[440] For instance, although a debt collector could include both the itemization required by § 1006.34(c)(2)(viii) on the front of a validation notice, and, on the reverse, an itemization specifically required by other applicable law (as an optional disclosure pursuant to § 1006.34(d)(3)(iv)), a consumer would be unlikely to benefit from receiving two itemizations. 352. Consequently, a debt collector concerned that a payment request would violate the Bankruptcy Code's automatic stay or discharge injunction is not required to include a payment request and, additionally, could use the model validation notice, specified variations of the model notice, or a substantially similar form, without a payment request and receive a safe harbor under § 1006.34(d)(2). Based on the December 2015 Call Report data as compiled by SNL Financial (with respect to insured depositories) and December 2015 data from the Nationwide Mortgage Licensing System and Registry (with respect to non-depositories), the Bureau estimates that there are approximately 9,000 small entities engaged in mortgage servicing, of which approximately 100 service more than 5,000 loans. 12.2.12.9(A); N.Y. Comp. Such a requirement could cause some debt collectors to face undue compliance challenges depending on their business practices and the types of debts they collect. 83. Specifically, without validation information and an opportunity to dispute the debt, individuals trying to resolve debts in a deceased consumer's estate will lack information needed to determine whether they are being asked to pay the right debt, in the right amount, and to the right debt collector, and, consequently, whether they should assert dispute rights. Section 1006.34(b)(5) also specifies that a debt collector may assume that a consumer receives the validation information on any date that is at least five days (excluding legal public holidays identified in 5 U.S.C. 2000). Some industry commenters, industry trade groups, and the SBA argued that the proposed requirement would impose burdens on creditors. 2. The Bureau proposed comment 38-1 (renumbered in this final rule as comment 38-3) to clarify the applicability of § 1006.38 in the decedent debt context. Second, consistent with the Supreme Court's decision in Midland Funding, LLC v. Johnson, the final rule clarifies that the prohibitions in § 1006.26(b) do not apply to proofs of claim filed in bankruptcy proceedings.[101]. See the section-by-section analysis of § 1006.34(d)(2). The Bureau determines that a consumer's verification request—whether an original-creditor information request or a dispute—is effective if the consumer sends or submits the request within the 30-day period established in § 1006.34(b)(5), even if the debt collector does not receive the request until after the 30-day period. 2019); Tatis v. Allied Interstate, LLC, 882 F.3d 422 (3d Cir. 74.13 (“Unless the initial communication is written and contains the following notice or the debtor has paid the debt, a licensee shall send the debtor the following notice within 5 days after the initial communication with a debtor: `This collection agency is licensed by the Division of Banking in the Wisconsin Department of Financial Institutions, www.wdfi.org.' The additions and revisions read as follows: 30(a) Required actions prior to furnishing information. 84 FR 23274, 23405 (May 21, 2019). The fact that the model validation notice departs from prevailing industry design is intended. [491] [87] 84 FR 23274, 23405 (May 21, 2019). A debt collector who provides the model validation notice electronically will not lose the safe harbor described in § 1006.34(d)(2) by including the § 1006.6(e) disclosure in the electronic communication outside the model notice. Because the Bureau did not propose such a requirement, the Bureau did not receive robust feedback in response to the proposal about what such a required form should look like and how a requirement to provide it might operate. Bankruptcy proofs of claim. This commenter was concerned that the proposed provision would not allow furnishing of information about consumers in those States and argued that this will reduce credit report accuracy. For these reasons, the Bureau proposed § 1006.34 to require debt collectors to provide certain validation information to consumers and to specify when and how the information must be provided. 1, 2020), https://rmaintl.org/​RMCP (last visited Dec. 9, 2020). 27, 2020) (first extension); 85 FR 30890 (May 21, 2020) (second extension). Watch our CFPB Q&A Webinar. However, because a mortgage servicer that is subject to the FDCPA with respect to a mortgage loan may comply with both this final rule and the applicable successor in interest provisions under Regulations X and Z, the Bureau concludes there is no conflict with the mortgage servicing rules. 1322(c)(2), a secured claim can be converted to an unsecured claim, which is referred to as a “lien strip.”. As discussed above, these commenters suggested a variety of interventions, such as requiring the debt collector provide the translated notice in circumstances in which the consumer had expressed a language preference to a prior debt collector or the creditor and that preference is noted in the file for the debt, or in which, at a later point in the process, the consumer communicates in a foreign language. When a merchant seeks check verification information, the check verification consumer reporting agency issues a check verification report with a code that will indicate if the check appears acceptable, the check is potentially fraudulent, or the checking account is likely overdrawn. As noted above, FDCPA section 809(a)(5) states that the validation information must include “a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.” [392] This document has been published in the Federal Register. Other industry and industry trade group commenters stated that this definition would be appropriate for older debts because a consumer may no longer recognize the original creditor, particularly if an account has been sold. Account information available to debt collectors may vary by debt type because some account information is not universally tracked or used across product markets. As discussed further in the section-by-section analysis of § 1006.2(i) of the November 2020 Final Rule, the FDCPA generally provides that a debt collector is any person: (1) Who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts (i.e., the “principal purpose” prong), or (2) who regularly collects, or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due to another (i.e., the “regularly collects” prong). The Bureau is finalizing § 1006.34(d)(3) largely as proposed but with minor technical revisions for clarity and with one substantive revision to clarify that a debt collector who includes any of the optional disclosures receives the safe harbor described in § 1006.34(d)(2), provided that the debt collector otherwise uses the model validation notice or a variation of the model notice as described in § 1006.34(d)(2). See 12 CFR 1005.31(a)(1), comment 31(a)(1)-1. [394] 2017), https://files.consumerfinance.gov/​f/​documents/​201703_​cfpb_​Fair-Debt-Collection-Practices-Act-Annual-Report.pdf (2017 FDCPA Annual Report); Fed. In developing the final rule, the Bureau has consulted, or offered to consult with, the appropriate prudential regulators and other Federal agencies, including regarding consistency with any prudential, market, or systemic objectives administered by such agencies. Commenters raised additional issues related to § 1006.2(e). 1692e; see also 15 U.S.C. [454], Alternative proposals to require Spanish-language disclosures. The Bureau disagrees that it did not sample sufficiently diverse groups. The Bureau considered proposals that would require debt collectors to provide a Spanish-language translation of the validation information under certain circumstances, such as on the reverse side of any English-language validation notice or if requested by a consumer. During the reasonable period, the debt collector must permit receipt of, and monitor for, notifications of undeliverability from communications providers. Because the Bureau did not finalize § 1006.34 in the November 2020 Final Rule, the Bureau finalized § 1006.42(a)(2) with a reference to the notice required by FDCPA section 809(a), as implemented by Regulation F, in lieu of a reference to the notice required by § 1006.34(a)(1)(i). Commenters recommended various modifications to proposed § 1006.34(c)(2)(ix). This Notice refers to proposed Model Form B-3 as the “proposed model validation notice” or the “proposed model notice” and final Model Form B-1 as the “model validation notice” or “model notice.” This Notice uses the phrase “specified variations of the model notice” to refer to the specifically enumerated versions of the model notice that receive a safe harbor pursuant to § 1006.34(d)(2)(i) and (ii) (i.e., notices that are the same as, or substantially similar to, the model notice but for: Omitting some or all of the optional disclosures that appear on the model notice; including optional disclosures that do not appear on the model notice; or including certain disclosures on a separate page as permitted by § 1006.34(c)(2)(viii) and (5)). The Bureau's testing also supports this conclusion.[200]. See 84 FR 23274, 23333-34 (May 21, 2019). The Bureau therefore is revising proposed § 1006.34(c)(5) and its related commentary to provide that the special rule only applies to residential mortgage debt if a periodic statement is required under Regulation Z, 12 CFR 1026.41, at the time a debt collector provides the validation notice.[315]. The authority citation for part 1006 continues to read as follows: Authority: Debt collectors who furnish information to CRAs prior to communicating with consumers but provide validation notices to consumers only after they have been in contact with consumers will need to change their practices and would face increased costs as a result of the final rule. According to this commenter, the arrearage owed is important information because, in many jurisdictions, homeowners in default can pay the arrearage to stop a foreclosure and reinstate a mortgage. . Nor does § 1006.2(e) expand the class of potential plaintiffs who may bring suit under the FDCPA and Regulation F, as an industry commenter alleged. 26. Thus, a consumer's voicemail left with a debt collector generally would not qualify as an initial communication. on An industry commenter questioned whether proposed § 1006.34(c)(2)(viii) would significantly improve consumer understanding. The Bureau also concludes that a strict liability standard is more consistent with FDCPA section 807's prohibition on deception, as well as case law imposing or implying such a standard when evaluating claims under FDCPA section 807 generally and claims related to suits and threats of suit on time-barred debt specifically.[118]. Thus, as discussed in the section-by-section analysis of § 1006.34(c), the Bureau is requiring debt collectors to Start Printed Page 5803disclose as validation information only two creditors: The creditor to whom the debt was owed on the itemization date (§ 1006.34(c)(2)(iii)) and the creditor to whom the debt is currently owed (§ 1006.34(c)(2)(v)). In these cases, the debt collector would report the bad check to a check verification CRA, but this could be prohibited under the proposed provision. Although State revival laws vary, there are generally several circumstances in which revival occurs. A debt collector who does not receive a notice of undeliverability during the reasonable period and who thereafter furnishes information about the debt to a consumer reporting agency does not violate paragraph (a)(1) of this section even if the debt collector subsequently receives a notice of undeliverability. While the final rule does not include new recordkeeping requirements, the Bureau notes that, by introducing a new compliance requirement, the rule may increase the cost of complying with recordkeeping requirements of the November 2020 Final Rule. Itemization required by other applicable law. 802(c), 120 Stat. 288. The current SBA size standards are found on SBA's website, http://www.sba.gov/​content/​table-small-business-size-standards.