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CFPB Punts on Validation Notices in So-called Final Rule

  • Written by Steel Rose

 Friday's rule lays out the parameters under which debt collectors can operate, for the first time incorporating modes of communication that didn't exist in 1977. The rule takes into account 14,000 public comments the bureau received in response to a related May proposal.

"With the vast changes in communications since the FDCPA was passed more than four decades ago, it is important to provide clear rules of the road," CFPB Director Kathy Kraninger said in a press release Friday.

Although the rule subjects debt collectors to a seven-call limit, surpassing that number may not automatically result in a penalty. Rather, other factors — such as whether the calls "had the intent to annoy, abuse or harass the person at the called number" — should be considered, the bureau said. However, consumers have the right to sue when a collector violates the cap.

The bureau did not clarify its rules surrounding validation notices, which debt collectors are required to send to consumers to let them know of an outstanding debt.

"Much of the litigation in debt collection revolves around validation notices, so for industry, that is a big punt because it harms all stakeholders," Joann Needleman, the attorney leading Clark Hill's consumer financial services regulatory and compliance group, told American Banker. The CFPB said it is still doing qualitative testing on validation notices.To read more click here