CFPB finalizes disclosure requirements for debt collectors

The Consumer Financial Protection Bureau issued a final rule outlining steps debt collectors must take to disclose the existence of a debt to a consumer, and prohibiting collectors from taking legal action over so-called time-barred debts.

The rule released Friday requires that debt collectors provide detailed disclosures at the beginning of any oral, written or electronic communication with a consumer about a debt, as well as information to help the consumer respond.

The rule also bars collectors from filing a lawsuit or threatening to do so to collect a time-barred debt that has exceeded the statute of limitations. The rule goes into effect Nov. 30, 2021.

“Today’s final rule provides clear rules of the road for debt collectors on how to disclose details about a consumer’s debt and informs consumers how they may respond to the collector, if they choose to do so,” CFPB Director Kathy Kraninger said in a press release. “Our final rule reflects our commitment to ensuring that consumers are better informed; informed consumers are empowered consumers.”

The 354-page rule revises Regulation F, which implements the Fair Debt Collection Practices Act. It generally requires collectors to take one of several actions to contact a consumer about a debt. Collectors can speak to consumers by phone, mail a letter or send an electronic text message. For texts and “snail” mail, debt collectors have to wait roughly 14 days before sending information to a credit bureau.

If the collector receives a notice that such communications were “undeliverable,” then additional steps have to be taken to reach the consumer.

The final rule also requires that debt collectors provide information that a consumer can use to dispute the debt or to request information about the original creditor. The rule also provides a safe harbor for compliance with the disclosure requirements for debt collectors that use a model validation notice provided by the bureau.

The rule comes less than two months after the CFPB issued a broad debt collection rule that restricts how often debt collectors can call borrowers. That October rulemaking for the first time said debt collectors can use voice mail, email and text messages to communicate with borrowers. Consumers can opt out of those technologies.