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CFPB Extends Comment Period for Supplemental Notice of Proposed Rulemaking on Time-Barred Debt

CFPB NPRMThe federal Consumer Financial Protection Bureau has extended the deadline for public comments on its Supplemental Notice of Proposed Rulemaking on time-barred debt disclosures to Aug. 4. The Bureau stated its reason for the extension as “the impact of the COVID-19 pandemic.” This is the Bureau’s second extension of the comment period.

The Supplemental NPRM was issued in February 2020 and proposes rules under the federal Fair Debt Collection Practices Act to require debt collectors to provide written disclosures when collecting debt subject to an expired limitations period.

“The Bureau proposes to prohibit collectors from using non-litigation means (such as calls) to collect on time-barred debt unless collectors disclose to consumers during the initial contact and on any required validation notice that the debt is time-barred,” the CFPB said. 

In May 2019, the CFPB released proposed rules for the Fair Debt Collection Practices Act. Modernizing the four-decade-old FDCPA makes up a large part of the proposal, particularly in electronic communications between consumers and debt collectors.

The CFPB’s NPRM devotes significant coverage to the use of emails, text messages and other forms of electronic communications by debt collectors.  At present, the FDCPA does not prohibit a debt collector’s use of emails or text messages. It also proposes a “call frequency cap,” while the “validation notice” received a refresh with the introduction of a model form and procedures for its electronic delivery, including an alternative method in lieu of compliance with the federal E-Sign Act.

The May 2019 NPRM also addresses time-barred debt, proposing that debt collectors may not sue or threaten to sue on debts they “know or should know” are time barred.  February’s Supplemental NPRM furnishes guidance including proposed model language and forms that collectors could use to comply with the proposed disclosure requirements.

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Donald Maurice provides counsel to the financial services industry, successfully litigating matters in the state and federal courts in individual and class actions. He has successfully argued before the Third, Fourth and Eighth Circuit U.S. Courts of Appeals, and has represented the financial services industry before several courts including as counsel for amicus curiae before the United States Supreme Court. He counsels clients in regulatory actions before the CFPB, and other federal and state regulators and in the development and testing of debt collection compliance systems. Don is peer-rated AV by Martindale-Hubbell, the worldwide guide to lawyers. In addition to being a frequent speaker and author on consumer financial services law, he serves as outside counsel to RMA International, on the governing Board of Regents of the American College of Consumer Financial Services Lawyers and on the Governing Committee of the Conference on Consumer Finance Law. From 2014 to 2017, he chaired the ABA's Bankruptcy and Debt Collection Subcommittee. For more information, see https://mauricewutscher.com/attorneys/donald-maurice/

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