What Does the CFPB’s Debt Collection Rule Mean to My Company?
After more than seven years of fact-finding, study, and deliberation, the CFPB announced its debt-collection rule last November and December. Although the original outline of the rule (back in 2013) suggested that it would impose requirements on creditors as well as debt collectors, the final rule did not attempt such changes.
So why, you’re asking yourself, should you be worried about the debt-collection rule?
I’m glad that you asked.
Among the many changes the debt-collection rule imposes on debt collectors such as Kramer & Frank, is a requirement to provide more detailed information in the initial communication that they send to consumers. This additional information may exceed, or at least be different from, the information that you may be accustomed to providing your debt collector when you place a claim.
The biggest change is that debt collectors must identify a date from which the debt runs, known as “the itemization date.” Possible itemization dates include:
- the last statement date;
- the charge-off date;
- the last payment date;
- the transaction date; and
- the date of judgment.
(The date of judgment would generally apply only where you obtained a judgment in one state and you need to register it in a new state due to the consumer moving to or working in that state.) For most creditors, the date of charge-off or the date of the last statement would work, and many creditors already provide that information.
Debt collectors must also provide:
- The name of the current creditor (your company)
- The name of the creditor at the time of the itemization date (which may be the same)
- The amount due on the itemization date
- Any interest or other charges that accrued since the itemization date
- Any payments or other credits since the itemization date
- The total amount due on the date of the letter
That letter will therefore look much different from the letters that debt collectors have sent consumers in the past.
The final rule also permits creditors to send what we have taken to calling a hand-off letter. In that letter, the creditor can inform the consumer that it intends to send the consumer’s account to a specified debt collector and, if the creditor has used email to communicate with the consumer about the account, it must provide the consumer 35 days to opt out of receiving emails from the debt collector.
The team at Kramer & Frank is preparing for the November 30, 2021, effective date of the debt-collection rule. We may be contacting your company if we need additional information from you.
In the meantime, feel free to contact the compliance team at Kramer & Frank to discuss the debt-collection rule, the additional information required, and the possibility of sending a hand-off letter to consumers.
(816) 778-8620 firstname.lastname@example.org