Nearly five years after starting rulemaking efforts, the Consumer Financial Protection Bureau (“CFPB”) has finalized part one and part two of its debt collection rule under the federal Fair Debt Collection Practices Act (“FDCPA”). The federal rule (known as Regulation F) becomes effective on November 30, 2021. Regulation F is the first regulation to implement substantive provisions of the FDCPA since the law was enacted in 1977. In addition to regulating third-party debt collectors subject to the FDCPA, Regulation F has a number of implications for creditors. This article highlights six points that creditors should know about Regulation F. This list is not exhaustive.
1. Regulation F does not solely affect third-party debt collectors.
Regulation F could affect creditors regardless of whether a creditor is engaged in first-party or third-party collections or is a debt buyer. If a creditor is a “debt collector” under the FDCPA, Regulation F applies directly to the creditor and the creditor must comply with Regulation F. Even if a creditor is not a “debt collector” directly subject to the FDCPA, Regulation F could impact a creditor’s collection functions in two ways.
First, most creditors engaging third-party debt collectors have vendor oversight responsibilities. Part of a creditor’s general oversight responsibilities entails evaluating a vendor’s ability to perform services in compliance with applicable law. Creditors must have appropriate background on Regulation F to perform due diligence of existing and potential third party collection agencies that are subject to FDCPA and to fulfill their oversight responsibilities.
Second, other laws may require or cause creditors engaging in first-party collections to follow all or part of Regulation F. For example, federal and state laws contain prohibitions on unfair, deceptive or abusive acts or practices (“UDAAPs”). The FDCPA and Regulation F set forth broad prohibitions on using unfair, unconscionable, false, deceptive, misleading, harassing, abusive or oppressive practices or means to collect a consumer debt. The FDCPA and Regulation F also identify specific prohibitive collection conduct under these broad prohibitions. The specific prohibitions under the FDCPA and Regulation F could inform the CFPB’s or the Federal Trade Commission’s views of collection conduct that is unfair, deceptive or abusive when exercising their respective UDAAP/UDAP enforcement authority against creditors and their first-party collectors. Indeed, in commentary accompanying part one and part two of the final debt collection rule, the CFPB declined to clarify whether a particular action taken by creditors or first-party collectors, who are not FDCPA debt collectors, would constitute a UDAAP under the federal Consumer Financial Protection Act. As a result, creditors and their first-party collectors may choose to follow all or part of Regulation F to reduce their risks of engaging in UDAAPs when collecting debts. Creditors should take a critical look at how and to what extent Regulation F impacts their or their vendor’s collection practices and strategies.
2. Regulation F will likely change collection communication practices.
Regulation F could cause first-party and third-party debt collectors to change their collection communication practices. Through Regulation F, the CFPB intended to provide guidance and more legal certainty on debt collector’s use of newer communication channels such as voicemail, email and text messaging. Many debt collectors and creditors have shied away from using these communication channels because of legal uncertainty created by court decisions and statutory silence. At the same time, Regulation F limits the number of telephone calls a debt collector may place. Because Regulation F limits a traditional communication channel and provides guardrails for the use of new communication practices, the new rule could encourage debt collectors to explore the use of new communication practices and technologies.
In addition, Regulation F contains new provisions that give consumers choices when it comes to receiving collection communications. For example, if a consumer prefers to communicate with a debt collector through email but not text messages, then Regulation F requires a debt collector to respect that communication preference subject to certain exceptions. The degree to which Regulation F gives consumers control of how a debt collector communicates with them may cause debt collector’s communication practices to evolve.
Changes to collection communication practices by first-party or third-party debt collectors could require adjustments by creditors. For example, creditors may have to change their vendor management tools to monitor a debt collector’s new communication practice and perform enhanced oversight of a debt collector’s activities for a period of time after the collector starts using the new communication practice.
3. Regulation F could require creditors to be more involved in third-party collections.
Regulation F could require a creditor to play a more significant role in third-party collections. Regulation F provides a safe harbor from the FDCPA’s prohibition on unauthorized third party disclosures if a debt collector follows certain reasonable procedures when sending emails and text messages to consumers. The safe harbor procedures require a debt collector to verify an email address or telephone number for text messages using one of the verification methods set forth in Regulation F. For email communications, one verification method involves the creditor sending advance notice to consumers regarding the debt collector’s future email communications. While other email verification methods are available under the safe harbor, a debt collector’s policy choices or the particular collection context may necessitate the creditor sending the specific notice required by Regulation F to enable the debt collector to qualify for the safe harbor when corresponding with a consumer via email.
Regulation F could also require a creditor to transfer more debt information to debt collectors. Part two of the final rule requires debt collectors to disclose more debt validation information to consumers to help consumers identify the debt. In commentary accompanying part two of the rule, the CFPB acknowledged that debt collectors depend on creditors to provide the account information that debt collectors must disclose to consumers. The CFPB reasoned that creditors will be incentivized to provide the account information to debt collectors to enable debt collectors to legally collect debts.
The expanded role that creditors may play in third-party collections could require creditors and debt collectors to amend their collection agreements and to revise practices to increase coordination among the parties.
4. Regulation F may require creditors and debt collectors to make judgment calls.
In lieu of adopting prescriptive practices or express limits, the CFPB chose to incorporate safe harbors and rebuttable presumptions into Regulation F. Like the FDCPA, Regulation F contains broad prohibitions on certain collection conduct. These statutory features provide flexibility to debt collectors (and creditors) but also leave debt collectors and creditor to use discretion and make judgment calls regarding compliance with the FDCPA and Regulation F. Certain situations may arise in collections that justify the risk of a debt collector operating outside of a safe harbor or placing a call that exceeds the call frequency presumption.
5. Regulation F is more complex than it may appear.
The new provisions of Regulation F may seem straightforward, but when the provisions are applied to situations that could arise during collections, the complexities of Regulation F become apparent. Regulation F weaves together existing provisions in the FDCPA and new provisions. The provisions interplay with each other. Just because one practice is permitted by one Regulation F provision does not mean the practice is permitted under other Regulation F provisions. In addition, Regulation F’s Official Interpretations and the CFPB’s commentary accompanying the final rule have material guidance that should be reviewed by creditors and debt collectors. Experienced regulatory attorneys could add significant value by helping debt collectors and creditors navigate Regulation F.
6. Reviewing state law should be a step in the Regulation F implementation process.
Nearly all U.S. states and some cities regulate debt collection through a variety of laws including, but not limited to, debt collection statutes and trade practices statutes. State and local collection laws can vary in scope from the FDCPA and Regulation F in terms of who is subject to the law and what practices the law covers. For over 40 years, state and local laws have developed around a fairly static federal debt collection statute. The new provisions in Regulation F could create new state law compliance questions for creditors and debt collectors to address. For example, how do state law requirements interact with the safe harbors and rebuttable presumptions under Regulation F? To what extent do applicable state laws require a creditor or first-party collector to comply with Regulation F? Creditors and debt collectors should not end their regulatory analysis with Regulation F. Applicable state and local collection laws should also be considered.
Although it does not apply on its terms to many creditors, Regulation F could have a number of implications on a creditor’s vendor relationships, multi-state compliance, collection strategies, role in third-party collections, and other aspects of a creditor’s collection efforts. The degree to which creditors must understand Regulation F and manage compliance changes from Regulation F depends on the creditor’s practices and strategies.
 Final Rule, Debt Collection Practices (Regulation F), 85 Fed. Reg. 76734 (Nov. 30, 2020) (to be codified at 12 C.F.R. Part. 1006), available at https://www.govinfo.gov/content/pkg/FR-2020-11-30/pdf/2020-24463.pdf; Final Rule, Debt Collection Practices (Regulation F), Consumer Financial Protection Bureau (Dec. 18, 2020), available at https://files.consumerfinance.gov/f/documents/cfpb_debt-collection_final-rule_2020-12.pdf.
 Id. at 76888 (to be codified at 12 C.F.R. § 1006.1(c)).
 This article uses “first-party collections” to mean a creditor is collecting its own accounts in its own name itself or through a first-party collector.
 See, e.g., 15 U.S.C § 5531; Cal. Fin. Code § 90003(a).
 15 U.S.C. §§ 1692d through 1692f.
 Final Rule (Nov. 30, 2020), 85 Fed. Reg. at 76742; Final Rule (Dec. 18, 2020) at 20 n. 56.
 Final Rule (Nov. 30, 2020), at 76734, 76747 (explaining that one of the CFPB’s goals in creating “limited-content messages” was to reduce the legal uncertainty and liability with leaving voicemails for consumers).
 Id. at 76890 (to be codified at 12 C.F.R. § 1006.14(b)(2)).
 See, e.g., id. at 76891 (to be codified at 12 C.F.R. § 1006.14(h)).
 Id. at 76889 (to be codified at 12 C.F.R. § 1006.6(d)(2)).
 Id.at 76889 (to be codified at 12 C.F.R. § 1006.6(d)(4)(ii)).
 Final Rule (Dec. 18, 2020) at 119.
 Id. at 125.
 Final Rule (Nov. 30, 2020), 85 Fed. Reg. at 76889, 76890.
 See, e.g., Cal. Civ. Code §§ 1788 et seq.; Cal. Fin. Code §§ 90000 et seq. (effective Jan. 1, 2021).