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July 29, 2022

By: Allen H. Denson, Rebecca Mandel

The CFPB has updated its Frequently Asked Questions (FAQs) to its Debt Collection Rule (Regulation F), 12 C.F.R. § 1006; Consumer Financial Protection Bureau, Debt Collection Rule FAQs, (last updated July 27, 2022), https://www.consumerfinance.gov/compliance/compliance-resources/other-applicable-requirements/debt-collection/debt-collection-rule-faqs/, which address questions related to the electronic communications and restrictions on communications at unusual or inconvenient times.  Both debt collectors and creditors should take notice. 

Electronic Communications

The FAQs provide a number of clarifications about opting out of electronic communication methods, particularly email communications.  Specifically, the Bureau clarified that a person may request that a debt collector not use a specific email address or telephone number.  If a person opts out of receiving electronic communications from a debt collector, the debt collector may then send an electronic confirmation of the person’s request.  Any further communication would violate the Debt Collection Rule.

Further, the FAQs specify that the Debt Collection Rule requires that a debt collector include a clear opt-out notice in all electronic communications with a consumer related to the collection of a debt.  The notice must describe a reasonable method the consumer can use to opt out of further electronic communication.  Reasonable methods include providing electronic means to opt-out (external hyperlink) or allowing the consumer to opt-out by replying “stop”.

Even if a consumer’s request to opt out of the electronic communication does not conform to the debt collector’s opt-out instructions, a debt collector is required to honor the consumer’s request. Generally, a consumer’s use of the terms “stop,” “unsubscribe,” “end,” “quit,” or “cancel” is considered an opt-out request.

Unusual or Inconvenient Times or Places

As prescribed, the Debt Collection Rule limits where or when a debt collector can communicate with a consumer regarding a debt.  A debt collector must not communicate with a consumer (1) at an unusual time or at a time the debt collector knows or should know is inconvenient to the consumer and (2) at any unusual place or at a place the debt collector knows or should know is inconvenient to the consumer.  Here, the FAQs also elaborate on how electronic communications fit within these broader prohibitions.  Specifically, the FAQs state that automatically generated electronic communications that are sent at a time that the debt collector knows or should know is inconvenient to the consumer would violate the prohibition on communicating at an unusual or inconvenient time or place.  This includes automatically generated communications such as payment reminders.

Several exceptions apply, however.  First, automatically generated messages in response to a direct communication from the consumer would not violate the prohibition, so long as the communication is through the same medium as the consumer-initiated contact.  Practically, this means that an auto-generated email response would be permissible.  Consumers may also provide direct prior consent to electronic communications that would otherwise occur at inconvenient times or places. Debt collectors may continue to communicate with consumers through court-permitted communications, including electronic ones.

While it is debatable that the inconvenience of receiving an unwanted email or other electronic communication is equivalent to more invasive communication methods such as a phone call, the Bureau appears to have deemed all methods to be equivalent when it comes to time and place restrictions.  This updated guidance clearly has implications for debt collectors, but due to UDAAP considerations, creditors should also carefully evaluate their opt-out procedures and schedules for automatically generating electronic communications when servicing accounts.

July 29, 2022

By: Allen H. Denson, Rebecca Mandel

The CFPB has updated its Frequently Asked Questions (FAQs) to its Debt Collection Rule (Regulation F), 12 C.F.R. § 1006; Consumer Financial Protection Bureau, Debt Collection Rule FAQs, (last updated July 27, 2022), https://www.consumerfinance.gov/compliance/compliance-resources/other-applicable-requirements/debt-collection/debt-collection-rule-faqs/, which address questions related to the electronic communications and restrictions on communications at unusual or inconvenient times.  Both debt collectors and creditors should take notice. 

Electronic Communications

The FAQs provide a number of clarifications about opting out of electronic communication methods, particularly email communications.  Specifically, the Bureau clarified that a person may request that a debt collector not use a specific email address or telephone number.  If a person opts out of receiving electronic communications from a debt collector, the debt collector may then send an electronic confirmation of the person’s request.  Any further communication would violate the Debt Collection Rule.

Further, the FAQs specify that the Debt Collection Rule requires that a debt collector include a clear opt-out notice in all electronic communications with a consumer related to the collection of a debt.  The notice must describe a reasonable method the consumer can use to opt out of further electronic communication.  Reasonable methods include providing electronic means to opt-out (external hyperlink) or allowing the consumer to opt-out by replying “stop”.

Even if a consumer’s request to opt out of the electronic communication does not conform to the debt collector’s opt-out instructions, a debt collector is required to honor the consumer’s request. Generally, a consumer’s use of the terms “stop,” “unsubscribe,” “end,” “quit,” or “cancel” is considered an opt-out request.

Unusual or Inconvenient Times or Places

As prescribed, the Debt Collection Rule limits where or when a debt collector can communicate with a consumer regarding a debt.  A debt collector must not communicate with a consumer (1) at an unusual time or at a time the debt collector knows or should know is inconvenient to the consumer and (2) at any unusual place or at a place the debt collector knows or should know is inconvenient to the consumer.  Here, the FAQs also elaborate on how electronic communications fit within these broader prohibitions.  Specifically, the FAQs state that automatically generated electronic communications that are sent at a time that the debt collector knows or should know is inconvenient to the consumer would violate the prohibition on communicating at an unusual or inconvenient time or place.  This includes automatically generated communications such as payment reminders.

Several exceptions apply, however.  First, automatically generated messages in response to a direct communication from the consumer would not violate the prohibition, so long as the communication is through the same medium as the consumer-initiated contact.  Practically, this means that an auto-generated email response would be permissible.  Consumers may also provide direct prior consent to electronic communications that would otherwise occur at inconvenient times or places. Debt collectors may continue to communicate with consumers through court-permitted communications, including electronic ones.

While it is debatable that the inconvenience of receiving an unwanted email or other electronic communication is equivalent to more invasive communication methods such as a phone call, the Bureau appears to have deemed all methods to be equivalent when it comes to time and place restrictions.  This updated guidance clearly has implications for debt collectors, but due to UDAAP considerations, creditors should also carefully evaluate their opt-out procedures and schedules for automatically generating electronic communications when servicing accounts.

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