There is a comprehensive revision to the federal Fair Debt Collection Practices Act (“FDCPA”), which went into effect on November 30, 2021. The updated rules provide consumers with more control over the debt collection process and places new restrictions on how debt collectors (as defined by the FDCPA) (“Debt Collectors”) can pursue collection efforts.
One of the major changes to the rules relates to the use of electronic communications as a means of collecting a debt. The new rule allows Debt Collectors to use e-mail, text messages, and even social media to contact consumers regarding their debts. There are some limitations to the use of electronic communications, which include the prohibition on posting any messages on a social media platform that is subject to public viewing, requiring Debt Collectors to identify themselves in the first attempt at contacting a consumer through a private message on social media, and prohibiting communication through work e-mails without prior consent. 12 C.F.R. § 1006. Consumers can still request a Debt Collector to stop all collection communications but now they can also stop communications through a particular medium (subject to certain exceptions outlined in the rule).
Another important change is the requirement of a Debt Collector to retain records related to its collection efforts. Specifically, § 1006.100 provides that Debt Collectors 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.” Debt Collectors are expressly prohibited from bringing legal action (or threatening legal action) to collect a time barred debt, i.e. a debt which the applicable statute of limitations has expired. § 1006.26.
The changes apply to and will likely affect typical businesses that utilize debt collectors to enforce judgments or collect past due amounts owed by consumers in addition to large, third party debt servicers and collection agencies. Businesses should review the new rule and determine what impact (if any) the changes have on their business and collection practices. Debt Collectors should ensure they have implemented new policies and practices to comply with the new rule. First party creditors should ensure that any vendors they utilize to assist in collecting debt are complying with these new requirements as well.
Correy Karbiener is a bankruptcy and commercial litigation lawyer in Moran Kidd’s litigation department. She can be contacted at 407-841-4141, firstname.lastname@example.org.
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