October 20, 2021

Volume XI, Number 293

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CFPB Confirms November 30 Effective Date for Debt Collection Final Rules

The CFPB recently announced that its two final debt collection rules implementing the Fair Debt Collection Practices Act (FDCPA) will take effect as planned on November 30.  The CFPB had previously proposed extending the final rules’ effective date by 60 days to allow for additional comments and time for implementation for those affected by COVID-19 (a recent Sheppard Mullin article discussing the COVID-related impact on debt collection was recently covered here).  Based on industry feedback, however, the Bureau determined that an extension is unnecessary, explaining that while “consumer advocate commenters generally supported extending the effective date, they did not focus on whether additional time is needed to implement the rules.”

The first rule, issued in October 2020, involves debt collection communications and clarifies restrictions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors engaged in collecting a consumer debt.  The second rule, issued in December 2020, focuses on disclosures debt collectors must provide to consumers at the onset of collection communications.  Notably, debt collectors must take specific steps to disclose to consumers the existence of a debt before reporting information about that debt to a credit reporting agency and may not sue, or threaten to sue, consumers on time-barred debt.

Putting It Into Practice:  By leaving the door open to reconsider the debt collection rules at a later date, the CFPB is likely signaling to debt collection firms, and the creditors who utilize them, that the agency will be keeping a watchful eye as hundreds of thousands of borrowers exit mortgage forbearance this fall.  Anyone who may be impacted by the CFPB’s debt collection rules ought to thoroughly review their processes to ensure that they are in compliance with the final rule, and be moving forward with implementation efforts.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 224
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About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm
Partner

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

213-617-4171
A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC
Associate

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

202-747-2323
Brandon Faus Finance Lawyer Sheppard Mullin
Associate

Brandon Faus is an associate in the Finance and Bankruptcy Practice Group in the firm's Los Angeles office. 

Areas of Practice

Brandon represents lenders and borrowers in secured and unsecured debt transactions across a variety of industries. He focuses on both new originations and workouts for bi-lateral and syndicated loan structures.

Prior to joining Sheppard Mullin, Brandon enjoyed a decade-long career as a banker serving in both a business development and credit risk management capacity. He...

213.617.5410
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