibition.
    The Bureau understands, based on its market knowledge and outreach 
to debt collectors, that debt collectors generally do not sell, 
transfer, or place for collection debts (other than in circumstances 
covered in the exceptions) if they have reason to believe the debts 
cannot be validly collected because they have been paid or settled or 
discharged in bankruptcy. The final rule provides an exception for 
transfer of secured debt that has been discharged in bankruptcy, 
provided that the debt collector provides notice to the transferee that 
the debt has been discharged. The Bureau understands that, if debt 
collectors transfer such secured debt, they generally already provide 
such notice in the ordinary course of business. Therefore, the Bureau 
does not expect this provision to create significant compliance costs 
for small entities.
(d) Electronic Disclosures and Communications
    The final rule includes provisions that clarify how debt collectors 
can communicate with consumers by email and text message in compliance 
with the FDCPA and the final rule. With respect to the validation 
notice, which most debt collectors currently provide by mail, Sec.  
1006.42 sets forth general standards for debt collectors to send 
notices electronically in a way that complies with the FDCPA's 
validation notice requirements. With respect to any communications 
about a debt, Sec.  1006.6(d)(3) through (5) specifies procedures that 
debt collectors may use to send an email or text message to a consumer 
about a debt such that the debt collector may obtain a safe harbor from 
civil liability under the FDCPA for an unintentional disclosure of the 
debt to a third party.
    The Bureau understands that few debt collectors currently 
communicate with consumers using electronic means. For debt collectors 
who do communicate with consumers electronically, the rule requires 
them to provide a method for opting out of such communications. The 
Bureau understands that such methods are common features of services 
that provide the ability to send electronic communications to 
consumers. The Bureau therefore does not anticipate that these 
requirements will impose significant costs on small entities that 
choose to communicate with consumers electronically.

F. Description of Any Significant Alternatives to the Final Rule That 
Accomplish the Stated Objectives of the Applicable Statutes and 
Minimize Any Significant Economic Impact of the Rule on Small Entities

    Section 604(a)(6) of the RFA requires the Bureau to describe in the 
FRFA any significant alternatives to the rule that accomplish the 
stated objectives of applicable statutes and that minimize any 
significant economic impact of the rule on small entities.\730\ In 
developing the rule, the Bureau has considered alternative provisions 
and believes that none of the alternatives considered would be as 
effective at accomplishing

[[Page 76886]]

the stated objectives of the FDCPA and the applicable provisions of 
title X of the Dodd-Frank Act while minimizing the impact of the rule 
on small entities.
---------------------------------------------------------------------------

    \730\ 5 U.S.C. 604(a)(6).
---------------------------------------------------------------------------

    In developing the rule, the Bureau considered a number of 
alternatives, including those considered as part of the SBREFA process 
and certain alternative provisions that were part of the proposal. Many 
of the alternatives considered would have resulted in greater costs to 
small entities than would the rule. For example, the Bureau considered 
limiting the frequency of contacts or contact attempts by any media, 
rather than by telephone calls only. Because such alternatives would 
result in a greater economic impact on small entities than the rule, 
they are not discussed here. The Bureau also considered alternatives 
that might have resulted in a smaller economic impact on small entities 
than the rule. Certain of these alternatives are briefly described and 
their impacts relative to the rule provisions are discussed below.
    Limitations on call frequency. The Bureau considered a proposal 
that would have limited the number of calls permitted to any particular 
telephone number (e.g., at most two calls to each of a consumer's 
landline, mobile, and work telephone numbers). The Bureau considered 
such a limit either instead of or in addition to an overall limit on 
the frequency of telephone calls to one consumer. Such an alternative 
could potentially reduce the effect on debt collector calls if it 
permitted more calls when consumers have multiple telephone numbers. 
The Bureau decided to propose an aggregate approach because of concerns 
that a more prescriptive, per-telephone number approach could less 
effectively carry out the consumer protection purposes of the FDCPA--
some consumers could receive (and some debt collectors could place) 
more telephone calls simply based on the number of telephone numbers 
that certain consumers happened to have (and that debt collectors 
happened to know about). Such an approach also could create incentives 
for debt collectors to, for example, place telephone calls to less 
convenient telephone numbers after exhausting their telephone calls to 
consumers' preferred numbers.
    The proposed rule would have established a bright-line limit on 
telephone call frequency rather than a rebuttable presumption. 
Specifically, proposed Sec.  1006.14(b)(1) set forth the general 
prohibition, Sec.  1006.14(b)(2) described bright-line frequency limits 
for telephone calls and telephone conversations during a seven-day 
period, and proposed Sec.  1006.14(b)(3), (4), and (5) described 
telephone calls excluded from the frequency limits, the effect of 
complying with the frequency limits, and a definition, respectively. 
The proposed rule's bright-line limit would impose lower costs on debt 
collectors than the final rule in some ways, although it would impose 
greater costs in other ways. Specifically, a bright-line limit on 
telephone call frequency would provide greater clarity to debt 
collectors about whether calling practices comply with the FDCPA. For 
example, under the proposal, a debt collector who did not place 
telephone calls to consumers more than seven times in a seven-day 
period would know that it was complying with the provision, whereas, 
under the final rule, a debt collector following the same practice 
would also need to consider whether the presumption of compliance might 
be rebutted in the case of particular consumers or accounts. This could 
result in greater compliance costs and greater risk of litigation for 
debt collectors compared with the proposal. On the other hand, the 
final rule may provide greater flexibility to debt collectors and 
additional benefits to consumers compared with the proposal. For debt 
collectors, the final rule may make it more possible to reach consumers 
if they are unable to make contact within seven call attempts in a week 
and additional calls would not be harassing.

G. Discussion of Impact on Cost of Credit for Small Entities

    Section 604(a)(6) of the RFA requires the Bureau to a description 
of the steps the agency has taken to minimize any additional cost of 
credit for small entities.\731\ The Bureau provided notification to the 
Chief Counsel for Advocacy of the Small Business Administration (Chief 
Counsel) that the Bureau would collect the advice and recommendations 
of the same small entity representatives identified in consultation 
with the Chief Counsel through the SBREFA process concerning any 
projected impact and the rule on the cost of credit for small entities. 
The Bureau sought to collect the advice and recommendations of the 
small entity representatives during the Small Business Review Panel 
meeting regarding the potential impact on the cost of business credit 
because, as small debt collectors with credit needs, the small entity 
representatives could provide valuable input on any such impact related 
to the rule.
---------------------------------------------------------------------------

    \731\ Id.
---------------------------------------------------------------------------

    The Bureau's Small Business Review Panel Outline asked small entity 
representatives to comment on how proposed provisions will affect cost 
of credit to small entities. The Bureau believes that the rule will 
have little impact on the cost of credit. However, it does recognize 
that consumer credit may become more expensive and less available as a 
result of some of these provisions, although the Romeo-Sandler Study 
indicates that the magnitude of the cost and availability of consumer 
credit from recent changes to State debt collection laws is small. Many 
small entities affected by the rule use consumer credit as a source of 
credit and may, therefore, see costs rise if consumer credit 
availability decreases. The Bureau does not expect this to be a large 
effect and does not anticipate measurable impact.\732\
---------------------------------------------------------------------------

    \732\ Charles Romeo & Ryan Sandler, The Effect of Debt 
Collection Laws on Access to Credit (Off. of Research, Bureau of 
Consumer Fin. Prot., Working Paper No. 2018-01, 2018).
---------------------------------------------------------------------------

    During the SBREFA process, several small entity representatives 
said that the proposals under consideration at that time could have an 
impact on the cost of credit for them and for their small business 
clients. Some small entity representatives said that they use lines of 
credit in their business and that regulations that raise their costs or 
reduce their revenue could mean they are unable to meet covenants in 
their loan agreements, causing lenders to reduce access to capital or 
increase their borrowing costs. The final rule's provisions are more 
limited than those that were under consideration during the SBREFA 
process and should not raise costs or reduce revenue to the same 
degree. The Bureau did not receive public comments on the effect of the 
proposed rule on the cost of credit for small entities.

IX. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA),\733\ Federal 
agencies are generally required to seek approval from the Office of 
Management and Budget (OMB) for information collection requirements 
prior to implementation. Under the PRA, the Bureau may not conduct or 
sponsor, and, notwithstanding any other provision of law, a person is 
not required to respond to, an information collection unless the 
information collection displays a valid control number assigned by OMB.
---------------------------------------------------------------------------

    \733\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Bureau conducts a preclearance consultation program to 
provide the general public and Federal agencies with an opportunity to 
comment on the information collection

[[Page 76887]]

requirements in accordance with the PRA. This helps ensure that the 
public understands the Bureau's requirements or instructions, 
respondents can provide the requested data in the desired format, 
reporting burden (time and financial resources) is minimized, 
collection instruments are clearly understood, and the Bureau can 
properly assess the impact of collection requirements on respondents.
    The final rule amends 12 CFR part 1006 (Regulation F), which 
implements the FDCPA. The Bureau's OMB control number for Regulation F 
is 3170-0056. This rule revises the information collection requirements 
contained in Regulation F that OMB has approved under that OMB control 
number.
    Under the final rule, the Bureau requires six information 
collection requirements in Regulation F:
    1. State application for exemption (current Sec.  1006.2, final 
rule Sec.  1006.108).
    2. Opt-out notice for electronic communications or attempts to 
communicate (final rule Sec.  1006.6(e)).
    3. Providing notice to transferee that secured debt was discharged 
in bankruptcy (final rule Sec.  1006.30(b)(2)(ii)).
    4. Responses to requests for original-creditor information (final 
rule Sec.  1006.38(c)).
    5. Responses to disputes (final rule Sec.  1006.38(d)(2)).
    6. Record retention (final rule Sec.  1006.100).
    The first collection, the State application for an exemption, is 
required to obtain a benefit and its respondents are exclusively State 
governments. The information collected under this collection regards 
State law, and so no issue of confidentiality arises. The remaining 
collections provide protection for consumers and will be mandatory. 
Because the Bureau does not collect any information in these remaining 
collections, no issue of confidentiality arises. The likely respondents 
are for-profit businesses that are FDCPA-covered debt collectors, 
including contingency debt collection agencies, debt buyers, law firms, 
and loan servicers, or State governments in the case of applications 
under Sec.  1006.2 (final Sec.  1006.108).
    The collections of information contained in this rule, and 
identified as such, have been submitted to OMB for review under section 
3507(d) of the PRA. A complete description of the information 
collection requirements, including the burden estimate methods, is 
provided in the information collection request (ICR) that the Bureau 
has submitted to OMB under the requirements of the PRA. The Bureau will 
publish a separate notice in the Federal Register when these 
information collections have been approved by OMB.
    Please send your comments to the Office of Information and 
Regulatory Affairs, OMB, Attention: Desk Officer for the Bureau of 
Consumer Financial Protection. Send these comments by email to 
[email protected] or by fax to 202-395-6974. If you wish to 
share your comments with the Bureau, please send a copy of these 
comments as described in the Addresses section above. The ICR submitted 
to OMB requesting approval under the PRA for the information collection 
requirements contained herein is available at www.regulations.gov as 
well as on OMB's public-facing docket at www.reginfo.gov.
    Title of Collection: Regulation F: Fair Debt Collection Practices 
Act.
    OMB Control Number: 3170-0056.
    Type of Review: Revision of a currently approved collection.
    Affected Public: Private Sector; State Governments.
    Estimated Number of Respondents: 12,027.
    Estimated Total Annual Burden Hours: 860,500.
    The Bureau has a continuing interest in the public's opinion of its 
collections of information. At any time, comments regarding the burden 
estimate, or any other aspect of the information collection, including 
suggestions for reducing the burden, may be sent to the Consumer 
Financial Protection Bureau (Attention: PRA Office), 1700 G Street NW, 
Washington, DC 20552, or by email to CFPB [email protected].
    Where applicable, the Bureau will display the control number 
assigned by OMB to any documents associated with any information 
collection requirements adopted in this rule.

X. Congressional Review Act

    Pursuant to the Congressional Review Act,\734\ the Bureau will 
submit a report containing this rule and other required information to 
the U.S. Senate, the U.S. House of Representatives, and the Comptroller 
General of the United States at least 60 days prior to the rule's 
published effective date. The Office of Information and Regulatory 
Affairs has designated this rule as a ``major rule'' as defined by 5 
U.S.C. 804(2).
---------------------------------------------------------------------------

    \734\ 5 U.S.C. 801 et seq.
---------------------------------------------------------------------------

XI. Signing Authority

    The Director of the Bureau, Kathleen L. Kraninger, having reviewed 
and approved this document, is delegating the authority to 
electronically sign this document to Laura Galban, a Bureau Federal 
Register Liaison, for purposes of publication in the Federal Register.

List of Subjects in 12 CFR Part 1006

    Administrative practice and procedure, Consumer protection, Credit, 
Debt collection, Intergovernmental relations.

Authority and Issuance

0
For the reasons set forth above, the Bureau revises Regulation F, 12 
CFR part 1006, to read as follows:

PART 1006--DEBT COLLECTION PRACTICES (REGULATION F)

Subpart A--General
Sec.
1006.1 Authority, purpose, and coverage.
1006.2 Definitions.
Subpart B--Rules for FDCPA Debt Collectors
1006.6 Communications in connection with debt collection.
1006.10 Acquisition of location information.
1006.14 Harassing, oppressive, or abusive conduct.
1006.18 False, deceptive, or misleading representations or means.
1006.22 Unfair or unconscionable means.
1006.26 [Reserved]
1006.30 Other prohibited practices.
1006.34 [Reserved]
1006.38 Disputes and requests for original-creditor information.
1006.42 Sending required disclosures.
Subpart C--[Reserved]
Subpart D--Miscellaneous
1006.100 Record retention.
1006.104 Relation to State laws.
1006.108 Exemption for State regulation.
Appendix A to Part 1006--Procedures for State Application for 
Exemption From the Provisions of the Act
Appendix B to Part 1006--[Reserved]
Appendix C to Part 1006--Issuance of Advisory Opinions
Supplement I to Part 1006--Official Interpretations

    Authority:  12 U.S.C. 5512, 5514(b), 5532; 15 U.S.C. 1692l(d), 
1692o, 7004.

Subpart A--General


Sec.  1006.1  Authority, purpose, and coverage.

    (a) Authority. This part, known as Regulation F, is issued by the 
Bureau of Consumer Financial Protection pursuant to sections 814(d) and 
817 of the Fair Debt Collection Practices Act (FDCPA or Act), 15 U.S.C. 
1692l(d), 1692o; title X of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (Dodd-Frank Act), 12 U.S.C. 5481 et seq.; and 
paragraph (b)(1) of section 104 of the Electronic Signatures in Global 
and National Commerce Act (E-SIGN Act), 15 U.S.C. 7004.

[[Page 76888]]

    (b) Purpose. This part carries out the purposes of the FDCPA, which 
include eliminating abusive debt collection practices by debt 
collectors, ensuring that debt collectors who refrain from using 
abusive debt collection practices are not competitively disadvantaged, 
and promoting consistent State action to protect consumers against debt 
collection abuses. This part also prescribes requirements to ensure 
that certain features of debt collection are disclosed fully, 
accurately, and effectively to consumers in a manner that permits 
consumers to understand the costs, benefits, and risks associated with 
debt collection, in light of the facts and circumstances. Finally, this 
part imposes record retention requirements to enable the Bureau to 
administer and carry out the purposes of the FDCPA, the Dodd-Frank Act, 
and this part, as well as to prevent evasions thereof. The record 
retention requirements also will facilitate supervision of debt 
collectors and the assessment and detection of risks to consumers.
    (c) Coverage. (1) Except as provided in Sec.  1006.108 and appendix 
A of this part regarding applications for State exemptions from the 
FDCPA, this part applies to debt collectors, as defined in Sec.  
1006.2(i), other than a person excluded from coverage by section 
1029(a) of the Consumer Financial Protection Act of 2010, title X of 
the Dodd-Frank Act (12 U.S.C. 5519(a)).
    (2) [Reserved]


Sec.  1006.2  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Act or FDCPA means the Fair Debt Collection Practices Act (15 
U.S.C. 1692 et seq.).
    (b) 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. An attempt 
to communicate includes leaving a limited-content message, as defined 
in paragraph (j) of this section.
    (c) Bureau means the Bureau of Consumer Financial Protection.
    (d) Communicate or communication means the conveying of information 
regarding a debt directly or indirectly to any person through any 
medium.
    (e) Consumer means any natural person obligated or allegedly 
obligated to pay any debt. For purposes of Sec.  1006.6, the term 
consumer includes the persons described in Sec.  1006.6(a). The Bureau 
may further define this term by regulation to clarify its application 
when the consumer is deceased.
    (f) [Reserved]
    (g) Creditor means any person who offers or extends credit creating 
a debt or to whom a debt is owed. The term creditor does not, however, 
include any person to the extent that such person receives an 
assignment or transfer of a debt in default solely to facilitate 
collection of the debt for another.
    (h) Debt means 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.
    (i)(1) Debt collector means any person who uses any instrumentality 
of interstate commerce or mail in any business the principal purpose of 
which is the collection of debts, or who regularly collects or attempts 
to collect, directly or indirectly, debts owed or due, or asserted to 
be owed or due, to another. Notwithstanding paragraph (i)(2)(vi) of 
this section, the term debt collector includes any creditor that, in 
the process of collecting its own debts, uses any name other than its 
own that would indicate that a third person is collecting or attempting 
to collect such debts. For purposes of Sec.  1006.22(e), the term also 
includes any person who uses any instrumentality of interstate commerce 
or mail in any business the principal purpose of which is the 
enforcement of security interests.
    (2) The term debt collector excludes:
    (i) Any officer or employee of a creditor while the officer or 
employee is collecting debts for the creditor in the creditor's name;
    (ii) Any person while acting as a debt collector for another person 
if:
    (A) The person acting as a debt collector does so only for persons 
with whom the person acting as a debt collector is related by common 
ownership or affiliated by corporate control; and
    (B) The principal business of the person acting as a debt collector 
is not the collection of debts;
    (iii) Any officer or employee of the United States or any State to 
the extent that collecting or attempting to collect any debt is in the 
performance of the officer's or employee's official duties;
    (iv) Any person while serving or attempting to serve legal process 
on any other person in connection with the judicial enforcement of any 
debt;
    (v) Any nonprofit organization that, at the request of consumers, 
performs bona fide consumer credit counseling and assists consumers in 
liquidating their debts by receiving payment from such consumers and 
distributing such amounts to creditors;
    (vi) Any person collecting or attempting to collect any debt owed 
or due, or asserted to be owed or due to another, to the extent such 
debt collection activity:
    (A) Is incidental to a bona fide fiduciary obligation or a bona 
fide escrow arrangement;
    (B) Concerns a debt that such person originated;
    (C) Concerns a debt that was not in default at the time such person 
obtained it; or
    (D) Concerns a debt that such person obtained as a secured party in 
a commercial credit transaction involving the creditor; and
    (vii) A private entity, to the extent such private entity is 
operating a bad check enforcement program that complies with section 
818 of the Act.
    (j) Limited-content message means a voicemail message for a 
consumer that includes all of the content described in paragraph (j)(1) 
of this section, that may include any of the content described in 
paragraph (j)(2) of this section, and that includes no other content.
    (1) Required content. A limited-content message is a voicemail 
message for a consumer that includes:
    (i) A business name for the debt collector that does not indicate 
that the debt collector is in the debt collection business;
    (ii) A request that the consumer reply to the message;
    (iii) The name or names of one or more natural persons whom the 
consumer can contact to reply to the debt collector; and
    (iv) A telephone number or numbers that the consumer can use to 
reply to the debt collector.
    (2) Optional content. In addition to the content described in 
paragraph (j)(1) of this section, a limited-content message may include 
one or more of the following:
    (i) A salutation;
    (ii) The date and time of the message;
    (iii) Suggested dates and times for the consumer to reply to the 
message; and
    (iv) A statement that if the consumer replies, the consumer may 
speak to any of the company's representatives or associates.
    (k) Person includes natural persons, corporations, companies, 
associations, firms, partnerships, societies, and joint stock 
companies.
    (l) State means any State, territory, or possession of the United 
States, the District of Columbia, the Commonwealth of Puerto Rico, or 
any political subdivision of any of the foregoing.

[[Page 76889]]

Subpart B--Rules for FDCPA Debt Collectors


Sec.  1006.6  Communications in connection with debt collection.

    (a) Definition. For purposes of this section, the term consumer 
includes:
    (1) The consumer's spouse;
    (2) The consumer's parent, if the consumer is a minor;
    (3) The consumer's legal guardian;
    (4) The executor or administrator of the consumer's estate, if the 
consumer is deceased; and
    (5) A confirmed successor in interest, as defined in Regulation X, 
12 CFR 1024.31, or Regulation Z, 12 CFR 1026.2(a)(27)(ii).
    (b) Communications with a consumer--(1) Prohibitions regarding 
unusual or inconvenient times or places. Except as provided in 
paragraph (b)(4) of this section, a debt collector must not communicate 
or attempt to communicate with a consumer in connection with the 
collection of any debt:
    (i) At any unusual time, or at a time that the debt collector knows 
or should know is inconvenient to the consumer. In the absence of the 
debt collector's knowledge of circumstances to the contrary, a time 
before 8:00 a.m. and after 9:00 p.m. local time at the consumer's 
location is inconvenient; or
    (ii) At any unusual place, or at a place that the debt collector 
knows or should know is inconvenient to the consumer.
    (2) Prohibitions regarding consumer represented by an attorney. 
Except as provided in paragraph (b)(4) of this section, a debt 
collector must not communicate or attempt to communicate with a 
consumer in connection with the collection of any debt if the debt 
collector knows the consumer is represented by an attorney with respect 
to such debt and knows, or can readily ascertain, the attorney's name 
and address, unless the attorney:
    (i) Fails to respond within a reasonable period of time to a 
communication from the debt collector; or
    (ii) Consents to the debt collector's direct communication with the 
consumer.
    (3) Prohibitions regarding consumer's place of employment. Except 
as provided in paragraph (b)(4) of this section, a debt collector must 
not communicate or attempt to communicate with a consumer in connection 
with the collection of any debt at the consumer's place of employment, 
if the debt collector knows or has reason to know that the consumer's 
employer prohibits the consumer from receiving such communication.
    (4) Exceptions. The prohibitions in paragraphs (b)(1) through (3) 
of this section do not apply when a debt collector communicates or 
attempts to communicate with a consumer in connection with the 
collection of any debt with:
    (i) The prior consent of the consumer, given directly to the debt 
collector during a communication that does not violate paragraphs 
(b)(1) through (3) of this section; or
    (ii) The express permission of a court of competent jurisdiction.
    (c) Communications with a consumer--after refusal to pay or cease 
communication notice--(1) Prohibition. Except as provided in paragraph 
(c)(2) of this section, if a consumer notifies a debt collector in 
writing that the consumer refuses to pay a debt or that the consumer 
wants the debt collector to cease further communication with the 
consumer, the debt collector must not communicate or attempt to 
communicate further with the consumer with respect to such debt.
    (2) Exceptions. The prohibition in paragraph (c)(1) of this section 
does not apply when a debt collector communicates or attempts to 
communicate further with a consumer with respect to such debt:
    (i) To advise the consumer that the debt collector's further 
efforts are being terminated;
    (ii) To notify the consumer that the debt collector or creditor may 
invoke specified remedies that the debt collector or creditor 
ordinarily invokes; or
    (iii) Where applicable, to notify the consumer that the debt 
collector or creditor intends to invoke a specified remedy.
    (d) Communications with third parties--(1) Prohibitions. Except as 
provided in paragraph (d)(2) of this section, a debt collector must not 
communicate, in connection with the collection of any debt, with any 
person other than:
    (i) The consumer;
    (ii) The consumer's attorney;
    (iii) A consumer reporting agency, if otherwise permitted by law;
    (iv) The creditor;
    (v) The creditor's attorney; or
    (vi) The debt collector's attorney.
    (2) Exceptions. The prohibition in paragraph (d)(1) of this section 
does not apply when a debt collector communicates, in connection with 
the collection of any debt, with a person:
    (i) For the purpose of acquiring location information, as provided 
in Sec.  1006.10;
    (ii) With the prior consent of the consumer given directly to the 
debt collector;
    (iii) With the express permission of a court of competent 
jurisdiction; or
    (iv) As reasonably necessary to effectuate a postjudgment judicial 
remedy.
    (3) Reasonable procedures for email and text message 
communications. A debt collector maintains procedures that are 
reasonably adapted, for purposes of FDCPA section 813(c), to avoid a 
bona fide error in sending an email or text message communication that 
would result in a violation of paragraph (d)(1) of this section if 
those procedures include steps to reasonably confirm and document that:
    (i) The debt collector communicated with the consumer by sending an 
email to an email address described in paragraph (d)(4) of this section 
or a text message to a telephone number described in paragraph (d)(5) 
of this section; and
    (ii) The debt collector did not communicate with the consumer by 
sending an email to an email address or a text message to a telephone 
number that the debt collector knows has led to a disclosure prohibited 
by paragraph (d)(1) of this section.
    (4) Procedures for email addresses. For purposes of paragraph 
(d)(3)(i) of this section, a debt collector may send an email to an 
email address if:
    (i) Procedures based on communication between the consumer and the 
debt collector. (A) The consumer used the email address to communicate 
with the debt collector about the debt and the consumer has not since 
opted out of communications to that email address; or
    (B) The debt collector has received directly from the consumer 
prior consent to use the email address to communicate with the consumer 
about the debt and the consumer has not withdrawn that consent; or
    (ii) Procedures based on communication by the creditor. (A) A 
creditor obtained the email address from the consumer;
    (B) The creditor used the email address to communicate with the 
consumer about the account and the consumer did not ask the creditor to 
stop using it;
    (C) Before the debt collector used the email address to communicate 
with the consumer about the debt, the creditor sent the consumer a 
written or electronic notice, to an address the creditor obtained from 
the consumer and used to communicate with the consumer about the 
account, that clearly and conspicuously disclosed:
    (1) That the debt has been or will be transferred to the debt 
collector;

[[Page 76890]]

    (2) The email address and the fact that the debt collector might 
use the email address to communicate with the consumer about the debt;
    (3) That, if others have access to the email address, then it is 
possible they may see the emails;
    (4) Instructions for a reasonable and simple method by which the 
consumer could opt out of such communications; and
    (5) The date by which the debt collector or the creditor must 
receive the consumer's request to opt out, which must be at least 35 
days after the date the notice is sent;
    (D) The opt-out period provided under paragraph (d)(4)(ii)(C)(5) of 
this section has expired and the consumer has not opted out; and
    (E) The email address has a domain name that is available for use 
by the general public, unless the debt collector knows the address is 
provided by the consumer's employer.
    (iii) Procedures based on communication by the prior debt 
collector. (A) Any prior debt collector obtained the email address in 
accordance with paragraph (d)(4)(i) or (ii) of this section;
    (B) The immediately prior debt collector used the email address to 
communicate with the consumer about the debt; and
    (C) The consumer did not opt out of such communications.
    (5) Procedures for telephone numbers for text messages. For 
purposes of paragraph (d)(3)(i) of this section, a debt collector may 
send a text message to a telephone number if:
    (i) The consumer used the telephone number to communicate with the 
debt collector about the debt by text message, the consumer has not 
since opted out of text message communications to that telephone 
number, and within the past 60 days either:
    (A) The consumer sent the text message described in paragraph 
(d)(5)(i) of this section or a new text message to the debt collector 
from that telephone number; or
    (B) The debt collector confirmed, using a complete and accurate 
database, that the telephone number has not been reassigned from the 
consumer to another user since the date of the consumer's most recent 
text message to the debt collector from that telephone number; or
    (ii) The debt collector received directly from the consumer prior 
consent to use the telephone number to communicate with the consumer 
about the debt by text message, the consumer has not since withdrawn 
that consent, and within the past 60 days the debt collector either:
    (A) Obtained the prior consent described in paragraph (d)(5)(ii) of 
this section or renewed consent from the consumer; or
    (B) Confirmed, using a complete and accurate database, that the 
telephone number has not been reassigned from the consumer to another 
user since the date of the consumer's most recent consent to use that 
telephone number to communicate about the debt by text message.
    (e) Opt-out notice for electronic communications or attempts to 
communicate. A debt collector who communicates or attempts to 
communicate with a consumer electronically in connection with the 
collection of a debt using a specific email address, telephone number 
for text messages, or other electronic-medium address must include in 
such communication or attempt to communicate a clear and conspicuous 
statement describing a reasonable and simple method by which the 
consumer can opt out of further electronic communications or attempts 
to communicate by the debt collector to that address or telephone 
number. The debt collector may not require, directly or indirectly, 
that the consumer, in order to opt out, pay any fee to the debt 
collector or provide any information other than the consumer's opt-out 
preferences and the email address, telephone number for text messages, 
or other electronic-medium address subject to the opt-out request.


Sec.  1006.10  Acquisition of location information.

    (a) Definition. The term location information means a consumer's:
    (1) Place of abode and telephone number at such place; or
    (2) Place of employment.
    (b) Form and content of location communications. A debt collector 
communicating with a person other than the consumer for the purpose of 
acquiring location information must:
    (1) Identify himself or herself individually by name, state that he 
or she is confirming or correcting the consumer's location information, 
and, only if expressly requested, identify his or her employer;
    (2) Not state that the consumer owes any debt;
    (3) Not communicate by postcard;
    (4) Not use any language or symbol on any envelope or in the 
contents of any communication by mail indicating that the debt 
collector is in the debt collection business or that the communication 
relates to the collection of a debt; and
    (5) After the debt collector knows the consumer is represented by 
an attorney with regard to the subject debt and has knowledge of, or 
can readily ascertain, such attorney's name and address, not 
communicate with any person other than that attorney, unless the 
attorney fails to respond to the debt collector's communication within 
a reasonable period of time.
    (c) Frequency of location communications. In addition to complying 
with Sec.  1006.14(b)(1), a debt collector communicating with any 
person other than the consumer for the purpose of acquiring location 
information about the consumer must not communicate more than once with 
such person unless requested to do so by such person, or unless the 
debt collector reasonably believes that the earlier response of such 
person is erroneous or incomplete and that such person now has correct 
or complete location information.


Sec.  1006.14  Harassing, oppressive, or abusive conduct.

    (a) In general. A debt collector must not engage in any conduct the 
natural consequence of which is to harass, oppress, or abuse any person 
in connection with the collection of a debt, including, but not limited 
to, the conduct described in paragraphs (b) through (h) of this 
section.
    (b) Repeated or continuous telephone calls or telephone 
conversations--(1) In general. In connection with the collection of a 
debt, a debt collector must not place telephone calls or engage any 
person in telephone conversation repeatedly or continuously with intent 
to annoy, abuse, or harass any person at the called number.
    (2) Telephone call frequencies; presumptions of compliance and 
violation. (i) Subject to the exclusions in paragraph (b)(3) of this 
section, a debt collector is presumed to comply with paragraph (b)(1) 
of this section and FDCPA section 806(5) (15 U.S.C. 1692d(5)) if the 
debt collector places a telephone call to a particular person in 
connection with the collection of a particular debt neither:
    (A) More than seven times within seven consecutive days; nor
    (B) Within a period of seven consecutive days after having had a 
telephone conversation with the person in connection with the 
collection of such debt. The date of the telephone conversation is the 
first day of the seven-consecutive-day period.
    (ii) Subject to the exclusions in paragraph (b)(3) of this section, 
a debt

[[Page 76891]]

collector is presumed to violate paragraph (b)(1) of this section and 
FDCPA section 806(5) if the debt collector places a telephone call to a 
particular person in connection with the collection of a particular 
debt in excess of either of the telephone call frequencies described in 
paragraph (b)(2)(i) of this section.
    (3) Certain telephone calls excluded from the telephone call 
frequencies. Telephone calls placed to a person do not count toward the 
telephone call frequencies described in paragraph (b)(2)(i) of this 
section if they are:
    (i) Placed with such person's prior consent given directly to the 
debt collector and within a period no longer than seven consecutive 
days after receiving the prior consent, with the date the debt 
collector receives prior consent counting as the first day of the 
seven-consecutive-day period;
    (ii) Not connected to the dialed number; or
    (iii) Placed to the persons described in Sec.  1006.6(d)(1)(ii) 
through (vi).
    (4) Definition. For purposes of this paragraph (b), particular debt 
means each of a consumer's debts in collection. However, in the case of 
student loan debts, the term particular debt means all student loan 
debts that a consumer owes or allegedly owes that were serviced under a 
single account number at the time the debts were obtained by a debt 
collector.
    (c) Violence or other criminal means. In connection with the 
collection of a debt, a debt collector must not use or threaten to use 
violence or other criminal means to harm the physical person, 
reputation, or property of any person.
    (d) Obscene or profane language. In connection with the collection 
of a debt, a debt collector must not use obscene or profane language, 
or language the natural consequence of which is to abuse the hearer or 
reader.
    (e) Debtor's list. In connection with the collection of a debt, a 
debt collector must not publish a list of consumers who allegedly 
refuse to pay debts, except to a consumer reporting agency or to 
persons meeting the requirements of sections 603(f) or 604(a)(3) of the 
Fair Credit Reporting Act (15 U.S.C. 1681a(f) or 1681b(a)(3)).
    (f) Coercive advertisements. In connection with the collection of a 
debt, a debt collector must not advertise for sale any debt to coerce 
payment of the debt.
    (g) Meaningful disclosure of identity. In connection with the 
collection of a debt, a debt collector must not place telephone calls 
without meaningfully disclosing the caller's identity, except as 
provided in Sec.  1006.10.
    (h) Prohibited communication media--(1) In general. In connection 
with the collection of any debt, a debt collector must not communicate 
or attempt to communicate with a person through a medium of 
communication if the person has requested that the debt collector not 
use that medium to communicate with the person.
    (2) Exceptions. Notwithstanding the prohibition in paragraph (h)(1) 
of this section:
    (i) If a person opts out of receiving electronic communications 
from a debt collector, a debt collector may send an electronic 
confirmation of the person's request to opt out, provided that the 
electronic confirmation contains no information other than a statement 
confirming the person's request and that the debt collector will honor 
it;
    (ii) If a person initiates contact with a debt collector using a 
medium of communication that the person previously requested the debt 
collector not use, the debt collector may respond once through the same 
medium of communication used by the person; or
    (iii) 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.


Sec.  1006.18  False, deceptive, or misleading representations or 
means.

    (a) In general. A debt collector must not use any false, deceptive, 
or misleading representation or means in connection with the collection 
of any debt, including, but not limited to, the conduct described in 
paragraphs (b) through (d) of this section.
    (b) False, deceptive, or misleading representations. (1) A debt 
collector must not falsely represent or imply that:
    (i) The debt collector is vouched for, bonded by, or affiliated 
with the United States or any State, including through the use of any 
badge, uniform, or facsimile thereof.
    (ii) The debt collector operates or is employed by a consumer 
reporting agency, as defined by section 603(f) of the Fair Credit 
Reporting Act (15 U.S.C. 1681a(f)).
    (iii) Any individual is an attorney or that any communication is 
from an attorney.
    (iv) The consumer committed any crime or other conduct in order to 
disgrace the consumer.
    (v) A sale, referral, or other transfer of any interest in a debt 
causes or will cause the consumer to:
    (A) Lose any claim or defense to payment of the debt; or
    (B) Become subject to any practice prohibited by this part.
    (vi) Accounts have been turned over to innocent purchasers for 
value.
    (vii) Documents are legal process.
    (viii) Documents are not legal process forms or do not require 
action by the consumer.
    (2) A debt collector must not falsely represent:
    (i) The character, amount, or legal status of any debt.
    (ii) Any services rendered, or compensation that may be lawfully 
received, by any debt collector for the collection of a debt.
    (3) A debt collector must not represent or imply that nonpayment of 
any debt will result in the arrest or imprisonment of any person or the 
seizure, garnishment, attachment, or sale of any property or wages of 
any person unless such action is lawful and the debt collector or 
creditor intends to take such action.
    (c) False, deceptive, or misleading collection means. A debt 
collector must not:
    (1) Threaten to take any action that cannot legally be taken or 
that is not intended to be taken.
    (2) Communicate or threaten to communicate to any person credit 
information that the debt collector knows or should know is false, 
including the failure to communicate that a disputed debt is disputed.
    (3) Use or distribute any written communication that simulates or 
that the debt collector falsely represents to be a document authorized, 
issued, or approved by any court, official, or agency of the United 
States or any State, or that creates a false impression about its 
source, authorization, or approval.
    (4) Use any business, company, or organization name other than the 
true name of the debt collector's business, company, or organization.
    (d) False representations or deceptive means. A debt collector must 
not use any false representation or deceptive means to collect or 
attempt to collect any debt or to obtain information concerning a 
consumer.
    (e) Disclosures required--(1) Initial communications. A debt 
collector must disclose in its initial communication with a consumer 
that the debt collector is attempting to collect a debt and that any 
information obtained will be used for that purpose. If the debt 
collector's initial communication with the consumer is oral, the debt 
collector

[[Page 76892]]

must make the disclosure required by this paragraph again in its 
initial written communication with the consumer.
    (2) Subsequent communications. In each communication with the 
consumer subsequent to the communications described in paragraph (e)(1) 
of this section, the debt collector must disclose that the 
communication is from a debt collector.
    (3) Exception. Disclosures under paragraphs (e)(1) and (2) of this 
section are not required in a formal pleading made in connection with a 
legal action.
    (4) Translated disclosures. A debt collector must make the 
disclosures required by paragraphs (e)(1) and (2) of this section in 
the same language or languages used for the rest of the communication 
in which the debt collector conveyed the disclosures. Any translation 
of the disclosures a debt collector uses must be complete and accurate.
    (f) Assumed names. This section does not prohibit a debt 
collector's employee from using an assumed name when communicating or 
attempting to communicate with a person, provided that the employee 
uses the assumed name consistently and that the debt collector can 
readily identify any employee using an assumed name.


Sec.  1006.22  Unfair or unconscionable means.

    (a) In general. A debt collector must not use unfair or 
unconscionable means to collect or attempt to collect any debt, 
including, but not limited to, the conduct described in paragraphs (b) 
through (f) of this section.
    (b) Collection of unauthorized amounts. A debt collector must not 
collect any amount unless such amount is expressly authorized by the 
agreement creating the debt or permitted by law. For purposes of this 
paragraph, the term ``any amount'' includes any interest, fee, charge, 
or expense incidental to the principal obligation.
    (c) Postdated payment instruments. A debt collector must not:
    (1) Accept from any person a check or other payment instrument 
postdated by more than five days unless such person is notified in 
writing of the debt collector's intent to deposit such check or 
instrument not more than ten, nor less than three, days (excluding 
legal public holidays identified in 5 U.S.C. 6103(a), Saturdays, and 
Sundays) prior to such deposit.
    (2) Solicit any postdated check or other postdated payment 
instrument for the purpose of threatening or instituting criminal 
prosecution.
    (3) Deposit or threaten to deposit any postdated check or other 
postdated payment instrument prior to the date on such check or 
instrument.
    (d) Charges resulting from concealment of purpose. A debt collector 
must not cause charges to be made to any person for communications by 
concealment of the true purpose of the communication. Such charges 
include, but are not limited to, collect telephone calls and telegram 
fees.
    (e) Nonjudicial action regarding property. A debt collector must 
not take or threaten to take any nonjudicial action to effect 
dispossession or disablement of property if:
    (1) There is no present right to possession of the property claimed 
as collateral through an enforceable security interest;
    (2) There is no present intention to take possession of the 
property; or
    (3) The property is exempt by law from such dispossession or 
disablement.
    (f) Restrictions on use of certain media. A debt collector must 
not:
    (1) Communicate with a consumer regarding a debt by postcard.
    (2) Use any language or symbol, other than the debt collector's 
address, on any envelope when communicating with a consumer by mail, 
except that a debt collector may use the debt collector's business name 
on an envelope if such name does not indicate that the debt collector 
is in the debt collection business.
    (3) Communicate or attempt to communicate with a consumer by 
sending an email to an email address that the debt collector knows is 
provided to the consumer by the consumer's employer, unless the email 
address is one described in Sec.  1006.6(d)(4)(i) or (iii).
    (4) Communicate or attempt to communicate with a person in 
connection with the collection of a debt through a social media 
platform if the communication or attempt to communicate is viewable by 
the general public or the person's social media contacts.
    (g) Safe harbor for certain emails and text messages relating to 
the collection of a debt. A debt collector who communicates with a 
consumer by sending an email or text message in accordance with the 
procedures described in Sec.  1006.6(d)(3) does not violate paragraph 
(a) of this section by revealing in the email or text message the debt 
collector's name or other information indicating that the communication 
relates to the collection of a debt.


Sec.  1006.26  [Reserved]


Sec.  1006.30  Other prohibited practices.

    (a) [Reserved]
    (b) Prohibition on the sale, transfer for consideration, or 
placement for collection of certain debts--(1) In general. Except as 
provided in paragraph (b)(2) of this section, a debt collector must not 
sell, transfer for consideration, or place for collection a debt if the 
debt collector knows or should know that the debt has been paid or 
settled or discharged in bankruptcy.
    (2) Exceptions--(i) In general. A debt collector may transfer for 
consideration a debt described in paragraph (b)(1) of this section if 
the debt collector:
    (A) Transfers the debt to the debt's owner;
    (B) Transfers the debt to a previous owner of the debt, if the 
transfer is authorized under the terms of the original contract between 
the debt collector and the previous owner; or
    (C) Transfers the debt as a result of a merger, acquisition, 
purchase and assumption transaction, or a transfer of substantially all 
of the debt collector's assets.
    (ii) Secured claims in bankruptcy. A debt collector may sell, 
transfer for consideration, or place for collection a debt that has 
been discharged in bankruptcy if the debt is secured by an enforceable 
lien and the debt collector notifies the transferee that the consumer's 
personal liability for the debt was discharged in bankruptcy.
    (iii) Securitizations and pledges of debt. Paragraph (b)(1) of this 
section does not prohibit the securitization of a debt or the pledging 
of a portfolio of debt as collateral in connection with a borrowing.
    (c) Multiple debts. If a consumer makes any single payment to a 
debt collector with respect to multiple debts owed by the consumer to 
the debt collector, the debt collector:
    (1) Must not apply the payment to any debt that is disputed by the 
consumer; and
    (2) If applicable, must apply the payment in accordance with the 
consumer's directions.
    (d) Legal actions by debt collectors--(1) Action to enforce 
interest in real property. A debt collector who brings a legal action 
against a consumer to enforce an interest in real property securing the 
consumer's debt must bring the action only in a judicial district or 
similar legal entity in which such real property is located.
    (2) Other legal actions. A debt collector who brings a legal action 
against a consumer other than to enforce an interest in real property 
securing the consumer's debt must bring such action only in the 
judicial district or similar legal entity in which the consumer:
    (i) Signed the contract sued upon; or

[[Page 76893]]

    (ii) Resides at the commencement of the action.
    (3) Authorization of actions. Nothing in this part authorizes debt 
collectors to bring legal actions.
    (e) Furnishing certain deceptive forms. A debt collector must not 
design, compile, and furnish any form that the debt collector knows 
would be used to cause a consumer falsely to believe that a person 
other than the consumer's creditor is participating in collecting or 
attempting to collect a debt that the consumer allegedly owes to the 
creditor.


Sec.  1006.34  [Reserved]


Sec.  1006.38  Disputes and requests for original-creditor information.

    (a) Definitions. For purposes of this section, the following 
definitions apply:
    (1) Duplicative dispute means a dispute submitted by the consumer 
in writing within the validation period that:
    (i) Is substantially the same as a dispute previously submitted by 
the consumer in writing within the validation period for which the debt 
collector already has satisfied the requirements of paragraph (d)(2)(i) 
of this section; and
    (ii) Does not include new and material information to support the 
dispute.
    (2) Validation period means the thirty-day period after a 
consumer's receipt of the written notice of debt described in FDCPA 
section 809 (15 U.S.C. 1692g) as defined by this part.
    (b)(1) Overshadowing of rights to dispute or request original-
creditor information. During the validation period, a debt collector 
must not engage in any collection activities or communications that 
overshadow or are inconsistent with the disclosure of the consumer's 
rights to dispute the debt and to request the name and address of the 
original creditor. The Bureau may provide by regulation a safe harbor 
for debt collectors when they use certain Bureau-approved disclosures.
    (2) [Reserved]
    (c) Requests for original-creditor information. (1) Upon receipt of 
a request for the name and address of the original creditor submitted 
by the consumer in writing within the validation period, a debt 
collector must cease collection of the debt until the debt collector 
sends the name and address of the original creditor to the consumer in 
writing or electronically in the manner required by Sec.  1006.42. The 
Bureau may provide by regulation for alternative procedures when the 
original creditor is the same as the current creditor.
    (2) [Reserved]
    (d) Disputes--(1) Failure to dispute. The failure of a consumer to 
dispute the validity of a debt does not constitute a legal admission of 
liability by the consumer.
    (2) Response to disputes. Upon receipt of a dispute submitted by 
the consumer in writing within the validation period, a debt collector 
must cease collection of the debt, or any disputed portion of the debt, 
until the debt collector:
    (i) Sends a copy either of verification of the debt or of a 
judgment to the consumer in writing or electronically in the manner 
required by Sec.  1006.42; or
    (ii) In the case of a dispute that the debt collector reasonably 
determines is a duplicative dispute, either:
    (A) Notifies the consumer in writing or electronically in the 
manner required by Sec.  1006.42(a)(1) that the dispute is duplicative, 
provides a brief statement of the reasons for the determination, and 
refers the consumer to the debt collector's response to the earlier 
dispute; or
    (B) Satisfies paragraph (d)(2)(i) of this section.


Sec.  1006.42  Sending required disclosures.

    (a) Sending required disclosures--(1) In general. A debt collector 
who sends disclosures required by the Act and this part in writing or 
electronically must do so in a manner that is reasonably expected to 
provide actual notice, and in a form that the consumer may keep and 
access later.
    (2) Exceptions. A debt collector need not comply with paragraph 
(a)(1) of this section when sending the disclosure required by Sec.  
1006.6(e) or Sec.  1006.18(e) in writing or electronically, unless the 
disclosure is included on a notice required by FDCPA section 809(a) (15 
U.S.C. 1692g(a)), as implemented by this part, or Sec.  1006.38(c) or 
(d)(2).
    (b) Requirements for certain disclosures sent electronically. To 
comply with paragraph (a) of this section, a debt collector who sends 
the notice required by FDCPA section 809(a), as implemented by this 
part, or the disclosures described in Sec.  1006.38(c) or (d)(2)(i), 
electronically must do so in accordance with section 101(c) of the 
Electronic Signatures in Global and National Commerce Act (E-SIGN Act) 
(15 U.S.C. 7001(c)).

Subpart C--[Reserved]

Subpart D--Miscellaneous


Sec.  1006.100  Record retention.

    (a) In general. Except as provided in paragraph (b) of this 
section, a debt collector must retain records that are evidence of 
compliance or noncompliance with the FDCPA and this part starting on 
the date that the debt collector begins collection activity on a debt 
until three years after the debt collector's last collection activity 
on the debt.
    (b) Special rule for telephone call recordings. If a debt collector 
records telephone calls made in connection with the collection of a 
debt, the debt collector must retain the recording of each such 
telephone call for three years after the date of the call.


Sec.  1006.104  Relation to State laws.

    Neither the Act nor the corresponding provisions of this part 
annul, alter, affect, or exempt any person subject to the provisions of 
the Act or the corresponding provisions of this part from complying 
with the laws of any State with respect to debt collection practices, 
except to the extent that those laws are inconsistent with any 
provision of the Act or the corresponding provisions of this part, and 
then only to the extent of the inconsistency. For purposes of this 
section, a State law is not inconsistent with the Act or the 
corresponding provisions of this part if the protection such law 
affords any consumer is greater than the protection provided by the Act 
or the corresponding provisions of this part.


Sec.  1006.108  Exemption for State regulation.

    (a) Exemption for State regulation. Any State may apply to the 
Bureau for a determination that, under the laws of that State, any 
class of debt collection practices within that State is subject to 
requirements that are substantially similar to those imposed under 
sections 803 through 812 of the Act (15 U.S.C. 1692a through 1692j) and 
the corresponding provisions of this part, and that there is adequate 
provision for State enforcement of such requirements.
    (b) Procedures and criteria. The procedures and criteria whereby 
States may apply to the Bureau for exemption of a class of debt 
collection practices within the applying State from the provisions of 
the Act and the corresponding provisions of this part as provided in 
section 817 of the Act (15 U.S.C. 1692o) are set forth in appendix A of 
this part.

Appendix A to Part 1006--Procedures for State Application for Exemption 
From the Provisions of the Act

I. Purpose and Definitions

    (a) This appendix establishes procedures and criteria whereby 
States may apply to the Bureau for exemption of a class of debt 
collection practices within the applying State from the provisions 
of the Act and the

[[Page 76894]]

corresponding provisions of this part as provided in section 817 of 
the Act (15 U.S.C. 1692o).
    (b) For purposes of this appendix:
    (1) Applicant State law means the State law that, for a class of 
debt collection practices within that State, is claimed to contain 
requirements that are substantially similar to the requirements that 
relevant Federal law imposes on that class of debt collection 
practices, and that contains adequate provision for State 
enforcement.
    (2) Class of debt collection practices includes one or more such 
classes of debt collection practices referred to in paragraph 
I(b)(1) of this appendix.
    (3) Relevant Federal law means sections 803 through 812 of the 
Act (15 U.S.C. 1692a through 1692j) and the corresponding provisions 
of this part.
    (4) State law includes State statutes, any regulations that 
implement State statutes, and formal interpretations of State 
statutes or regulations by a court of competent jurisdiction or duly 
authorized State agency.

II. Application

    Any State may apply to the Bureau pursuant to the terms of this 
appendix for a determination that the applicant State law contains 
requirements that, for a class of debt collection practices within 
that State, are substantially similar to the requirements that 
relevant Federal law imposes on that class of debt collection 
practices, and that the applicant State law contains adequate 
provision for State enforcement. The application must be in writing, 
addressed to the Assistant Director, Office of Regulations, Division 
of Research, Markets, and Regulations, Bureau of Consumer Financial 
Protection, 1700 G Street NW, Washington, DC 20552, signed by the 
Governor, Attorney General, or State official having primary 
enforcement responsibility under the State law that applies to the 
class of debt collection practices, and must be supported by the 
documents specified in this appendix.

III. Supporting Documents

    The application must be accompanied by the following, which may 
be submitted in paper or electronic form:
    (a) A copy of the applicant State law.
    (b) A comparison of each provision of relevant Federal law with 
the corresponding provisions of the applicant State law, together 
with reasons supporting the claim that the corresponding provisions 
of the applicant State law are substantially similar to the 
provisions of relevant Federal law, and an explanation as to why any 
differences between the State statute or regulation and Federal law 
are not inconsistent with the provisions of relevant Federal law and 
do not result in a diminution in the protection otherwise afforded 
consumers; and a statement that no other State laws (including 
administrative or judicial interpretations) are related to, or would 
have an effect upon, the State law that is being considered by the 
Bureau in making its determination.
    (c) A comparison of the provisions of the State law that provide 
for enforcement with the provisions of section 814 of the Act (15 
U.S.C. 1692l), together with reasons supporting the claim that the 
applicant State law provides for adequate administrative 
enforcement.
    (d) A statement identifying the office designated or to be 
designated to enforce the applicant State law. The statement must 
show how the office provides for adequate enforcement of the 
applicant State law, including by showing that the office has 
necessary facilities, personnel, and funding. The statement must 
include, for example, complete information regarding the fiscal 
arrangements for administrative enforcement (including the amount of 
funds available or to be provided), the number and qualifications of 
personnel engaged or to be engaged in enforcement, and a description 
of the procedures under which the applicant State law is to be 
enforced by the State.

IV. Criteria for Determination

    The Bureau will consider the criteria set forth below, and any 
other relevant information, in determining whether the applicant 
State law is substantially similar to relevant Federal law and 
whether there is adequate provision for enforcement of the applicant 
State law. In making that determination, the Bureau primarily will 
consider each provision of the applicant State law in comparison 
with each corresponding provision in relevant Federal law, and not 
the State law as a whole in comparison with the Act as a whole.
    (a)(1) In order for the applicant State law to be substantially 
similar to relevant Federal law, the applicant State law at least 
must provide that:
    (i) Definitions and rules of construction, as applicable, import 
a meaning and have an application that are substantially similar to 
those prescribed by relevant Federal law.
    (ii) Debt collectors provide all of the applicable notices 
required by relevant Federal law, with the content and in the 
terminology, form, and time periods prescribed pursuant to relevant 
Federal law. The Bureau may determine whether additional notice 
requirements under the applicant State law affect a determination 
that the applicant State law is substantially similar to relevant 
Federal law.
    (iii) Debt collectors take all affirmative actions and abide by 
obligations substantially similar to those prescribed by relevant 
Federal law under substantially similar conditions and within 
substantially similar time periods as are prescribed under relevant 
Federal law;
    (iv) Debt collectors abide by prohibitions that are 
substantially similar to those prescribed by relevant Federal law;
    (v) Consumers' obligations or responsibilities are no more 
costly, lengthy, or burdensome than consumers' corresponding 
obligations or responsibilities under relevant Federal law; and
    (vi) Consumers' rights and protections are substantially similar 
to those provided by relevant Federal law under conditions or within 
time periods that are substantially similar to those prescribed by 
relevant Federal law.
    (2) In applying the criteria set forth in paragraph IV(a)(1) of 
this appendix, the Bureau will not consider adversely any additional 
requirements of State law that are not inconsistent with the purpose 
of the Act or the requirements imposed under relevant Federal law.
    (b) In determining whether provisions for enforcement of the 
applicant State law are adequate, consideration will be given to the 
extent to which, under the applicant State law, provision is made 
for administrative enforcement, including necessary facilities, 
personnel, and funding.

V. Public Comment

    In connection with any application that has been filed in 
accordance with the requirements of parts II and III of this 
appendix and following initial review of the application, a proposed 
rule concerning the application for exemption will be published by 
the Bureau in the Federal Register, and a copy of such application 
will be made available for examination by interested persons during 
business hours at the Bureau of Consumer Financial Protection, 1700 
G Street NW, Washington, DC 20552. A comment period will be allowed 
from the date of such publication for interested parties to submit 
written comments to the Bureau regarding that application.

VI. Exemption From Requirements

    If the Bureau determines on the basis of the information before 
it that, under the applicant State law, a class of debt collection 
practices is subject to requirements substantially similar to those 
imposed under relevant Federal law and that there is adequate 
provision for State enforcement, the Bureau will exempt the class of 
debt collection practices in that State from the requirements of 
relevant Federal law and section 814 of the Act in the following 
manner and subject to the following conditions:
    (a) A final rule granting the exemption will be published in the 
Federal Register, and the Bureau will furnish a copy of such rule to 
the State official who made application for such exemption, to each 
Federal authority responsible for administrative enforcement of the 
requirements of relevant Federal law, and to the Attorney General of 
the United States. Any exemption granted will be effective 90 days 
after the date of publication of such rule in the Federal Register.
    (b) Any State that receives an exemption must, through its 
appropriate official, take the following steps:
    (i) Inform the Assistant Director, Office of Regulations, 
Division of Research, Markets, and Regulations, Bureau of Consumer 
Financial Protection, 1700 G Street NW, Washington, DC 20552 in 
writing within 30 days of any change in the applicant State law. The 
report of any such change must contain copies of the full text of 
that change, together with statements setting forth the information 
and opinions regarding that change that are specified in paragraph 
III.
    (ii) Provide, not later than two years after the date the 
exemption is granted, and every two years thereafter, a report to 
the Bureau in writing concerning the manner in which the State has 
enforced the applicant State law in the preceding two years and an 
update of the information required under paragraph III(d) of this 
appendix.

[[Page 76895]]

    (c) The Bureau will inform any State that receives such an 
exemption, through its appropriate official, of any subsequent 
amendments of the Act or this part that might necessitate the 
amendment of State law for the exemption to continue.
    (d) After an exemption is granted, the requirements of the 
applicable State law constitute the requirements of relevant Federal 
law, except to the extent such State law imposes requirements not 
imposed by the Act or this part.

VII. Adverse Determination

    (a) If, after publication of a proposed rule in the Federal 
Register as provided under part V of this appendix, the Bureau finds 
on the basis of the information before it that it cannot make a 
favorable determination in connection with the application, the 
Bureau will notify the appropriate State official of the facts upon 
which such findings are based and will afford that State authority a 
reasonable opportunity to submit additional materials that 
demonstrate the basis for granting an exemption.
    (b) If, after having afforded the State authority such 
opportunity to demonstrate the basis for granting an exemption, the 
Bureau finds on the basis of the information before it that it still 
cannot make a favorable determination in connection with the 
application, the Bureau will publish in the Federal Register a final 
rule containing its determination regarding the application and will 
furnish a copy of such rule to the State official who made 
application for such exemption.

VIII. Revocation of Exemption

    (a) The Bureau reserves the right to revoke any exemption 
granted under the provisions of the Act or this part, if at any time 
it determines that the State law does not, in fact, impose 
requirements that are substantially similar to relevant Federal law 
or that there is not, in fact, adequate provision for State 
enforcement.
    (b) Before revoking any such exemption, the Bureau will notify 
the State of the facts or conduct that, in the Bureau's opinion, 
warrant such revocation, and will afford that State such opportunity 
as the Bureau deems appropriate in the circumstances to demonstrate 
continued eligibility for an exemption.
    (c) If, after having been afforded the opportunity to 
demonstrate or achieve compliance, the Bureau determines that the 
State has not done so, a proposed rule to revoke such exemption will 
be published in the Federal Register. A comment period will be 
allowed from the date of such publication for interested persons to 
submit written comments to the Bureau regarding the intention to 
revoke.
    (d) If such exemption is revoked, a final rule revoking the 
exemption will be published by the Bureau in the Federal Register, 
and a copy of such rule will be furnished to the State, to the 
Federal authorities responsible for enforcement of the requirements 
of the Act, and to the Attorney General of the United States. The 
revocation becomes effective, and the class of debt collection 
practices affected within that State become subject to the 
requirements of sections 803 through 812 of the Act and the 
corresponding provisions of this part, 90 days after the date of 
publication of the final rule in the Federal Register.

Appendix B to Part 1006--[Reserved]

Appendix C to Part 1006--Issuance of Advisory Opinions

    1. Advisory opinions. Any act done or omitted in good faith in 
conformity with any advisory opinion issued by the Bureau, including 
advisory opinions referenced in this appendix, provides the 
protection afforded under section 813(e) of the Act. The Bureau will 
amend this appendix periodically to incorporate references to 
advisory opinions that the Bureau issues.
    2. Requests for issuance of advisory opinions. A request for an 
advisory opinion may be submitted in accordance with the 
instructions regarding submission and content of requests applicable 
to any relevant advisory opinion program that the Bureau offers. 
Requests for advisory opinions will be reviewed consistent with the 
process outlined in any such program, and any resulting advisory 
opinions will be published in the Federal Register and on 
consumerfinance.gov.
    3. Bureau-issued advisory opinions. The Bureau has issued the 
following advisory opinions:
    a. Safe Harbors from Liability under the Fair Debt Collection 
Practices Act for Certain Actions Taken in Compliance with Mortgage 
Servicing Rules under the Real Estate Settlement Procedures Act 
(Regulation X) and the Truth in Lending Act (Regulation Z), 81 FR 
71977 (Oct. 19, 2016).

Supplement I to Part 1006--Official Interpretations

Introduction

    1. Official status. This commentary is the vehicle by which the 
Bureau of Consumer Financial Protection supplements Regulation F, 12 
CFR part 1006. The provisions of the commentary are issued under the 
same authorities as the corresponding provisions of Regulation F and 
have been adopted in accordance with the notice-and-comment 
procedures of the Administrative Procedure Act (5 U.S.C. 553). 
Unless specified otherwise, references in this commentary are to 
sections of Regulation F or the Fair Debt Collection Practices Act, 
15 U.S.C. 1692 et seq. No commentary is expected to be issued other 
than by means of this Supplement I.
    2. Procedure for requesting interpretations. Anyone may request 
that an official interpretation of the regulation be added to this 
commentary. A request for such an official interpretation must be in 
writing and addressed to the Associate Director, Division of 
Research, Markets, and Regulations, Bureau of Consumer Financial 
Protection, 1700 G Street NW, Washington, DC 20552. The request must 
contain a complete statement of all relevant facts concerning the 
issue, including copies of all pertinent documents. Revisions to 
this commentary that are adopted in accordance with the rulemaking 
procedures of section 553 of the Administrative Procedure Act (5 
U.S.C. 553) will be incorporated in the commentary following 
publication in the Federal Register.
    3. Comment designations. Each comment in the commentary is 
identified by a number and the regulatory section or paragraph that 
it interprets. The comments are designated with as much specificity 
as possible according to the particular regulatory provision 
addressed. For example, comments to Sec.  1006.6(d)(4) are further 
divided by subparagraph, such as comment 6(d)(4)(i)-1 and comment 
6(d)(4)(ii)-1. Comments that have more general application are 
designated, for example, as comments 38-1 and 38-2. This 
introduction may be cited as comments I-1, I-2, and I-3.

Subpart A--General

Section 1006.2--Definitions

2(b) Attempt To Communicate

    1. Examples. Section 1006.2(b) defines an attempt to communicate 
as 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. An act to initiate a communication or 
other contact about a debt 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. For example:
    i. Assume that a debt collector places a telephone call to a 
person about a debt. Regardless of whether the debt collector 
reaches the person, the debt collector has attempted to communicate 
with the person.
    ii. Assume that a debt collector places a telephone call to a 
person about a debt and leaves a voicemail message. Regardless of 
whether the voicemail message consists solely of a limited-content 
message or includes content that conveys, directly or indirectly, 
information about a debt, the debt collector has attempted to 
communicate with the person.

2(d) Communicate or Communication

    1. Any medium. Section 1006.2(d) provides, in relevant part, 
that a communication can occur through any medium. ``Any medium'' 
includes any oral, written, electronic, or other medium. For 
example, a communication may occur in person or by telephone, audio 
recording, paper document, mail, email, text message, social media, 
or other electronic media.
    2. Information regarding a debt. Section 1006.2(d) provides, in 
relevant part, that a communication means conveying information 
regarding a debt. A debt collector does not convey information 
regarding a debt directly or indirectly to any person if the debt 
collector leaves only a limited-content message, as defined in Sec.  
1006.2(j). A debt collector who provides marketing or advertising 
that does not contain information about a specific debt or debts has 
not communicated under Sec.  1006.2(d), even if the debt collector 
transmits the marketing or advertising message to a consumer, 
because the debt collector has not conveyed information regarding a 
debt.

[[Page 76896]]

2(h) Debt

    1. Consumer. Section 1006.2(h) defines debt to mean, in part, 
any obligation or alleged obligation of a consumer to pay money 
arising out of a transaction. Section 1006.2(e), in turn, defines 
consumer to mean any natural person obligated or allegedly obligated 
to pay any debt. Only natural persons, therefore, can incur debts as 
defined in Sec.  1006.2(h).

2(i) Debt Collector

    1. In general. Section 1006.2(i) provides, in part, that a debt 
collector is any person who uses any instrumentality of interstate 
commerce or mail in any business the principal purpose of which is 
the collection of debts, or who regularly collects or attempts to 
collect, directly or indirectly, debts owed or due, or asserted to 
be owed or due, to another. 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 Sec.  1006.2(i).

2(j) Limited-Content Message

    1. In general. Section 1006.2(j) provides that a limited-content 
message is a voicemail message for a consumer that includes all of 
the content described in Sec.  1006.2(j)(1), that may include any of 
the content described in Sec.  1006.2(j)(2), and that includes no 
other content. Any other message is not a limited-content message. 
If a voicemail message includes content other than the specific 
items described in Sec.  1006.2(j)(1) and (2), and such other 
content directly or indirectly conveys any information about a debt, 
the message is a communication, as defined in Sec.  1006.2(d). For 
example, a voicemail message that includes a statement that the 
message is from a debt collector and a request to speak to a 
particular consumer is not a limited-content message because it 
includes more than the required or permitted content.
    2. Message for a consumer. Section 1006.2(j) provides, in part, 
that a limited-content message is a voicemail message for a 
consumer. A message knowingly left for a third party is not a 
limited-content message because it is not for a consumer. For 
example, assume that a debt collector has a telephone number that 
the debt collector knows belongs to the consumer's friend. A 
voicemail message left after calling that number is not a limited-
content message, even if the message includes no more than the 
content described in Sec.  1006.2(j)(1) and (2) because the debt 
collector knowingly left the message for someone other than the 
consumer. Other provisions of this part may, in certain 
circumstances, restrict a debt collector from leaving a limited-
content message or otherwise attempting to communicate with a 
consumer. See Sec. Sec.  1006.6(b) and (c) and 1006.22(f) and their 
related commentary for further guidance regarding when a debt 
collector is prohibited from attempting to communicate with a 
consumer.
    3. Meaningful disclosure of identity. A debt collector who 
leaves only a limited-content message for a consumer does not 
violate Sec.  1006.14(g)'s requirement to meaningfully disclose the 
caller's identity with respect to that voicemail message.

2(j)(1) Required Content

    1. Example. The following example illustrates a limited-content 
message that includes only the content described in Sec.  
1006.2(j)(1): ``This is Robin Smith calling from ABC Inc. Please 
contact me or Jim Johnson at 1-800-555-1212.''

2(j)(2) Optional Content

    1. In general. Section 1006.2(j)(2)(iv) provides that a limited-
content message may include a statement that, if the consumer 
replies, the consumer may speak to any of the company's 
representatives or associates. A message that includes a more 
detailed description of the representative or associate group is not 
a limited-content message. For example, a reference to an agent with 
the ``credit card receivables group'' is not a limited-content 
message because it includes more than a statement that the 
consumer's reply may be answered by a representative or associate.
    2. Example. The following example illustrates a limited-content 
message that includes the content described in both Sec.  
1006.2(j)(1) and (2): ``Hi, this is Robin Smith calling from ABC 
Inc. It is 4:15 p.m. on Wednesday, September 1. Please contact me or 
any of our representatives at 1-800-555-1212 today until 6:00 p.m. 
Eastern time, or any weekday from 8:00 a.m. to 6:00 p.m. Eastern 
time.''

Subpart B--Rules for FDCPA Debt Collectors

Section 1006.6--Communications in Connection With Debt Collection

6(a) Consumer

Paragraph 6(a)(1)

    1. Spouse. Section 1006.6(a)(1) provides that, for purposes of 
Sec.  1006.6, the term consumer includes a consumer's spouse. The 
surviving spouse of a deceased consumer is a spouse as that term is 
used in Sec.  1006.6(a)(1).

Paragraph 6(a)(2)

    1. Parent. Section 1006.6(a)(2) provides that, for purposes of 
Sec.  1006.6, the term consumer includes a consumer's parent, if the 
consumer is a minor. A parent of a deceased minor consumer is a 
parent as that term is used in Sec.  1006.6(a)(2).

Paragraph 6(a)(4)

    1. Personal representative. Section 1006.6(a)(4) provides that, 
for purposes of Sec.  1006.6, the term consumer includes the 
executor or administrator of the consumer's estate, if the consumer 
is deceased. The terms executor or administrator include the 
personal representative of the consumer's estate. A personal 
representative is any person who is authorized to act on behalf of 
the deceased consumer's estate. Persons with such authority may 
include personal representatives under the informal probate and 
summary administration procedures of many States, persons appointed 
as universal successors, persons who sign declarations or affidavits 
to effectuate the transfer of estate assets, and persons who dispose 
of the deceased consumer's financial assets or other assets of 
monetary value extrajudicially.

6(b) Communications With a Consumer

6(b)(1) Prohibitions Regarding Unusual or Inconvenient Times or Places

    1. Designation of inconvenience. Section 1006.6(b)(1) prohibits 
a debt collector from, among other things, 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, unless an 
exception in Sec.  1006.6(b)(4) applies. For example, a debt 
collector knows or should know that a time or place is inconvenient 
to a consumer if the consumer uses the word ``inconvenient'' to 
notify the debt collector. In addition, depending on the facts and 
circumstances, the debt collector knows or should know that a time 
or place is inconvenient even if the consumer does not specifically 
state to the debt collector that a time or place is 
``inconvenient.'' The debt collector may ask follow-up questions 
regarding whether a time or place is convenient to clarify 
statements by the consumer. For example:
    i. Assume that a creditor places a debt for collection with a 
debt collector. To facilitate collection of the debt, the creditor 
provides the debt collector a file that includes recent notes 
stating that the consumer cannot be disturbed on Tuesdays and 
Thursdays through the end of the calendar year. Based on these 
facts, the debt collector knows or should know that Tuesdays and 
Thursdays through the end of the calendar year are inconvenient to 
the consumer. Unless the consumer informs the debt collector that 
those times are no longer inconvenient, Sec.  1006.6(b)(1)(i) 
prohibits the debt collector from communicating or attempting to 
communicate with the consumer on those days through the end of the 
calendar year.
    ii. Assume that a debt collector calls a consumer. The consumer 
answers the call but states ``I am busy'' or ``I cannot talk now.'' 
The debt collector asks the consumer when would be a convenient 
time. The consumer responds, ``on weekdays, except from 3:00 p.m. to 
5:00 p.m.'' The debt collector asks the consumer whether there would 
be a convenient time on weekends. The consumer responds ``no.'' 
Based on these facts, the debt collector knows or should know that 
the time period between 3:00 p.m. and 5:00 p.m. on weekdays, and all 
times on weekends, are inconvenient to the consumer. Thereafter, 
unless the consumer informs the debt collector that those times are 
no longer inconvenient, Sec.  1006.6(b)(1)(i) prohibits the debt 
collector from communicating or attempting to communicate with the 
consumer at those times.
    iii. Assume that a consumer tells a debt collector not to 
communicate with the consumer at a particular place, such as the 
consumer's home. The debt collector asks whether the consumer 
intends to prohibit the debt collector from communicating with the 
consumer through all media associated with the consumer's home, 
including, for example, mail. Absent such additional information, 
the debt collector knows or

[[Page 76897]]

should know that communications to the consumer at home, including 
mail to the consumer's home address and calls to the consumer's home 
landline telephone number, are inconvenient. Thereafter, unless the 
consumer informs the debt collector that the place is no longer 
inconvenient, Sec.  1006.6(b)(1)(ii) prohibits the debt collector 
from communicating or attempting to communicate with the consumer at 
the consumer's home. See comment 6(b)(1)(ii)-1 for additional 
guidance regarding communications or attempts to communicate at an 
inconvenient place.
    2. Consumer-initiated communication. If a consumer initiates a 
communication with a debt collector at a time or from a place that 
the consumer previously designated as inconvenient, the debt 
collector may respond once at that time or place through the same 
medium of communication used by the consumer. (For more on medium of 
communication, see Sec.  1006.14(h) and its associated commentary.) 
After that response, Sec.  1006.6(b)(1) prohibits the debt collector 
from communicating or attempting to communicate further with the 
consumer at that time or place until the consumer conveys that the 
time or place is no longer inconvenient, unless an exception in 
Sec.  1006.6(b)(4) applies. For example:
    i. Assume the same facts as in comment 6(b)(1)-1.ii, except 
that, after the consumer tells the debt collector that weekdays from 
3:00 p.m. to 5:00 p.m. and weekends are inconvenient, the consumer 
sends an email message to the debt collector at 3:30 p.m. on 
Wednesday. Based on these facts, Sec.  1006.6(b)(1)(i) does not 
prohibit the debt collector from responding once by email message 
before 5:00 p.m. on that day. Unless the consumer informs the debt 
collector that those times are no longer inconvenient, Sec.  
1006.6(b)(1)(i) prohibits the debt collector from future 
communications or attempts to communicate with the consumer on 
weekdays between 3:00 p.m. and 5:00 p.m. and on weekends. 
Additionally, if the consumer responds to the debt collector's email 
message, the debt collector may continue to respond once to each 
consumer-initiated email message before 5:00 p.m. on that day.
    ii. Assume the same facts as in comment 6(b)(1)-1.iii, except 
that, after the consumer tells the debt collector not to communicate 
with the consumer at home, the consumer calls the debt collector 
from the consumer's home landline telephone number. Based on these 
facts, Sec.  1006.6(b)(1)(ii) does not prohibit the debt collector 
from responding once by communicating with the consumer on that 
telephone call. Unless the consumer informs the debt collector that 
the place is no longer inconvenient, Sec.  1006.6(b)(1)(ii) 
prohibits the debt collector from future communications or attempts 
to communicate with the consumer at home.
    iii. Assume that a consumer tells a debt collector that all 
communications to the consumer on Friday every week are inconvenient 
to the consumer. On a Friday, the consumer visits the debt 
collector's website and uses the debt collector's mobile 
application. Based on these facts, while the consumer navigates the 
website or uses the mobile application, Sec.  1006.6(b)(1)(i) does 
not prohibit the debt collector from conveying information to the 
consumer about the debt through the website or mobile application. 
Once the consumer stops navigating the website or using the mobile 
application, however, Sec.  1006.6(b)(1)(i) prohibits the debt 
collector from further communications or attempts to communicate on 
that day. And unless the consumer informs the debt collector that 
those times are no longer inconvenient, Sec.  1006.6(b)(1)(i) 
prohibits the debt collector from future communications or attempts 
to communicate with the consumer on Fridays.
    iv. Assume the same facts as in comment 6(b)(1)-2.iii, except 
that after the consumer visits the debt collector's website and uses 
the debt collector's mobile application, the consumer sends an email 
message to the debt collector at 8:30 p.m. on Friday. Based on these 
facts, Sec.  1006.6(b)(1)(i) does not prohibit the debt collector 
from responding once, such as by sending an automated email message 
reply generated in response to the consumer's email message. Unless 
the consumer informs the debt collector that those times are no 
longer inconvenient, Sec.  1006.6(b)(1)(i) prohibits the debt 
collector from future communications or attempts to communicate with 
the consumer on Fridays.

Paragraph 6(b)(1)(i)

    1. Time of electronic communication. Section 1006.6(b)(1)(i) 
prohibits a debt collector from communicating or attempting to 
communicate, including through electronic communication media, at 
any unusual time, or at a time that the debt collector knows or 
should know is inconvenient to the consumer. For purposes of 
determining the time of an electronic communication, such as an 
email or text message, under Sec.  1006.6(b)(1)(i), an electronic 
communication occurs when the debt collector sends it, not, for 
example, when the consumer receives or views it.
    2. Consumer's location. Under Sec.  1006.6(b)(1)(i), in the 
absence of a debt collector's knowledge of circumstances to the 
contrary, an inconvenient time for communicating with a consumer is 
before 8:00 a.m. and after 9:00 p.m. local time at the consumer's 
location. If a debt collector has conflicting or ambiguous 
information regarding a consumer's location, then, in the absence of 
knowledge of circumstances to the contrary, the debt collector 
complies with Sec.  1006.6(b)(1)(i) if the debt collector 
communicates or attempts to communicate with the consumer at a time 
that would be convenient in all of the locations at which the debt 
collector's information indicates the consumer might be located. The 
following examples, which assume that the debt collector has no 
information about times the consumer considers inconvenient or other 
information about the consumer's location, illustrate the rule.
    i. Assume that a debt collector's information indicates that a 
consumer has a mobile telephone number with an area code associated 
with the Eastern time zone and a residential address in the Pacific 
time zone. The convenient times to communicate with the consumer are 
after 11:00 a.m. Eastern time (8:00 a.m. Pacific time) and before 
9:00 p.m. Eastern time (6:00 p.m. Pacific time).
    ii. Assume that a debt collector's information indicates that a 
consumer has a mobile telephone number with an area code associated 
with the Eastern time zone and a landline telephone number with an 
area code associated with the Mountain time zone. The convenient 
times to communicate with the consumer are after 10:00 a.m. Eastern 
time (8:00 a.m. Mountain time) and before 9:00 p.m. Eastern time 
(7:00 p.m. Mountain time).

Paragraph 6(b)(1)(ii)

    1. Communications or attempts to communicate at unusual or 
inconvenient places. Section 1006.6(b)(1)(ii) prohibits a debt 
collector from communicating or attempting to communicate with a 
consumer in connection with the collection of any debt at any 
unusual place, or at a place that the debt collector knows or should 
know is inconvenient to the consumer. Some communication media, such 
as mailing addresses and landline telephone numbers, are associated 
with a place. Pursuant to Sec.  1006.6(b)(1)(ii), a debt collector 
must not communicate or attempt to communicate with a consumer 
through media associated with an unusual place, or with a place that 
the debt collector knows or should know is inconvenient to the 
consumer. Other communication media, such as email addresses and 
mobile telephone numbers, are not associated with a place. Section 
1006.6(b)(1)(ii) does not prohibit a debt collector from 
communicating or attempting to communicate with a consumer through 
such media unless the debt collector knows that the consumer is at 
an unusual place, or at a place that the debt collector knows or 
should know is inconvenient to the consumer. For example:
    i. Assume the same facts as in comment 6(b)(1)-1.iii. Unless the 
debt collector knows that the consumer is at home, a telephone call 
to the consumer's mobile telephone number or an electronic 
communication, including, for example, an email message or a text 
message to the consumer's mobile telephone, does not violate Sec.  
1006.6(b)(1)(ii) even if the consumer receives or views the 
communication while at home.

6(b)(2) Prohibitions Regarding Consumer Represented by an Attorney

    1. Consumer-initiated communications. A consumer-initiated 
communication from a consumer represented by an attorney constitutes 
the consumer's prior consent to that communication under Sec.  
1006.6(b)(4)(i); therefore, a debt collector may respond to that 
consumer-initiated communication. However, the consumer's act of 
initiating the communication does not negate the debt collector's 
knowledge that the consumer is represented by an attorney and does 
not revoke the protections afforded the consumer under Sec.  
1006.6(b)(2). After the debt collector's response, the debt 
collector must not communicate or attempt to communicate further 
with the consumer unless the debt collector knows the consumer is 
not represented by an attorney with respect to the debt, either 
based on information from the consumer or the consumer's attorney, 
or unless an exception under Sec.  1006.6(b)(2)(i) or (ii) or Sec.  
1006.6(b)(4) applies.

[[Page 76898]]

6(b)(3) Prohibitions Regarding Consumer's Place of Employment

    1. Communications at consumer's place of employment. Section 
1006.6(b)(3) prohibits a debt collector from communicating or 
attempting to communicate with a consumer in connection with the 
collection of any debt at the consumer's place of employment, if the 
debt collector knows or has reason to know that the consumer's 
employer prohibits the consumer from receiving such communication. A 
debt collector knows or has reason to know that a consumer's 
employer prohibits the consumer from receiving such communication 
if, for example, the consumer tells the debt collector that the 
consumer cannot take personal calls at work. The debt collector may 
ask follow-up questions regarding the employer's prohibitions or 
limitations on contacting the consumer at the place of employment to 
clarify statements by the consumer.
    2. Employer-provided email. For special rules regarding 
employer-provided email addresses, see Sec.  1006.22(f)(3) and its 
associated commentary.

6(b)(4) Exceptions

Paragraph 6(b)(4)(i)

    1. Prior consent--in general. Section 1006.6(b)(4)(i) provides, 
in part, that the prohibitions in Sec.  1006.6(b)(1) through (3) on 
a debt collector communicating or attempting to communicate with a 
consumer in connection with the collection of any debt do not apply 
if the debt collector communicates or attempts to communicate with 
the prior consent of the consumer. If the debt collector learns 
during a communication that the debt collector is communicating with 
the consumer at an inconvenient time or place, for example, the debt 
collector may ask the consumer during that communication what time 
or place would be convenient. However, Sec.  1006.6(b)(4)(i) 
prohibits the debt collector from asking the consumer to consent to 
the continuation of that inconvenient communication.
    2. Directly to the debt collector. Section 1006.6(b)(4)(i) 
requires the prior consent of the consumer to be given directly to 
the debt collector. For example, a debt collector cannot rely on the 
prior consent of the consumer given to a creditor or to a previous 
debt collector.

6(c) Communications With a Consumer--After Refusal To Pay or Cease 
Communication Notice

6(c)(1) Prohibitions

    1. Notification complete upon receipt. If, pursuant to Sec.  
1006.6(c)(1), a consumer notifies a debt collector in writing or 
electronically using a medium of electronic communication through 
which a debt collector accepts electronic communications from 
consumers that the consumer either refuses to pay a debt or wants 
the debt collector to cease further communication with the consumer, 
notification is complete upon the debt collector's receipt of that 
information. The following example illustrates the rule.
    i. Assume that on August 3, a consumer places in the mail a 
written notification to a debt collector that the consumer either 
refuses to pay a debt or wants the debt collector to cease further 
communication with the consumer pursuant to Sec.  1006.6(c)(1). On 
August 4, the debt collector sends the consumer an email message. 
The debt collector receives the consumer's written notification on 
August 6. Because the consumer's notification is complete upon the 
debt collector's receipt of that information on August 6, the debt 
collector's email message communication on August 4 does not violate 
Sec.  1006.6(c)(1).
    2. Interpretation of the E-SIGN Act. Comment 6(c)(1)-1 
constitutes the Bureau's interpretation of section 101 of the E-SIGN 
Act as applied to FDCPA section 805(c). Under this interpretation, 
section 101(a) of the E-SIGN Act enables a consumer to satisfy the 
requirement in FDCPA section 805(c) that the consumer's notification 
of the debt collector be ``in writing'' through an electronic 
request. Further, because the consumer may only satisfy the writing 
requirement using a medium of electronic communication through which 
a debt collector accepts electronic communications from consumers, 
section 101(b) of the E-SIGN Act is not contravened.

6(c)(2) Exceptions

    1. Written early intervention notice for mortgage servicers. The 
Bureau has interpreted the written early intervention notice 
required by 12 CFR 1024.39(d)(3) to fall within the exceptions to 
the cease communication provision in FDCPA section 805(c)(2) and 
(3). See 12 CFR 1024.39(d)(3), its commentary, and the Bureau's 2016 
FDCPA Interpretive Rule (81 FR 71977 (Oct. 19, 2016)).
    2. Other mortgage servicing rule provisions. Notwithstanding a 
consumer's cease communication request pursuant to Sec.  
1006.6(c)(1), a mortgage servicer who is subject to the FDCPA with 
respect to a mortgage loan is not liable under the FDCPA for 
complying with certain servicing rule provisions, including 
requirements to provide a consumer with disclosures regarding the 
forced placement of hazard insurance as required by 12 CFR 1024.37, 
a disclosure regarding an adjustable-rate mortgage's initial 
interest rate adjustment as required by 12 CFR 1026.20(d), and a 
periodic statement for each billing cycle as required by 12 CFR 
1026.41. See CFPB Bulletin 2013-12 (Oct. 15, 2013) providing 
implementation guidance for certain mortgage servicing rules.

6(d) Communications With Third Parties

6(d)(2) Exceptions

    1. Prior consent. See the commentary to Sec.  1006.6(b)(4)(i) 
for guidance concerning a consumer giving prior consent directly to 
a debt collector.

6(d)(3) Reasonable Procedures for Email and Text Message Communications

Paragraph 6(d)(3)(ii)

    1. Knowledge of prohibited disclosure. For purposes of Sec.  
1006.6(d)(3)(ii), a debt collector knows that sending an email to an 
email address or a text message to a telephone number has led to a 
disclosure prohibited by Sec.  1006.6(d)(1) if any person has 
informed the debt collector of that fact.

6(d)(4) Procedures for Email Addresses

6(d)(4)(i) Procedures Based on Communication Between the Consumer and 
the Debt Collector

Paragraph 6(d)(4)(i)(B)

    1. Prior consent--in general. Section 1006.6(d)(4)(i)(B) 
provides that, for purposes of Sec.  1006.6(d)(3)(i), a debt 
collector may send an email to an email address if, among other 
things, the debt collector has received directly from the consumer 
prior consent to use the email address to communicate with the 
consumer about the debt. For purposes of Sec.  1006.6(d)(4)(i)(B), a 
consumer may provide consent directly to a debt collector through 
any medium of communication, such as in writing, electronically, or 
orally.
    2. Prior consent--consumer-provided email address. If a consumer 
provides an email address to a debt collector (including on the debt 
collector's website or online portal), the debt collector may treat 
the consumer as having consented directly to the debt collector's 
use of the email address to communicate with the consumer about the 
debt for purposes of Sec.  1006.6(d)(4)(i)(B) if the debt collector 
discloses clearly and conspicuously that the debt collector may use 
the email address to communicate with the consumer about the debt.

6(d)(4)(ii) Procedures Based on Communication by the Creditor

Paragraph 6(d)(4)(ii)(B)

    1. Communications about the account. Section 1006.6(d)(4)(ii)(B) 
provides that, for purposes of Sec.  1006.6(d)(3)(i), a debt 
collector may send an email to an email address if, among other 
things, the creditor used the email address to communicate with the 
consumer about the account giving rise to the debt. For purposes of 
Sec.  1006.6(d)(4)(ii)(B), communications about the account include, 
for example, required disclosures, bills, invoices, periodic 
statements, payment reminders, and payment confirmations. 
Communications about the account do not include, for example, 
marketing or advertising materials unrelated to the consumer's 
account.

Paragraph 6(d)(4)(ii)(C)

    1. Clear and conspicuous. Clear and conspicuous means readily 
understandable. In the case of written and electronic disclosures, 
the location and type size also must be readily noticeable and 
legible to consumers, although no minimum type size is mandated.
    2. Sample language. Section 1006.6(d)(4)(ii)(C) provides that, 
for purposes of Sec.  1006.6(d)(3)(i), a debt collector may send an 
email to an email address if, among other things, the creditor sent 
the consumer a written or electronic notice that clearly and 
conspicuously disclosed that the debt would be transferred to the 
debt collector; that the debt collector might use the email address 
to communicate with the consumer about the debt; that, if others 
have access to this email address, then it is possible they may see 
the emails; instructions for a reasonable and simple method by which 
the consumer could

[[Page 76899]]

opt out of such communications; and the date by which the debt 
collector or creditor must receive the consumer's request to opt 
out.
    i. When a creditor sends the notice in writing, the creditor may 
use, but is not required to use, the following language to satisfy 
Sec.  1006.6(d)(4)(ii)(C): ``We are transferring your account to ABC 
debt collector, and we are providing ABC debt collector with the 
following email address for you: [email address]. ABC debt collector 
may use this email address to communicate with you about the debt. 
If others have access to this email address, then it is possible 
they may see the emails. If you would like to opt out of 
communications by ABC debt collector to [email address], please fill 
out the enclosed form and return it in the enclosed envelope so that 
we receive it by [date].''
    ii. When a creditor sends the notice electronically, the 
creditor may use, but is not required to use, the following language 
to satisfy Sec.  1006.6(d)(4)(ii)(C): ``We are transferring your 
account to ABC debt collector, and we are providing ABC debt 
collector with the following email address for you: [email address]. 
ABC debt collector may use this email address to communicate with 
you about the debt. If others have access to this email address, 
then it is possible they may see the emails. If you would like to 
opt out of communications by ABC debt collector to [email address], 
please click here by [date].''
    3. Combined notice. A notice provided by the creditor under 
Sec.  1006.6(d)(4)(ii)(C) may be contained in a larger communication 
that conveys other information, as long as the notice is clear and 
conspicuous.

Paragraph 6(d)(4)(ii)(C)(1)

    1. Identification of the debt collector. Under Sec.  
1006.6(d)(4)(ii)(C)(1), the notice must clearly and conspicuously 
disclose, among other things, that the debt has been or will be 
transferred to the debt collector. To satisfy this requirement, the 
notice must identify the name of the specific debt collector to 
which the debt has been or will be transferred.

Paragraph 6(d)(4)(ii)(C)(4)

    1. Reasonable and simple method to opt out. Under Sec.  
1006.6(d)(4)(ii)(C)(4), the notice must clearly and conspicuously 
disclose instructions for a reasonable and simple method by which 
the consumer can opt out of the debt collector's use of the email 
address to communicate about the debt. The following examples 
illustrate the rule.
    i. When the creditor sends the notice in writing, reasonable and 
simple methods for opting out include providing a reply form and a 
pre-addressed envelope together with the opt-out notice. Requiring a 
consumer to call or write to obtain a form for opting out, rather 
than including the form with the opt-out notice, does not meet the 
requirement to provide a reasonable and simple method for opting 
out.
    ii. When the creditor sends the notice electronically, 
reasonable and simple methods for opting out include providing an 
electronic means to opt out, such as a hyperlink, or allowing the 
consumer to opt out by replying to the communication with the word 
``stop.'' Requiring a consumer who receives the opt-out notice 
electronically to opt out by postal mail, telephone, or visiting a 
website without providing a link does not meet the requirement to 
provide a reasonable and simple method for opting out.

Paragraph 6(d)(4)(ii)(C)(5)

    1. Recipient of opt-out request. Under Sec.  
1006.6(d)(4)(ii)(C)(5), the notice must clearly and conspicuously 
disclose the date by which a debt collector or creditor must receive 
a consumer's request to opt out, which must be at least 35 days 
after the date the notice is sent. The notice may instruct the 
consumer to respond to the debt collector or to the creditor but not 
to both.

Paragraph 6(d)(4)(ii)(D)

    1. Effect of opt-out request after expiration of opt-out period. 
If a consumer requests after the expiration of the opt-out period 
that the debt collector not communicate using the email address 
identified in the opt-out notice, such as by returning the notice or 
opting out under Sec.  1006.6(e), Sec.  1006.14(h)(1) prohibits the 
debt collector from communicating or attempting to communicate with 
the consumer using that email address. If the consumer requests 
after the expiration of the opt-out period that the debt collector 
not communicate with the consumer by email, Sec.  1006.14(h)(1) 
prohibits the debt collector from communicating or attempting to 
communicate with the consumer by email, including by using the 
specific email address identified in the notice. For more on 
prohibited communication media and certain exceptions, see Sec.  
1006.14(h) and its associated commentary. If after the expiration of 
the opt-out period the consumer notifies the debt collector in 
writing or electronically using a medium of electronic communication 
through which a debt collector accepts electronic communications 
from consumers that the consumer refuses to pay the debt or wants 
the debt collector to cease further communication with the consumer, 
Sec.  1006.6(c)(1) prohibits the debt collector from communicating 
or attempting to communicate with the consumer with respect to the 
debt, subject to the exceptions in Sec.  1006.6(c)(2). For more on 
communications with a consumer after refusal to pay or a cease 
communication notice, see Sec.  1006.6(c) and its associated 
commentary.
    2. Scope of opt-out request. In the absence of evidence that the 
consumer refuses to pay the debt or wants the debt collector to 
cease all communication with the consumer, a consumer's request 
under Sec.  1006.6(d)(4)(ii)(D) to opt out of a debt collector's use 
of a particular email address to communicate with the consumer by 
email does not constitute a notification to cease further 
communication with respect to the debt under Sec.  1006.6(c)(1).

Paragraph 6(d)(4)(ii)(E)

    1. Domain name available for use by the general public. Under 
Sec.  1006.6(d)(4)(ii)(E), the domain name of an email address is 
available for use by the general public when multiple members of the 
general public are permitted to use the same domain name, whether 
for free or through a paid subscription. Such a name does not 
include one that is reserved for use by specific registrants, such 
as a domain name branded for use by a particular commercial entity 
(e.g., [email protected]) or reserved for particular 
types of institutions (e.g., [email protected], 
[email protected], or [email protected]).
    2. Knowledge of employer-provided email address. For purposes of 
Sec.  1006.6(d)(4)(ii)(E), a debt collector knows that an email 
address is provided by the consumer's employer if any person has 
informed the debt collector that the address is employer provided. 
However, Sec.  1006.6(d)(4)(ii)(E) does not require a debt collector 
to conduct a manual review of consumer accounts to determine whether 
an email address might be employer provided.

6(d)(4)(iii) Procedures Based on Communication by the Prior Debt 
Collector

    1. Immediately prior debt collector. Section 1006.6(d)(4)(iii) 
provides that, for purposes of Sec.  1006.6(d)(3)(i), a debt 
collector may send an email to an email address if, among other 
things, the immediately prior debt collector used the email address 
to communicate with the consumer about the debt. For purposes of 
Sec.  1006.6(d)(4)(iii), the immediately prior debt collector is the 
debt collector immediately preceding the current debt collector. For 
example, if ABC debt collector returns a debt to the creditor and 
the creditor places the debt with XYZ debt collector, ABC debt 
collector is the immediately prior debt collector for purposes of 
Sec.  1006.6(d)(4)(iii).
    2. Examples. The following examples illustrate the rule.
    i. After obtaining a consumer's email address in accordance with 
the procedures in Sec.  1006.6(d)(4)(i) or (ii), ABC debt collector 
communicates with the consumer about the debt using that email 
address and the consumer does not opt out. ABC debt collector 
returns the debt to the creditor, who places it with XYZ debt 
collector. XYZ debt collector communicates with the consumer about 
the debt using the email address obtained by ABC debt collector. 
Assuming that the requirements of Sec.  1006.6(d)(3)(ii) are 
satisfied, XYZ debt collector may have a bona fide error defense to 
civil liability for any unintentional third-party disclosure that 
occurs during that communication because a prior debt collector 
(i.e., ABC debt collector) obtained the email address in accordance 
with the procedures in Sec.  1006.6(d)(4)(i) or (ii), the 
immediately prior debt collector (i.e., ABC debt collector) used the 
email address to communicate with the consumer about the debt, and 
the consumer did not opt out of such communications by ABC debt 
collector.
    ii. After obtaining a consumer's email address in accordance 
with the procedures in Sec.  1006.6(d)(4)(i) or (ii), ABC debt 
collector communicates with the consumer about the debt using that 
email address and the consumer does not opt out. ABC debt collector 
returns the debt to the creditor, who places it with EFG debt 
collector. EFG debt collector communicates with the consumer about 
the debt using the email address obtained by ABC debt collector, and 
the consumer does not opt out. EFG debt collector returns the debt 
to the creditor, who places it with XYZ debt collector. XYZ debt

[[Page 76900]]

collector communicates with the consumer about the debt using the 
email address obtained by ABC debt collector and used by EFG debt 
collector. Assuming that the requirements of Sec.  1006.6(d)(3)(ii) 
are satisfied, XYZ debt collector may have a bona fide error defense 
to civil liability for any unintentional third-party disclosure that 
occurs during that communication because a prior debt collector 
(i.e., ABC debt collector) obtained the email address in accordance 
with the procedures in Sec.  1006.6(d)(4)(i) or (ii), the 
immediately prior debt collector (i.e., EFG debt collector) used the 
email address to communicate with the consumer about the debt, and 
the consumer did not opt out of such communications by EFG debt 
collector.
    iii. After obtaining a consumer's email address in accordance 
with the procedures in Sec.  1006.6(d)(4)(i) or (ii), ABC debt 
collector communicates with the consumer about the debt using that 
email address and the consumer does not opt out. ABC debt collector 
returns the debt to the creditor, who places it with EFG debt 
collector, who chooses not to communicate with the consumer by 
email. EFG debt collector returns the debt to the creditor, who 
places it with XYZ debt collector. XYZ debt collector communicates 
with the consumer about the debt using the email address obtained by 
ABC debt collector. Section 1006.6(d)(4)(iii) does not provide XYZ 
debt collector with a bona fide error defense to civil liability for 
any unintentional third-party disclosure that occurs during that 
communication because the immediately prior debt collector (i.e., 
EFG debt collector) did not use the email address to communicate 
with the consumer about the debt.

6(d)(5) Procedures for Telephone Numbers for Text Messages

    1. Complete and accurate database. Section 1006.6(d)(5)(i) and 
(ii) provides that, for purposes of Sec.  1006.6(d)(3)(i), a debt 
collector may send a text message to a telephone number if, among 
other things, the debt collector confirms, using a complete and 
accurate database, that the telephone number has not been reassigned 
from the consumer to another user. For purposes of Sec.  
1006.6(d)(5)(i) and (ii), the database established by the FCC in In 
re Advanced Methods to Target & Eliminate Unlawful Robocalls (33 FCC 
Rcd. 12024 (Dec. 12, 2018)) qualifies as a complete and accurate 
database, as does any commercially available database that is 
substantially similar in terms of completeness and accuracy to the 
FCC's database.

Paragraph 6(d)(5)(i)

    1. Response to telephone call by consumer. Section 
1006.6(d)(5)(i) provides that, for purposes of Sec.  
1006.6(d)(3)(i), a debt collector may send a text message to a 
telephone number if, among other things, the consumer used the 
telephone number to communicate by text message with the debt 
collector about the debt. Section 1006.6(d)(5)(i) does not apply if 
the consumer used the telephone number to communicate only by 
telephone call with the debt collector about the debt.

Paragraph 6(d)(5)(ii)

    1. Prior consent. See comment 6(d)(4)(i)(B)-1 for guidance 
concerning how a consumer may provide prior consent directly to a 
debt collector. See comment 6(d)(4)(i)(B)-2 for guidance concerning 
when a debt collector may treat a consumer who provides a telephone 
number for text messages as having consented directly to the debt 
collector.

6(e) Opt-Out Notice for Electronic Communications or Attempts To 
Communicate

    1. In general. Section 1006.6(e) requires a debt collector who 
communicates or attempts to communicate with a consumer 
electronically in connection with the collection of a debt using a 
specific email address, telephone number for text messages, or other 
electronic-medium address to include in such communication or 
attempt to communicate a clear and conspicuous statement describing 
a reasonable and simple method by which the consumer can opt out of 
further electronic communications or attempts to communicate by the 
debt collector to that address or telephone number. See comment 
6(d)(4)(ii)(C)-1 for guidance on the meaning of clear and 
conspicuous. See comment 6(d)(4)(ii)(C)(4)-1 for guidance on the 
meaning of reasonable and simple. The following examples illustrate 
the rule.
    i. Assume that a debt collector sends a text message to a 
consumer's mobile telephone number. The text message includes the 
following instruction: ``Reply STOP to stop texts to this telephone 
number.'' Assuming that it is readily noticeable and legible to 
consumers, this instruction constitutes a clear and conspicuous 
statement describing a reasonable and simple method to opt out of 
receiving further text messages from the debt collector to that 
telephone number consistent with Sec.  1006.6(e). No minimum type 
size is mandated.
    ii. Assume that a debt collector sends the consumer an email 
that includes a hyperlink labeled: ``Click here to opt out of 
further emails to this email address.'' Assuming that it is readily 
noticeable and legible to consumers, this instruction constitutes a 
clear and conspicuous statement describing a reasonable and simple 
method to opt out of receiving further emails from the debt 
collector to that email address consistent with Sec.  1006.6(e). No 
minimum type size is mandated.
    iii. Assume that a debt collector sends the consumer an email 
that includes instructions in a textual format explaining that the 
consumer may opt out of receiving further email communications from 
the debt collector to that email address by replying with the word 
``stop'' in the subject line. Assuming that it is readily noticeable 
and legible to consumers, this instruction constitutes a clear and 
conspicuous statement describing a reasonable and simple method to 
opt out of receiving further emails from the debt collector to that 
email address consistent with Sec.  1006.6(e). No minimum type size 
is mandated.

Section 1006.10--Acquisition of Location Information

10(a) Definition

    1. Location information about deceased consumers. If a consumer 
obligated or allegedly obligated to pay any debt is deceased, 
location information includes the information described in Sec.  
1006.10(a) for a person who is authorized to act on behalf of the 
deceased consumer's estate, as described in Sec.  1006.6(a)(4) and 
its associated commentary.

10(b) Form and Content of Location Communications

Paragraph 10(b)(2)

    1. Executors, administrators, or personal representatives of a 
deceased consumer's estate. Section 1006.10(b)(2) prohibits a debt 
collector who is communicating with any person other than the 
consumer for the purpose of acquiring location information about the 
consumer from stating that the consumer owes any debt. If the 
consumer obligated or allegedly obligated to pay the debt is 
deceased, and the debt collector is attempting to locate the person 
who is authorized to act on behalf of the deceased consumer's 
estate, the debt collector does not violate Sec.  1006.10(b)(2) by 
stating that the debt collector is seeking to identify and locate 
the person who is authorized to act on behalf of the deceased 
consumer's estate. The debt collector may also state that the debt 
collector is seeking to identify and locate the person handling the 
financial affairs of the deceased consumer. For more on executors, 
administrators, and personal representatives, see Sec.  1006.6(a)(4) 
and its associated commentary.

Section 1006.14--Harassing, Oppressive, or Abusive Conduct

14(a) In General

    1. General prohibition. Section 1006.14(a), which implements 
FDCPA section 806 (15 U.S.C. 1692d), sets forth a general standard 
that prohibits a debt collector from engaging in any conduct the 
natural consequence of which is to harass, oppress, or abuse any 
person in connection with the collection of a debt. The general 
prohibition covers the specific conduct described in Sec.  
1006.14(b) through (h), as well as any conduct by the debt collector 
that is not specifically prohibited by Sec.  1006.14(b) through (h) 
but the natural consequence of which is to harass, oppress, or abuse 
any person in connection with the collection of a debt. Such conduct 
can occur regardless of the communication media the debt collector 
uses, including in-person interactions, telephone calls, audio 
recordings, paper documents, mail, email, text messages, social 
media, or other electronic media, even if not specifically addressed 
by Sec.  1006.14(b) through (h). The following example illustrates 
the rule.
    i. Assume that, in connection with the collection of a debt, a 
debt collector sends a consumer numerous, unsolicited text messages 
per day for several consecutive days. The consumer does not respond. 
Assume further that the debt collector does not communicate or 
attempt to communicate with the consumer using any other

[[Page 76901]]

communication medium and that, by sending the text messages, the 
debt collector has not violated Sec.  1006.14(b) through (h). Even 
though the debt collector's conduct does not violate any specific 
prohibition under Sec.  1006.14(b) through (h), it is likely that 
the natural consequence of the debt collector's text messages is to 
harass, oppress, or abuse the person receiving the text messages; 
when such natural consequence occurs, the debt collector has 
violated Sec.  1006.14(a) and FDCPA section 806.
    2. Cumulative effect of conduct. Whether a debt collector's 
conduct violates the general standard in Sec.  1006.14(a) may depend 
on the cumulative effect of the debt collector's conduct through any 
communication medium the debt collector uses, including in-person 
interactions, telephone calls, audio recordings, paper documents, 
mail, email, text messages, social media, or other electronic media. 
Depending on the facts and circumstances, conduct that on its own 
would violate neither the general prohibition in Sec.  1006.14(a), 
nor any specific prohibition in Sec.  1006.14(b) through (h), 
nonetheless may violate Sec.  1006.14(a) when such conduct is 
evaluated cumulatively with other conduct. The following example 
illustrates the rule as applied to a debt collector who uses 
multiple communication media to communicate or attempt to 
communicate with a person.
    i. Assume that a debt collector places seven unanswered 
telephone calls within seven consecutive days to a consumer in 
connection with the collection of a debt. During this same period, 
the debt collector also sends multiple additional unsolicited emails 
about the debt to the consumer. The consumer does not respond. The 
frequency of the debt collector's telephone calls during the seven-
day period does not exceed the telephone call frequencies described 
in Sec.  1006.14(b)(2)(i), so the debt collector is presumed to 
comply with Sec.  1006.14(b)(1). Assume further that no evidence is 
offered to rebut the presumption of compliance, such that the debt 
collector complies with Sec.  1006.14(b)(1). Also assume that, for 
purposes of this illustrative example only, the frequency of the 
debt collector's emails alone does not violate Sec.  1006.14(a). It 
nevertheless is likely that the cumulative effect of the debt 
collector's telephone calls and emails is harassment; when such 
natural consequence occurs, the debt collector has violated Sec.  
1006.14(a) and FDCPA section 806.

14(b) Repeated or Continuous Telephone Calls or Telephone Conversations

    1. Placing telephone calls repeatedly or continuously. Section 
1006.14(b) prohibits a debt collector from, in connection with the 
collection of a debt, placing telephone calls or engaging any person 
in telephone conversation repeatedly or continuously with intent to 
annoy, abuse, or harass any person at the called number, and it 
describes when a debt collector is presumed to have complied with or 
violated that prohibition. For purposes of Sec.  1006.14(b)(1) 
through (4), ``placing a telephone call'' includes conveying a 
ringless voicemail but does not include sending an electronic 
message (e.g., a text message or an email) that may be received on a 
mobile telephone.

14(b)(1) In General

    1. Effect of compliance. A debt collector who complies with 
Sec.  1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 1692d(5)) 
complies with Sec.  1006.14(a) and FDCPA section 806 (15 U.S.C. 
1692d) solely with respect to the frequency of its telephone calls. 
The debt collector nevertheless could violate Sec.  1006.14(a) and 
FDCPA section 806 if the natural consequence of another aspect of 
the debt collector's telephone calls, unrelated to frequency, is to 
harass, oppress, or abuse any person in connection with the 
collection of a debt. See also comment 14(a)-2 regarding the 
cumulative effect of the debt collector's conduct.
    2. Example. Assume that a debt collector communicates or 
attempts to communicate with a consumer about a particular debt only 
by telephone. The debt collector does not exceed either of the 
telephone call frequencies described in Sec.  1006.14(b)(2)(i). 
Under Sec.  1006.14(b)(2)(i), the debt collector is presumed to 
comply with Sec.  1006.14(b)(1). Assume, further, that no evidence 
is offered to rebut that presumption of compliance. Pursuant to 
Sec.  1006.14(b)(1), the debt collector complies with Sec.  
1006.14(a) and FDCPA section 806, but only with respect to the 
frequency of its telephone calls. Assume, however, that one of the 
debt collector's telephone calls results in the debt collector 
leaving a voicemail that contains obscene language. Even though the 
debt collector does not violate Sec.  1006.14(a) and FDCPA section 
806 based solely on the frequency of the telephone calls, the debt 
collector's obscene voicemail would violate Sec.  1006.14(a) and (d) 
and FDCPA section 806 and 806(2) (15 U.S.C. 1692, 1692d(2)).

14(b)(2) Telephone Call Frequencies; Presumptions of Compliance and 
Violation

Paragraph 14(b)(2)(i)

    1. Presumption of compliance; examples. Section 1006.14(b)(2)(i) 
provides that a debt collector is presumed to comply with Sec.  
1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 1692d(5)) if the 
debt collector places a telephone call to a particular person in 
connection with the collection of a particular debt neither: More 
than seven times within seven consecutive days (Sec.  
1006.14(b)(2)(i)(A)); nor within a period of seven consecutive days 
after having had a telephone conversation with the person in 
connection with the collection of such debt (Sec.  
1006.14(b)(2)(i)(B)). For the presumption of compliance to apply, 
the debt collector's telephone call frequencies must not exceed 
either prong of Sec.  1006.14(b)(2)(i). The telephone call 
frequencies are subject to the exclusions in Sec.  1006.14(b)(3). In 
addition, for purposes of Sec.  1006.14(b)(2)(i)(B), the date of the 
telephone conversation is the first day of the seven-consecutive-day 
period. The following examples illustrate the rule.
    i. On Wednesday, April 1, a debt collector first attempts to 
communicate with a consumer in connection with the collection of a 
credit card debt by placing a telephone call and leaving a limited-
content message. Between Thursday, April 2, and Tuesday, April 7, 
the debt collector places six more telephone calls to the consumer 
about the debt, all of which go unanswered. As of Tuesday, April 7, 
the debt collector has placed seven telephone calls to the consumer 
in connection with the collection of the credit card debt within the 
period of seven consecutive days that started on Wednesday, April 1. 
Assume the debt collector does not place any additional telephone 
calls about the debt until Wednesday, April 8. Under Sec.  
1006.14(b)(2)(i), the debt collector is presumed to comply with 
Sec.  1006.14(b)(1) and FDCPA section 806(5).
    ii. On Thursday, August 13, a consumer places a telephone call 
to, and initiates a telephone conversation with, a debt collector 
regarding a particular debt. Assume that the debt collector does not 
place a telephone call to the consumer in connection with the 
collection of that debt again prior to Thursday, August 20. The debt 
collector is presumed to comply with Sec.  1006.14(b)(1) and FDCPA 
section 806(5).
    iii. On Tuesday, October 6, a debt collector first attempts to 
communicate with a particular third party for the purpose of 
acquiring location information about a consumer by placing a 
telephone call to that third party. The call is unanswered. The debt 
collector places up to six more unanswered telephone calls to that 
third party for the purpose of acquiring location information about 
the consumer through Monday, October 12. The debt collector is 
presumed to comply with Sec.  1006.14(b)(1) and FDCPA section 
806(5). See Sec.  1006.10(c) for further guidance concerning when a 
debt collector is prohibited from communicating with a person other 
than the consumer for the purpose of acquiring location information.
    2. Factors to rebut the presumption of compliance. To rebut the 
presumption of compliance, it must be proven that a debt collector 
who did not place a telephone call in excess of either of the 
telephone call frequencies described in Sec.  1006.14(b)(2)(i) 
nevertheless placed a telephone call or engaged a person in 
telephone conversation repeatedly or continuously with intent to 
annoy, abuse, or harass any person at the called number. For 
purposes of determining whether the presumption of compliance has 
been rebutted, it is assumed that debt collectors intend the natural 
consequence of their actions. Comments 14(b)(2)(i)-2.i through .iv 
provide a non-exhaustive list of factors that may rebut the 
presumption of compliance. The factors may be considered either 
individually or in combination with one another (or other non-
specified factors). The factors may be viewed in light of any other 
relevant facts and circumstances and therefore may apply to varying 
degrees. Factors that may rebut the presumption of compliance 
include:
    i. The frequency and pattern of telephone calls the debt 
collector places to a person, including the intervals between them. 
The considerations relevant to this factor include whether the debt 
collector placed telephone calls to a person in rapid succession 
(e.g., two unanswered telephone calls to the same telephone number 
within five minutes) or in a highly concentrated manner (e.g., seven 
telephone calls to the same telephone number within one day). For 
example, assume the same facts as in comment 14(b)(2)(i)-1.i, except 
assume that, after the

[[Page 76902]]

debt collector placed the first telephone call to the consumer about 
the credit card debt on Wednesday, April 1, the debt collector 
placed six additional telephone calls to the consumer about that 
debt on Friday, April 3. Under Sec.  1006.14(b)(2)(i), the debt 
collector is presumed to comply with Sec.  1006.14(b)(1) and FDCPA 
section 806(5), but the high concentration of telephone calls on 
Friday, April 3, is a factor that may rebut the presumption of 
compliance.
    ii. The frequency and pattern of any voicemails that the debt 
collector leaves for a person, including the intervals between them. 
The considerations relevant to this factor include whether the debt 
collector left voicemails for a person in rapid succession (e.g., 
two voicemails within five minutes left at the same telephone 
number) or in a highly concentrated manner (e.g., seven voicemails 
left at the same telephone number within one day).
    iii. The content of a person's prior communications with the 
debt collector. Among the considerations relevant to this factor are 
whether the person previously informed the debt collector, for 
example, that the person did not wish to be contacted again about 
the particular debt, that the person was refusing to pay the 
particular debt, or that the person did not owe the particular debt. 
This factor also includes a consumer's cease communication 
notification described in Sec.  1006.6(c) and a consumer's request 
under Sec.  1006.14(h) that the debt collector not use telephone 
calls to communicate or attempt to communicate with the consumer. 
The amount of time elapsed since any such prior communications also 
may be relevant to this factor.
    iv. The debt collector's conduct in prior communications or 
attempts to communicate with the person. Among the considerations 
relevant to this factor are whether, during a prior communication or 
attempt to communicate with a person, the debt collector, for 
example, used obscene, profane, or otherwise abusive language (see 
Sec.  1006.14(d)), used or threatened to use violence or other 
criminal means to harm the person (see Sec.  1006.14(c)), or called 
at an inconvenient time or place (see Sec.  1006.6(b)(1)). The 
amount of time elapsed since any such prior communications or 
attempts to communicate also may be relevant to this factor.
    3. Misdirected telephone calls. Section 1006.14(b)(2)(i) 
provides that a debt collector is presumed to comply with Sec.  
1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 1692d(5)) if the 
debt collector's telephone call frequencies do not exceed the 
telephone call frequencies described in Sec.  1006.14(b)(2)(i). If, 
within a period of seven consecutive days, a debt collector attempts 
to communicate with a particular person by placing telephone calls 
to a particular telephone number, and the debt collector then learns 
that the telephone number is not that person's number, the telephone 
calls that the debt collector made to that number are not considered 
to have been telephone calls placed to that person during that 
seven-consecutive-day period for purposes of Sec.  1006.14(b)(2)(i). 
For example:
    i. Assume that a debt collector first attempts to communicate 
with a consumer on Monday, and again on Wednesday, by placing one 
unanswered telephone call to a particular telephone number on each 
of those days. On Thursday, the debt collector learns that the 
telephone number belongs to someone else and that the consumer does 
not answer telephone calls to that number. For purposes of Sec.  
1006.14(b)(2)(i), the debt collector has not yet placed any 
telephone calls to that consumer during that seven-consecutive-day 
period.

Paragraph 14(b)(2)(ii)

    1. Presumption of a violation; examples. Section 
1006.14(b)(2)(ii) provides that a debt collector is presumed to 
violate Sec.  1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 
1692d(5)) if the debt collector places a telephone call to a 
particular person in connection with the collection of a particular 
debt in excess of either of the telephone call frequencies described 
in Sec.  1006.14(b)(2)(i). The telephone call frequencies are 
subject to the exclusions in Sec.  1006.14(b)(3). The following 
examples illustrate the rule.
    i. On Wednesday, April 1, a debt collector first attempts to 
communicate with a consumer in connection with the collection of a 
mortgage debt by placing a telephone call and leaving a limited-
content message. On each of the next three business days (i.e., on 
Thursday, April 2, Friday, April 3, and Monday, April 6), the debt 
collector places two additional telephone calls to the consumer 
about the debt, all of which go unanswered. On Tuesday, April 7, the 
debt collector places an additional telephone call to the consumer 
about the debt. The debt collector has placed a total of eight 
telephone calls to the consumer about the debt during the seven-day 
period starting Wednesday, April 1. None of the calls was subject to 
the exclusions in Sec.  1006.14(b)(3). The debt collector is 
presumed to violate Sec.  1006.14(b)(1) and FDCPA section 806(5).
    ii. On Tuesday, August 11, a debt collector first attempts to 
communicate with a consumer in connection with the collection of a 
credit card debt by placing a telephone call to the consumer that 
the consumer does not answer. On Friday, August 14, the debt 
collector again places a telephone call to the consumer and has a 
telephone conversation with the consumer in connection with the 
collection of the debt. Subject to the exclusions in Sec.  
1006.14(b)(3), the debt collector is presumed to violate Sec.  
1006.14(b)(1) and FDCPA section 806(5) if the debt collector places 
a telephone call to the consumer in connection with the collection 
of that debt again prior to Friday, August 21.
    2. Factors to rebut the presumption of a violation. To rebut the 
presumption of a violation, it must be proven that a debt collector 
who placed telephone calls in excess of either of the frequencies 
described in Sec.  1006.14(b)(2)(i) nevertheless did not place a 
telephone call or engage any person in telephone conversation 
repeatedly or continuously with intent to annoy, abuse, or harass 
any person at the called number. For purposes of determining whether 
the presumption of a violation has been rebutted, it is assumed that 
debt collectors intend the natural consequence of their actions. 
Comments 14(b)(2)(ii)-2.i through .iv provide a non-exhaustive list 
of factors that may rebut the presumption of a violation. The 
factors may be considered either individually or in combination with 
one another (or other non-specified factors). The factors may be 
viewed in light of any other relevant facts and circumstances and 
therefore may apply to varying degrees. Factors that may rebut the 
presumption of a violation include:
    i. Whether a debt collector placed a telephone call to comply 
with, or as required by, applicable law. For example, assume the 
same facts as in comment 14(b)(2)(ii)-1.i, except assume that the 
debt collector placed the final telephone call of the seven-
consecutive-day period to inform the consumer of available loss 
mitigation options in compliance with the Bureau's mortgage 
servicing rules under Regulation X, 12 CFR 1024.39(a). The debt 
collector's compliance with applicable law is a factor that may 
rebut the presumption of a violation.
    ii. Whether a debt collector placed a telephone call that was 
directly related to active litigation involving the collection of a 
particular debt. For example, assume the same facts as in comment 
14(b)(2)(ii)-1.ii, except assume that, after the debt collector and 
the consumer had a telephone conversation about the credit card debt 
on Friday, August 14, the debt collector placed another telephone 
call to the consumer before Friday, August 21, to complete a court-
ordered communication with the consumer about the debt, or as part 
of negotiations to settle active debt collection litigation 
regarding the debt. The direct relationship between the additional 
telephone call and the active debt collection litigation is a factor 
that may rebut the presumption of a violation.
    iii. Whether a debt collector placed a telephone call in 
response to a consumer's request for additional information when the 
exclusion in Sec.  1006.14(b)(3)(i) for telephone calls made with 
the consumer's prior consent given directly to the debt collector 
did not apply. For example, assume the same facts as in comment 
14(b)(2)(ii)-1.ii, except assume that, during the telephone 
conversation about the credit card debt on Friday, August 14, the 
consumer told the debt collector that the consumer would like more 
information about the amount of the debt but that the consumer could 
not talk at that moment. The consumer ended the telephone call 
before the debt collector could seek prior consent under Sec.  
1006.14(b)(3)(i) to call back with the requested information. The 
debt collector placed another telephone call to the consumer prior 
to Friday, August 21, to provide the requested information. The fact 
that the debt collector placed the additional telephone call in 
response to the consumer's request is a factor that may rebut the 
presumption of a violation.
    iv. Whether a debt collector placed a telephone call to convey 
information to the consumer that, as shown through evidence, would 
provide the consumer with an opportunity to avoid a demonstrably 
negative effect relating to the collection of the particular debt, 
where the negative effect was not in the debt collector's control, 
and where time was of the essence. For example, in each of the 
following three scenarios, assume the

[[Page 76903]]

same facts as in comment 14(b)(2)(ii)-1.ii, and also assume that:
    A. During the telephone conversation about the credit card debt 
on Friday, August 14, the debt collector and the consumer engaged in 
a lengthy conversation regarding settlement terms, and, toward the 
end of the conversation, the telephone call dropped. The debt 
collector immediately placed an additional telephone call to the 
consumer to complete the conversation. The fact that the debt 
collector placed the telephone call to permit the debt collector and 
the consumer to complete the conversation about settlement terms, 
which provided the consumer an opportunity to avoid a demonstrably 
negative effect that was not in the debt collector's control (i.e., 
having to repeat a substantive conversation with a potentially 
different representative of the debt collector) and where time was 
of the essence (i.e., to prevent the delay of settlement 
negotiations by seven days) is a factor that may rebut the 
presumption of a violation.
    B. The consumer previously entered into a payment plan with the 
debt collector regarding the credit card debt. The conditions for 
the payment plan were set by the creditor, and among those 
conditions is that only the creditor, in its sole discretion, may 
approve waivers of late fees. On Monday, August 17, the debt 
collector learned that the consumer's payment failed to process, and 
the applicable grace period was set to expire on Tuesday, August 18. 
The debt collector placed a telephone call to the consumer on Monday 
to remind the consumer that a late fee would be applied by the 
creditor for non-payment unless the consumer made the payment by the 
next day. The fact that the debt collector placed the telephone call 
to alert the consumer to the pending penalty, giving the consumer an 
opportunity to avoid a demonstrably negative effect that was not in 
the debt collector's control and where time was of the essence, is a 
factor that may rebut the presumption of a violation.
    C. On Monday, August 17, the debt collector placed a telephone 
call to the consumer to offer the consumer a ``one-time only'' 
discount on the payment of the credit card debt. The debt collector 
stated that the offer would expire the next day when, in fact, the 
debt collector could have offered the same or a similar discount 
through the end of August. Because the negative effect on the 
consumer was in the debt collector's control, the discount offer is 
not a factor that may rebut the presumption of a violation.

14(b)(3) Certain Telephone Calls Excluded From Telephone Call 
Frequencies

Paragraph 14(b)(3)(i)

    1. Prior consent. Section 1006.14(b)(3)(i) excludes from the 
telephone call frequencies described in Sec.  1006.14(b)(2) certain 
telephone calls placed to a person who gives prior consent. See 
Sec.  1006.6(b)(4)(i) and its associated commentary for guidance 
about giving prior consent directly to a debt collector. Nothing in 
Sec.  1006.14(b)(3)(i) regarding prior consent for telephone call 
frequencies permits a debt collector to communicate, or attempt to 
communicate, with a consumer as prohibited by Sec. Sec.  1006.6(b) 
and 1006.14(h).
    2. Duration of prior consent. For purposes of Sec.  
1006.14(b)(3)(i), if a person gives prior consent for additional 
telephone calls about a particular debt directly to a debt 
collector, any telephone calls that the debt collector thereafter 
places to the person about that particular debt do not count toward 
the telephone call frequencies described in Sec.  1006.14(b)(2) for 
a period of up to seven consecutive days. A person's prior consent 
may expire before the conclusion of the seven-consecutive-day 
period. A person's prior consent expires when any of the following 
occurs: (1) The person consented to the additional telephone calls 
for a shorter time period and such time period has ended; (2) the 
person revokes such prior consent; or (3) the debt collector has a 
telephone conversation with the person regarding the particular 
debt.
    3. Examples. The following examples illustrate how Sec.  
1006.14(b)(3)(i) applies:
    i. On Friday, April 3, a debt collector places a telephone call 
to a consumer. During the ensuing telephone conversation in 
connection with the collection of a debt, the consumer tells the 
debt collector to ``call back on Monday.'' Absent an exception, 
under Sec.  1006.14(b)(2)(ii), the debt collector would be presumed 
to violate Sec.  1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 
1692d(5)) if the debt collector called the consumer on Monday, April 
6, because the additional telephone call would exceed the frequency 
described in Sec.  1006.14(b)(2)(i)(B). Under Sec.  
1006.14(b)(3)(i), however, in the scenario described (and absent any 
other facts), the debt collector could, pursuant to the consumer's 
prior consent, place telephone calls to the consumer on Monday, 
April 6, and not lose a presumption of compliance with Sec.  
1006.14(b)(1) and FDCPA section 806(5).
    ii. Assume the same facts as in the preceding example, except 
that the consumer does not specify a particular day the debt 
collector may call back. Assume further that, on Monday, April 6, 
the debt collector calls the consumer back and has a telephone 
conversation with the consumer. The exception in Sec.  
1006.14(b)(3)(i) does not apply to subsequent telephone calls placed 
by the debt collector to the consumer, absent additional prior 
consent from the consumer. For example, if the debt collector, 
without additional prior consent, placed a telephone call to the 
consumer on Wednesday, April 8, that telephone call would count 
toward the telephone call frequencies described in Sec.  
1006.14(b)(2), and, pursuant to Sec.  1006.14(b)(2)(ii), the debt 
collector would be presumed to violate Sec.  1006.14(b)(1) and FDCPA 
section 806(5).
    iii. Between Monday, June 1, and Wednesday, June 3, a debt 
collector places three unanswered telephone calls to a consumer in 
connection with the collection of a debt. Also on Wednesday, June 3, 
the debt collector sends the consumer an email message in connection 
with the collection of the debt. The consumer responds by email on 
Thursday, June 4, requesting additional information about available 
repayment options related to the debt and writes, ``You can call me 
at 123-456-7891 to discuss the repayment options.'' The debt 
collector receives the consumer's prior consent by email on 
Thursday, June 4, and thereafter places eight unanswered telephone 
calls to the consumer between Monday, June 8, and Wednesday, June 
10. Because the consumer provided prior consent directly to the debt 
collector, the exclusion in Sec.  1006.14(b)(3)(i) applies to the 
eight telephone calls placed by the debt collector during the seven-
consecutive-day period that began with receipt of the consumer's 
consent on Thursday, June 4. Those telephone calls therefore do not 
count toward the telephone call frequencies described in Sec.  
1006.14(b)(2)(i). However, any telephone calls placed by the debt 
collector after the end of the seven-day period (i.e., on or after 
Thursday, June 11) would count toward the telephone call frequencies 
described in Sec.  1006.14(b)(2)(i), unless the consumer again gives 
prior consent directly to the debt collector.

Paragraph 14(b)(3)(ii)

    1. Unconnected telephone calls. Section 1006.14(b)(3)(ii) 
provides that telephone calls placed to a person do not count toward 
the telephone call frequencies described in Sec.  1006.14(b)(2)(i) 
if they do not connect to the dialed number. A debt collector's 
telephone call does not connect to the dialed number if, for 
example, the debt collector receives a busy signal or an indication 
that the dialed number is not in service. Conversely, a telephone 
call placed to a person counts toward the telephone call frequencies 
described in Sec.  1006.14(b)(2)(i) if it connects to the dialed 
number, unless an exclusion in Sec.  1006.14(b)(3) applies. A debt 
collector's telephone call connects to the dialed number if, for 
example, the telephone call is answered, even if it subsequently 
drops; if the telephone call causes a telephone to ring at the 
dialed number but no one answers it; or if the telephone call is 
connected to a voicemail or other recorded message, even if it does 
not cause a telephone to ring and even if the debt collector is 
unable to leave a voicemail.

14(b)(4) Definition

    1. Particular debt. Section 1006.14(b)(2) establishes 
presumptions of compliance and violation with respect to Sec.  
1006.14(b)(1) and FDCPA section 806(5) (15 U.S.C. 1692d(5)) based on 
the frequency with which a debt collector places telephone calls to, 
or engages in telephone conversation with, a person in connection 
with the collection of a particular debt. Section 1006.14(b)(4) 
provides that, except in the case of student loan debt, the term 
particular debt means each of a consumer's debts in collection. For 
student loan debt, Sec.  1006.14(b)(4) provides that the term 
particular debt means all student loan debts that a consumer owes or 
allegedly owes that were serviced under a single account number at 
the time the debts were obtained by a debt collector.
    i. Placing a telephone call in connection with the collection of 
a particular debt. Under Sec.  1006.14(b)(2)(i)(A), if a debt 
collector places a telephone call to a person and initiates a 
conversation or leaves a voicemail about one particular debt, the 
debt collector

[[Page 76904]]

counts the telephone call as a telephone call in connection with the 
collection of the particular debt, subject to the exclusions in 
Sec.  1006.14(b)(3). If a debt collector places a telephone call to 
a person and initiates a conversation or leaves a voicemail about 
more than one particular debt, the debt collector counts the 
telephone call as a telephone call in connection with the collection 
of each such particular debt, subject to the exclusions in Sec.  
1006.14(b)(3). If a debt collector places a telephone call to a 
person but neither initiates a conversation about a particular debt 
nor leaves a voicemail that refers to a particular debt, or if the 
debt collector's telephone call is unanswered, the debt collector 
counts the telephone call as a telephone call in connection with the 
collection of at least one particular debt, unless an exclusion in 
Sec.  1006.14(b)(3) applies.
    ii. Engaging in a telephone conversation in connection with the 
collection of a particular debt. Under Sec.  1006.14(b)(2)(i)(B), if 
a debt collector and a person discuss one particular debt during a 
telephone conversation, the debt collector has engaged in a 
telephone conversation in connection with the collection of the 
particular debt, regardless of which party initiated the discussion 
about the particular debt, subject to the exclusions in Sec.  
1006.14(b)(3). If a debt collector and a person discuss more than 
one particular debt during a telephone conversation, the debt 
collector has engaged in a telephone conversation in connection with 
the collection of each such particular debt, regardless of which 
party initiated the discussion about the particular debts, subject 
to the exclusions in Sec.  1006.14(b)(3). If no particular debt is 
discussed during a telephone conversation between a debt collector 
and a person, the debt collector counts the conversation as a 
telephone conversation in connection with the collection of at least 
one particular debt, unless an exclusion in Sec.  1006.14(b)(3) 
applies.
    2. Examples. The following examples illustrate the rule.
    i. A debt collector is attempting to collect a medical debt and 
two credit card debts (denominated A and B for this example) from 
the same consumer. Under Sec.  1006.14(b)(2)(i)(A), a debt collector 
may count an unanswered telephone call as one telephone call placed 
toward any one particular debt, even if the debt collector intended 
to discuss more than one particular debt had the telephone call 
resulted in a telephone conversation. Therefore, if the debt 
collector, within a period of seven consecutive days, places a total 
of 21 unanswered telephone calls, seven of which the debt collector 
counted as unanswered telephone calls to the consumer in connection 
with the collection of the medical debt, seven of which the debt 
collector counted as unanswered telephone calls to the consumer in 
connection with the collection of credit card debt A, and seven of 
which the debt collector counted as unanswered telephone calls to 
the consumer in connection with the collection of credit card debt 
B, the debt collector is presumed to comply with Sec.  1006.14(b)(1) 
and FDCPA section 806(5), even if, for example, the debt collector 
intended to discuss both credit card debt A and credit card debt B 
had any of the telephone calls with respect to the credit card debts 
resulted in a telephone conversation.
    ii. A debt collector is attempting to collect a medical debt and 
a credit card debt from the same consumer. The debt collector places 
a telephone call to the consumer, intending to discuss both 
particular debts, but the consumer does not answer, and the 
telephone call goes to voicemail. The debt collector leaves a 
limited-content message, as defined in Sec.  1006.2(j). Because the 
limited-content message does not specifically refer to any 
particular debt, under Sec.  1006.14(b)(2)(i)(A), a debt collector 
may count the voicemail as one telephone call placed toward either 
of the particular debts, even though the debt collector intended to 
discuss both particular debts if the telephone call had resulted in 
a telephone conversation.
    iii. A debt collector is attempting to collect a medical debt 
and a credit card debt from the same consumer. On Monday, November 
9, the debt collector places a telephone call to, and engages in a 
telephone conversation with, the consumer solely in connection with 
the collection of the medical debt. The debt collector does not 
place any telephone calls to the consumer in connection with the 
collection of the credit card debt. Regarding the medical debt, 
under Sec.  1006.14(b)(2)(i)(A) and (B) respectively, the debt 
collector has placed a telephone call to, and has and engaged in a 
telephone conversation with, the consumer in connection with the 
collection of the particular debt, unless an exclusion in Sec.  
1006.14(b)(3) applies. Regarding the credit card debt, under Sec.  
1006.14(b)(2)(i)(A) and (B) respectively, the debt collector has 
neither placed a telephone call to, nor engaged in a telephone 
conversation with, the consumer in connection with the collection of 
the particular debt.
    iv. Assume the same facts as in the preceding example, except 
that on Monday, November 9, the debt collector engages in a 
telephone conversation with the consumer in connection with the 
collection of both the medical debt and the credit card debt. Under 
Sec.  1006.14(b)(2)(i)(A) and (B) respectively, the debt collector 
has placed a telephone call to, and has engaged in a telephone 
conversation with, the consumer in connection with the collection of 
both the medical debt and the credit card debt, unless an exclusion 
in Sec.  1006.14(b)(3) applies.
    v. A debt collector is attempting to collect a medical debt and 
a credit card debt from the same consumer. Beginning on Monday, 
November 9, and through Wednesday, November 11, the debt collector 
places two unanswered telephone calls to the consumer which the debt 
collector counts as telephone calls in connection with the 
collection of the medical debt, and four unanswered telephone calls 
to the consumer which the debt collector counts as telephone calls 
in connection with the collection of the credit card debt. On 
Thursday, November 12, the debt collector places a telephone call 
to, and engages in a general telephone conversation with, the 
consumer, but the debt collector and the consumer do not discuss 
either particular debt. Under Sec.  1006.14(b)(2)(i)(A) and (B) 
respectively, the debt collector may count the November 12 telephone 
call and ensuing conversation toward either the medical debt or the 
credit card debt. For example, if the debt collector counts the 
November 12 telephone call and ensuing conversation toward the 
collection of only the medical debt, then, during this time period, 
the debt collector has placed three telephone calls and has had one 
conversation in connection with the collection of the medical debt, 
and has placed four telephone calls and has had no conversations in 
connection with the collection of the credit card debt.
    vi. A debt collector is attempting to collect a medical debt and 
a credit card debt from the same consumer. On Monday, November 9, 
the debt collector places a telephone call to, and initiates a 
telephone conversation with, the consumer about the collection of 
the medical debt. The consumer states that the consumer does not 
want to discuss the medical debt, and instead initiates a discussion 
about the credit card debt. Under Sec.  1006.14(b)(2)(i)(A) and (B) 
respectively, the debt collector has both placed a telephone call 
to, and engaged in a telephone conversation with, the consumer in 
connection with the collection of the medical debt, even though the 
consumer was unwilling to engage in the discussion initiated by the 
debt collector regarding the medical debt. Under Sec.  
1006.14(b)(2)(i)(A) and (B) respectively, the debt collector has not 
placed a telephone call to the consumer in connection with the 
credit card debt, but the debt collector has engaged in a telephone 
conversation in connection with the collection of the credit card 
debt, even though the consumer, not the debt collector, initiated 
the discussion about the credit card debt.
    vii. A debt collector is attempting to collect three student 
loan debts that were serviced under a single account number at the 
time that they were obtained by a debt collector and that are owed 
or allegedly owed by the same consumer. All three debts are treated 
as a single debt for purposes of Sec.  1006.14(b)(2). The debt 
collector is presumed to comply with Sec.  1006.14(b)(1) and FDCPA 
section 806(5) if the debt collector places seven or fewer telephone 
calls within seven consecutive days to the consumer in connection 
with the collection of the three student loan debts, and the debt 
collector does not place a telephone call within a period of seven 
consecutive days after having had a telephone conversation with the 
consumer in connection with the collection of any one of the three 
student loan debts, unless an exclusion in Sec.  1006.14(b)(3) 
applies.

14(h) Prohibited Communication Media

14(h)(1) In General

    1. Communication media designations. Section 1006.14(h)(1) 
prohibits a debt collector from communicating or attempting to 
communicate with a person in connection with the collection of any 
debt through a medium of communication if the person has requested 
that the debt collector not use that medium to communicate with the 
person.

[[Page 76905]]

The debt collector may ask follow-up questions regarding preferred 
communication media to clarify statements by the person. For 
examples of communication media, see comment 2(d)-1.
    2. Specific address or telephone number. Within a medium of 
communication, a person may request that a debt collector not use a 
specific address or telephone number. For example, if a person has 
two mobile telephone numbers, the person may request that the debt 
collector not use one or both mobile telephone numbers.
    3. Examples. The following examples illustrate the prohibition 
in Sec.  1006.14(h)(1).
    i. Assume that a person tells a debt collector to ``stop 
calling'' the person. Based on these facts, the person has requested 
that the debt collector not use telephone calls to communicate with 
the person and, thereafter, Sec.  1006.14(h)(1) prohibits the debt 
collector from communicating or attempting to communicate with the 
person through telephone calls.
    ii. Assume that, in response to receipt of either the opt-out 
procedures described in Sec.  1006.6(d)(4)(ii) or the opt-out notice 
in Sec.  1006.6(e), a consumer requests to opt out of receiving 
electronic communications from a debt collector at a particular 
email address or telephone number. Based on these facts, the 
consumer has requested that the debt collector not use that email 
address or telephone number to electronically communicate with the 
consumer for any debt and, thereafter, Sec.  1006.14(h)(1) prohibits 
the debt collector from electronically communicating or attempting 
to communicate with the consumer through that email address or 
telephone number.

14(h)(2) Exceptions

    1. Legally required communication media. Under Sec.  
1006.14(h)(2)(iii), 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. For example, assume that a debt 
collector who is also a mortgage servicer subject to the periodic 
statement requirement for residential mortgage loans under 
Regulation Z, 12 CFR 1026.41, is engaging in debt collection 
communications with a person about the person's residential mortgage 
loan. The person tells the debt collector to stop mailing letters to 
the person, and the person has not consented to receive statements 
electronically in accordance with 12 CFR 1026.41(c). Although the 
person has requested that the debt collector not use mail to 
communicate with the person, Sec.  1006.14(h)(2)(iii) permits the 
debt collector to mail the person periodic statements, because the 
periodic statements are required by applicable law.

Section 1006.18--False, Deceptive, or Misleading Representations or 
Means

18(d) False Representations or Deceptive Means

    1. Social media. Under Sec.  1006.18(d), a debt collector may 
not use any false representation or deceptive means to collect any 
debt or to obtain information concerning a consumer. In the social 
media context, the following examples illustrate the rule:
    i. Assume that a debt collector sends a private message, in 
connection with the collection of a debt, requesting to be added as 
one of the consumer's contacts on a social media platform marketed 
for social or professional networking purposes. A debt collector 
makes a false representation or implication if the debt collector 
does not disclose his or her identity as a debt collector in the 
request.
    ii. Assume that a debt collector communicates privately with a 
friend or coworker of a consumer on a social media platform, for the 
purpose of acquiring location information about the consumer. 
Pursuant to Sec.  1006.10(b)(1), the debt collector must identify 
himself or herself individually by name when communicating for the 
purpose of acquiring location information. To avoid violating Sec.  
1006.18(d), the debt collector must communicate using a profile that 
accurately identifies the debt collector's individual name. (But see 
Sec.  1006.18(f) and its associated commentary regarding use of 
assumed names.) The debt collector also must comply with the other 
applicable requirements for obtaining location information in Sec.  
1006.10 (e.g., with respect to stating that the debt collector is 
confirming or correcting location information concerning the 
consumer and, only if expressly requested, identifying the name of 
the debt collector's employer), for communicating with third parties 
in Sec.  1006.6(d)(1), and for communicating through social media in 
Sec.  1006.22(f)(4).

18(e) Disclosures Required

    1. Communication. A limited-content message, as defined in Sec.  
1006.2(j), is not a communication, as that term is defined in Sec.  
1006.2(d). Thus, a debt collector who leaves only a limited-content 
message for a consumer need not make the disclosures required by 
Sec.  1006.18(e)(1) and (2). However, if a debt collector leaves a 
voicemail message for a consumer that includes content in addition 
to the content described in Sec.  1006.2(j)(1) and (2) and that 
directly or indirectly conveys any information regarding a debt, the 
voicemail message is a communication, and the debt collector is 
required to make the Sec.  1006.18(e) disclosures. See the 
commentary to Sec.  1006.2(d) and (j) for additional clarification 
regarding the definitions of communication and limited-content 
message.

18(e)(1) Initial Communications

    1. Example. A debt collector must make the disclosure required 
by Sec.  1006.18(e)(1) in the debt collector's initial communication 
with a consumer, regardless of the medium of communication and 
regardless of whether the debt collector or the consumer initiated 
the communication. For example, assume that a debt collector who has 
not previously communicated with a consumer attempts to communicate 
with the consumer by leaving a limited-content message, as defined 
in Sec.  1006.2(j). After listening to the debt collector's limited-
content message, the consumer initiates a telephone call to, and 
communicates with, the debt collector. Pursuant to Sec.  
1006.18(e)(1), because the consumer-initiated call is the initial 
communication between the debt collector and the consumer, the debt 
collector must disclose to the consumer during that telephone call 
that the debt collector is attempting to collect a debt and that any 
information obtained will be used for that purpose.

18(e)(4) Translated Disclosures

    1. Example. Section 1006.18(e)(4) provides that a debt collector 
must make the disclosures required by Sec.  1006.18(e)(1) and (2) in 
the same language or languages used for the rest of the 
communication in which the disclosures are conveyed. The following 
example illustrates the rule:
    i. ABC debt collector is collecting a debt. ABC debt collector's 
initial communication with the consumer takes place in Spanish. 
Section 1006.18(e)(4) requires ABC debt collector to provide in 
Spanish the disclosure required by Sec.  1006.18(e)(1). Thereafter, 
ABC debt collector has a communication with the consumer that takes 
place partly in English and partly in Spanish. During this 
communication, the debt collector must provide the disclosure 
required by Sec.  1006.18(e)(2) in both English and Spanish.

18(f) Assumed Names

    1. Readily identifiable by the employer. Section 1006.18(f) 
provides, in part, that Sec.  1006.18 does not prohibit a debt 
collector's employee from using an assumed name when communicating 
or attempting to communicate with a person, provided that the debt 
collector can readily identify any employee using an assumed name. A 
debt collector may use any method of managing assumed names that 
enables the debt collector to determine the true identity of any 
employee using an assumed name. For example, a debt collector may 
require an employee to use the same assumed name when communicating 
or attempting to communicate with any person and may prohibit any 
other employee from using the same assumed name.

Section 1006.22--Unfair or Unconscionable Means

22(f) Restrictions on Use of Certain Media

Paragraph 22(f)(2)

    1. Language or symbol. Section 1006.22(f)(2) provides, in 
relevant part, that a debt collector must not use any language or 
symbol, other than the debt collector's address, on any envelope 
when communicating with a consumer by mail. For purposes of Sec.  
1006.22(f)(2), the phrase ``language or symbol'' does not include 
language and symbols that facilitate communications by mail, such 
as: The debtor's name and address; postage; language such as 
``forwarding and address correction requested''; and the United 
States Postal Service's Intelligent Mail barcode.

Paragraph 22(f)(3)

    1. Email addresses described in Sec.  1006.6(d)(4). Section 
1006.22(f)(3) generally prohibits a debt collector from 
communicating or attempting to

[[Page 76906]]

communicate with a consumer by sending an email to an email address 
that the debt collector knows is provided to the consumer by the 
consumer's employer. The prohibition does not apply if the debt 
collector sends the email to an email address described in Sec.  
1006.6(d)(4)(i) or (iii), which specifically contemplate debt 
collectors sending emails to any email address--including an email 
address that a debt collector knows is employer provided--if the 
consumer has used the email address to communicate with the debt 
collector about a debt (Sec.  1006.6(d)(4)(i)(A)), has provided 
prior consent directly to the debt collector to use the email 
address (Sec.  1006.6(d)(4)(i)(B)), or has obtained the email 
address from a prior debt collector who satisfied either Sec.  
1006.6(d)(4)(i) or (ii). A debt collector who sends an email to an 
email address described in Sec.  1006.6(d)(4)(ii) complies with the 
prohibition in Sec.  1006.22(f)(3) because the procedures in Sec.  
1006.6(d)(4)(ii) do not permit debt collectors to send emails to 
email addresses that the debt collector knows are employer provided.

Paragraph 22(f)(4)

    1. Social media. Section 1006.22(f)(4) prohibits a debt 
collector from communicating or attempting to communicate with a 
person in connection with the collection of a debt through a social 
media platform if the communication or attempt to communicate is 
viewable by the general public or the person's social media 
contacts. For example, Sec.  1006.22(f)(4) prohibits a debt 
collector from posting, in connection with the collection of a debt, 
any message for a person on a social media web page if that web page 
is viewable by the general public or the person's social media 
contacts. Section 1006.22(f)(4) does not prohibit a debt collector 
from sending a message to a person if the message is not viewable by 
the general public or the person's social media contacts. Section 
1006.6(b) or Sec.  1006.14(h) nonetheless may prohibit the debt 
collector from sending such a message, and a debt collector who 
communicates by sending such a message about the debt to the wrong 
person violates Sec.  1006.6(d)(1). See also comment 18(d)-1 with 
respect to communications and attempts to communicate with consumers 
and third parties on social media platforms.

Section 1006.30--Other Prohibited Practices

30(b) Prohibition on the Sale, Transfer for Consideration, or Placement 
for Collection of Certain Debts

30(b)(1) In General

    1. Transfer for consideration. Section 1006.30(b)(1) prohibits, 
among other things, a debt collector from transferring for 
consideration a debt that has been paid or settled or discharged in 
bankruptcy. A debt collector transfers a debt for consideration when 
the debt collector receives or expects to receive compensation for 
the transfer of the debt. A debt collector does not transfer a debt 
for consideration when the debt collector sends information about 
the debt, as opposed to the debt itself, to another party. For 
example, a debt collector does not transfer a debt for consideration 
when the debt collector sends a file with data about the debt to 
another person for analytics, ``scrubbing,'' or archiving. A debt 
collector also does not transfer a debt for consideration when the 
debt collector reports to a credit reporting agency information that 
a debt has been paid or settled or discharged in bankruptcy.
    2. Debt that resulted from identity theft. Section 615(f)(1) of 
the Fair Credit Reporting Act (15 U.S.C. 1681m(f)(1)) states that no 
person shall sell, transfer for consideration, or place for 
collection a debt if such person has been notified under section 
605B of the Fair Credit Reporting Act (15 U.S.C. 1681c-2) that the 
debt has resulted from identity theft. Nothing in Sec.  
1006.30(b)(1) alters a debt collector's obligation to comply with 
the prohibition set forth in section 615(f)(1) of the Fair Credit 
Reporting Act.

30(b)(2) Exceptions

30(b)(2)(i) In General

Paragraph 30(b)(2)(i)(A)

    1. In general. Under Sec.  1006.30(b)(2)(i)(A), a debt collector 
who is collecting a debt described in Sec.  1006.30(b)(1) may 
transfer the debt to the debt's owner. However, unless another 
exception under Sec.  1006.30(b)(2) applies, the debt collector may 
not transfer the debt or the right to collect the debt to another 
entity on behalf of the debt owner.

Section 1006.38--Disputes and Requests for Original-Creditor 
Information

    1. In writing. Section 1006.38 contains requirements related to 
a dispute or request for the name and address of the original 
creditor timely submitted in writing by the consumer. A consumer has 
disputed the debt or requested the name and address of the original 
creditor in writing for purposes of Sec.  1006.38(c) or (d)(2) if 
the consumer, for example:
    i. Mails the written dispute or request to the debt collector;
    ii. Provides the dispute or request to the debt collector using 
a medium of electronic communication through which the debt 
collector accepts electronic communications from consumers, such as 
an email address or a website portal; or
    iii. Delivers the written dispute or request in person or by 
courier to the debt collector.
    2. Interpretation of the E-SIGN Act. Comment 38-1.ii constitutes 
the Bureau's interpretation of section 101 of the E-SIGN Act as 
applied to section 809(b) of the FDCPA. Under this interpretation, 
section 101(a) of the E-SIGN Act enables a consumer to satisfy 
through an electronic request the requirement in section 809(b) of 
the FDCPA that the consumer's notification of the debt collector be 
``in writing.'' Further, because the consumer may only use a medium 
of electronic communication through which a debt collector accepts 
electronic communications from consumers, section 101(b) of the E-
SIGN Act is not contravened.

38(a) Definitions

38(a)(1) Duplicative Dispute

    1. Substantially the same. Section 1006.38(a)(1) provides that a 
dispute is a duplicative dispute if, among other things, the dispute 
is substantially the same as a dispute previously submitted by the 
consumer in writing within the validation period for which the debt 
collector has already satisfied the requirements of Sec.  
1006.38(d)(2)(i). A later dispute can be substantially the same as 
an earlier dispute even if the later dispute does not repeat 
verbatim the language of the earlier dispute.
    2. New and material information. Section 1006.38(a)(1) provides 
that a dispute that is substantially the same as a dispute 
previously submitted by the consumer in writing within the 
validation period for which the debt collector has already satisfied 
the requirements of Sec.  1006.38(d)(2)(i) is not a duplicative 
dispute if the consumer provides new and material information to 
support the dispute. Information is new if the consumer did not 
provide the information when submitting an earlier dispute. 
Information is material if it is reasonably likely to change the 
verification the debt collector provided or would have provided in 
response to the earlier dispute. The following example illustrates 
the rule:
    i. ABC debt collector is collecting a debt from a consumer and 
sends the consumer a validation notice. In response, the consumer 
submits a written dispute to ABC debt collector within the 
validation period asserting that the consumer does not owe the debt. 
The consumer does not include any information in support of the 
dispute. Pursuant to Sec.  1006.38(d)(2)(i), ABC debt collector 
provides the consumer a copy of verification of the debt. The 
consumer then sends a cancelled check showing the consumer paid the 
debt. The cancelled check is new and material information.

38(d) Disputes

38(d)(2) Response to Disputes

Paragraph 38(d)(2)(ii)

    1. Duplicative dispute notice. Section 1006.38(d)(2)(ii) 
provides that, in the case of a dispute that a debt collector 
reasonably determines is a duplicative dispute, the debt collector 
must cease collection of the debt, or any disputed portion of the 
debt, until the debt collector either notifies the consumer that the 
dispute is duplicative (Sec.  1006.38(d)(2)(ii)(A)) or provides a 
copy either of verification of the debt or of a judgment to the 
consumer (Sec.  1006.38(d)(2)(ii)(B)). If the debt collector 
notifies the consumer that the dispute is duplicative, Sec.  
1006.38(d)(2)(ii)(A) requires that the notice provide a brief 
statement of the reasons for the debt collector's determination that 
the dispute is duplicative and refer the consumer to the debt 
collector's response to the earlier dispute. A debt collector 
complies with the requirement to provide a brief statement of the 
reasons for its determination if the notice states that the dispute 
is substantially the same as an earlier dispute submitted by the 
consumer and the consumer has not included any new and material 
information in support of the earlier dispute. A debt collector 
complies with the requirement to refer the consumer to the debt 
collector's response to the earlier dispute if the notice states 
that the debt collector responded to the earlier dispute and 
provides the date of that response.

[[Page 76907]]

Section 1006.42--Sending Required Disclosures

42(a) Sending Required Disclosures

42(a)(1) In General

    1. Relevant factors. Section 1006.42(a)(1) provides, in part, 
that a debt collector who sends disclosures required by the Act or 
this part in writing or electronically must, among other things, do 
so in a manner that is reasonably expected to provide actual notice. 
In determining whether a debt collector has complied with this 
requirement, relevant factors include whether the debt collector:
    i. Identified the purpose of the communication by including, in 
the subject line of an electronic communication transmitting the 
disclosure, the name of the creditor to whom the debt currently is 
owed or allegedly is owed and one additional piece of information 
identifying the debt, other than the amount, such as a truncated 
account number; the name of the original creditor; the name of any 
store brand associated with the debt; the date of sale of a product 
or service giving rise to the debt; the physical address of service; 
and the billing or mailing address on the account;
    ii. Permitted receipt of notifications of undeliverability from 
communications providers, monitored for any such notifications, and 
treated any such notifications as precluding a reasonable 
expectation of actual notice for that delivery attempt; and
    iii. Identified itself as the sender of the communication by 
including a business name that the consumer would be likely to 
recognize, such as the name included in the notice described in 
Sec.  1006.6(d)(4)(ii)(C), or the name that the debt collector has 
used in a prior limited-content message left for the consumer or in 
an email message sent to the consumer.
    2. Notice of undeliverability. A debt collector who sends a 
required disclosure in writing or electronically and who receives a 
notice that the disclosure was not delivered has not sent the 
disclosure in a manner that is reasonably expected to provide actual 
notice under Sec.  1006.42(a)(1).
    3. Safe harbor for notices sent by mail. Subject to comment 
42(a)(1)-2, a debt collector satisfies Sec.  1006.42(a)(1) if the 
debt collector mails a printed copy of a disclosure to the 
consumer's last known address, unless the debt collector, at the 
time of mailing, knows or should know that the consumer does not 
currently reside at, or receive mail at, that location.
    4. Effect of consumer opt out. If a consumer has opted out of 
debt collection communications to a particular email address or 
telephone number by, for example, following the instructions 
provided pursuant to Sec.  1006.6(e), then a debt collector cannot 
use that email address or telephone number to send required 
disclosures.

Subpart C--[Reserved]

Subpart D--Miscellaneous

Section 1006.100--Record Retention

    1. Three-year retention period. Section 1006.100 requires a debt 
collector to maintain records that are evidence of compliance or 
noncompliance with the FDCPA and this part starting on the date that 
the debt collector begins collection activity on a debt until three 
years after the debt collector's last collection activity on the 
debt or, in the case of telephone call recordings, until three years 
after the dates of the telephone calls. Nothing in Sec.  1006.100 
prohibits a debt collector from retaining records that are evidence 
of compliance or noncompliance with the FDCPA and this part for more 
than three years after the applicable date.

100(a) In General

    1. Records that evidence compliance. Section 1006.100(a) 
provides, in part, that a debt collector must retain records that 
are evidence of compliance or noncompliance with the FDCPA and this 
part. Thus, under Sec.  1006.100(a), a debt collector must retain 
records that evidence that the debt collector performed the actions 
and made the disclosures required by the FDCPA and this part, as 
well as records that evidence that the debt collector refrained from 
conduct prohibited by the FDCPA and this part. If a record is of a 
type that could evidence compliance or noncompliance depending on 
the conduct of the debt collector that is revealed within the 
record, then the record is one that is evidence of compliance or 
noncompliance and the debt collector must retain it. Such records 
include, but are not limited to, records that evidence that the debt 
collector's communications and attempts to communicate in connection 
with the collection of a debt complied (or did not comply) with the 
FDCPA and this part. For example, a debt collector must retain:
    i. Telephone call logs as evidence of compliance or 
noncompliance with the prohibition against harassing telephone calls 
in Sec.  1006.14(b)(1); and
    ii. Copies of documents provided to consumers as evidence that 
the debt collector provided the information required by FDCPA 
section 809(a) (15 U.S.C. 1692g(a)), as implemented by Bureau 
regulation, and Sec.  1006.38 and met the delivery requirements of 
Sec.  1006.42.
    2. No requirement to create additional records. A debt collector 
need not create and maintain additional records, for the sole 
purpose of evidencing compliance, that the debt collector would not 
have created in the ordinary course of its business in the absence 
of the record retention requirement set forth in Sec.  1006.100(a). 
For example, Sec.  1006.100(a) does not require a debt collector to 
create call logs showing that it has not attempted to communicate 
with any consumers at times that the consumers designated as 
inconvenient. However, if the debt collector maintains call logs, 
the call logs are evidence of compliance or noncompliance with the 
FDCPA and this part and the collector must retain them.
    3. Methods of retaining evidence. Section 1006.100(a) does not 
require a debt collector to retain actual paper copies of documents. 
Records may be retained by any method that reproduces the records 
accurately (including computer programs) and that ensures that the 
debt collector can easily access the records (including a 
contractual right to access records possessed by another entity).
    4. When the three-year record retention clock starts to run. 
Section 1006.100(a) provides, in part, that a debt collector must 
retain records that are evidence of compliance or noncompliance 
until three years after the debt collector's last collection 
activity on a debt. An event such as the debt collector transferring 
the debt for consideration to another party would start the running 
of the debt collector's three-year record retention clock with 
respect to the debt, provided that the transfer of the debt 
represents the debt collector's last collection activity on the 
debt. In contrast, the debt's discharge in bankruptcy, or the 
consumer's curing of default on the debt, would not represent the 
time at which the three-year record-retention clock starts to run if 
the debt collector continues collection activity on the debt after 
that time, which might occur when the debt is secured and an 
enforceable lien on the collateral that secured the debt survives 
the bankruptcy discharge (and collection activity pursuant to the 
lien continues after the discharge).

100(b) Special Rule for Telephone Call Recordings

    1. Recorded telephone calls. Nothing in Sec.  1006.100 requires 
a debt collector to record telephone calls. However, if a debt 
collector records telephone calls, the recordings are evidence of 
compliance or noncompliance with the FDCPA and this part, and, under 
Sec.  1006.100(b), the debt collector must retain the recording of 
each such telephone call for three years after the date of the call.

    Dated: October 30, 2020.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2020-24463 Filed 11-27-20; 8:45 am]
BILLING CODE 4810-AM-P

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