Now that the CFPB’s Debt Collection Rule Has Been Implemented, What Does It Mean to My Company?
After more than seven years of fact-finding, study, and deliberation, the CFPB announced its debt-collection rule in November and December of 2020. The rule became final on November 30, 2021. K&F has fully implemented the changes required by the rules.
But my company is a creditor, not a debt collector. So what does that matter to me?
I’m glad that you asked.
Among other things, Regulation F requires debt collectors such as Kramer & Frank 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 were previously accustomed to providing your debt collector when you place a claim.
The biggest change is the itemization table that provides consumers the information that the CFPB thinks consumers need to recognize their debts. As part of that table, 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 a different debt-collection lawyer to register it in a new state due to the consumer moving to or working in that state.) For most creditors and most debts, 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.
Kramer & Frank is aware that providing this information will provide new problems for your company when placing a new account with us. We’d be happy to talk with you about how we can help you develop procedures to get that information to us.
But all debt collectors are in the same bind on this issue. Any debt collector who tells you that it doesn’t need that information at the time of placement is telling you that it either doesn’t understand or doesn’t intend to comply with Regulation F. You should ask yourself if those are the type of people you want to represent your company.
In the meantime, feel free to contact the compliance team at Kramer & Frank to discuss the debt-collection rule and the additional information required.