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July 28, 2016

SMALL BUSINESS REVIEW PANEL FOR 

DEBT COLLECTOR AND DEBT BUYER RULEMAKING

OUTLINE OF PROPOSALS UNDER CONSIDERATION

AND ALTERNATIVES CONSIDERED

I. Introduction ................................................................................................................................1

A. Background ...........................................................................................................................1

B. Scope of proposals under consideration.............................................................................. 4

II. The SBREFA Process ................................................................................................................. 5

III. Information Integrity and Related Concerns ............................................................................ 5

A. Proposals under consideration to prohibit unsubstantiated claims of indebtedness ........ 6

B. Proposal under consideration to require review and transfer of certain information ......13

C. Validation notice and statement of rights ..........................................................................15

IV. Other Consumer Understanding Initiatives .............................................................................18

A. Litigation disclosure............................................................................................................18

B. Time-barred debt and obsolete debt ..................................................................................19

V. Collector Communication Practices ........................................................................................ 22

A. Proposals under consideration regarding contact frequency and the leaving of 

messages............................................................................................................................. 23

B. General time, place, manner restrictions .......................................................................... 28

C. Issues concerning decedent debt....................................................................................... 32

D. Consumer consent.............................................................................................................. 34

VI. Additional Proposals ................................................................................................................ 35

A. Prohibition on transferring debt to certain entities or in certain circumstances ............. 35

B. Recordkeeping.................................................................................................................... 35

VII. Potential Impacts on Small Entities .................................................................................. 36

A. Entities subject to the proposals under consideration...................................................... 36
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B. Bureau review of debt collection processes and costs....................................................... 37

C. Activities of debt collectors and impact of recent regulatory changes.............................. 38

D. Impacts on debt collectors of the proposals under consideration .................................... 47

VIII. Cost of Credit to Small Entities...........................................................................................71

Appendices
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I. Introduction

A. Background

Debt collection is a critical part of the consumer credit market infrastructure. Collection of 

consumer debts reduces the costs that creditors incur through their lending activities. 

Collection efforts directly recover some amounts owed to debt owners and may indirectly 

support responsible borrowing by underscoring consumers’ obligations to repay their debts and 

providing them with an incentive to do so. The reductions in creditors’ costs, in turn, may allow 

creditors to extend more credit at lower prices.

While debt collection may benefit consumers at large by reducing the price and increasing the 

availability of credit, in the debt collection market, collectors’ incentives generally are to recover 

as much money as they can from each consumer subject to collection efforts by any lawful 

means. Collectors generally are paid based on how much they collect. Consumer choice 

provides little, if any, constraint on the behavior of collectors. Consumers generally choose 

between creditors based on factors such as the creditor’s identity and the credit terms offered, 

not who might collect on the debt for these creditors—or how they might collect—if the 

consumer later defaults on the loan. And when a consumer does default, that consumer has no 

alternative but to deal with whatever collector the debt owner has chosen. With consumers 

unable to “vote with their feet,” collectors have only limited incentive to collect debts in a 

manner that consumers would prefer.

In 1977, Congress enacted the Fair Debt Collection Practices Act (FDCPA) to “eliminate abusive 

debt collection practices by debt collectors” and “to insure that those debt collectors who refrain 

from using abusive debt collection practices are not competitively disadvantaged.”1 The FDCPA

imposes a range of restrictions and disclosure requirements on collectors’ conduct. The FDCPA 

generally covers the collection activities of debt collectors collecting on others’ debts and debt 

buyers (collectively “debt collectors” in this Outline unless otherwise specified) but not the 

collection activities of first-party debt collectors (i.e., creditors collecting on debts owed to 

them). Many states also have enacted laws similar to the FDCPA to regulate the conduct of debt 

collectors.2

Even with these laws in place, debt collection remains a major source of consumer complaints, 

lawsuits, and enforcement actions. Since the Consumer Financial Protection Bureau (Bureau) 

commenced operations in 2011, it has brought more than 25 debt collection cases against firstand third-party collectors alleging FDCPA violations or unfair, deceptive, and abusive debt 

collection acts and practices in violation of the Dodd-Frank Act. In these cases, the Bureau has 

ordered over $100 million in civil penalties, over $300 million in restitution to consumers, and 

billions of dollars in debt relief to consumers. During this same five-year period, the Federal 

Trade Commission (FTC) has brought more than 40 debt collection cases alleging FDCPA 

violations or unfair or deceptive acts and practices in violation of the FTC Act, and states have 

brought numerous additional actions against debt collectors for violating state debt collection 

and consumer protection laws. In its supervisory work, the Bureau similarly has identified 

many violations of the FDCPA through its examinations of debt collectors, as well as violations 

 1 15 U.S.C. 1692(e).

2 To the extent that some of these state laws are interpreted consistently with the FDCPA, it is possible 

that clarifying the FDCPA’s application would provide greater guidance for collectors regarding some 

state laws as well.
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of the Dodd-Frank Act by first-party debt collectors.

Notwithstanding these governmental enforcement and supervisory efforts, consumers for many 

years have submitted more complaints to the FTC about debt collectors than any other single 

industry,3 and that trend is continuing at the Bureau.4 Indeed, since the Bureau began accepting 

debt collection complaints in July 2013, the Bureau has received more than 200,000 consumer 

complaints regarding debt collection practices.5 The leading reason for debt collection 

complaints to the Bureau in 2015 was consumers being contacted for debts they report they do 

not owe.6 Consumers also commonly complain that collectors harass them or make false or 

misleading statements, take or threaten to take illegal actions, fail to send required notices, or 

improperly contact or share information with third parties.7

In addition to submitting complaints, consumers continue to file thousands of private actions 

each year against debt collectors that allegedly have violated the FDCPA. Over the past five 

years alone, consumers have brought more than 50,000 federal actions alleging that debt 

collectors have violated the FDCPA, with nearly 12,000 such lawsuits being filed in 2015.8 While 

these cases may bring redress for those involved, differing court decisions or decisions in 

different jurisdictions have created some splits in the FDCPA’s interpretation. These decisions 

can create uncertainty for consumers and industry alike. 

To protect consumers more effectively, the Bureau has decided to consider issuing debt 

collection regulations that implement the FDCPA and other statutory authorities and that cover 

the activities of debt collectors and debt buyers. Until the creation of the Bureau, no federal 

agency was authorized to issue comprehensive regulations to implement the FDCPA, a statute 

passed in 1977.

9 The Dodd-Frank Act also empowered the Bureau to issue regulations 

 3 Between 2010 and 2012, for example, the FTC received more than 400,000 total complaints about debt 

collection, representing between 24 and 27 percent of all complaints received by the FTC during those 

years. Bureau of Consumer Fin. Prot., Fair Debt Collection Practices Act: CFPB Annual Report 2013, at 

14 (2013), available at http://files.consumerfinance.gov/f/201303_cfpb_March_FDCPA_Report1.pdf; 

Bureau of Consumer Fin. Prot., Fair Debt Collection Practices Act: CFPB Annual Report 2012, at 6 

(2012), available at http://files.consumerfinance.gov/f/201203_cfpb_FDCPA_annual_report.pdf.

4 During 2015 alone, the Bureau handled over 85,000 debt collection complaints—more than about any 

other consumer financial product or service that the Bureau’s complaint system monitors. Bureau of 

Consumer Fin. Prot., Fair Debt Collection Practices Act: CFPB Annual Report 2016, at 18 (2016)

(hereinafter 2016 FDCPA Annual Report), available at http://files.consumerfinance.gov/f/201603_cfpbfair-debt-collection-practices-act.pdf. (This number reflects aggregate debt collection complaints for 

2015, regardless of whether the debt collector was subject to the FDCPA.)

5 See 2016 FDCPA Annual Report, at 19; Bureau of Consumer Fin. Prot., Fair Debt Collection Practices

Act: CFPB Annual Report 2014, at 2 (2014), available at

http://files.consumerfinance.gov/f/201403_cfpb_fair-debt-collection-practices-act.pdf.

6 See 2016 FDCPA Annual Report, at 17-19. Of the 85,200 total complaints, the most common debt 

collection complaint is about continued attempts to collect a debt that the consumer reports is not owed 

(this accounts for 40 percent of total complaints). Of the complaints within this category, the vast 

majority of consumers report that the debt is not their debt (63 percent) or that the debt was paid (26 

percent), while the remaining consumers report that the debt resulted from identity theft (six percent) or 

was discharged in bankruptcy (four percent).

7 Id. at 18-20.

8 See id. at 15.

9 15 U.S.C. 1692l(d).
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prohibiting covered persons from engaging in unfair, deceptive, and abusive acts and practices 

and requiring disclosures to permit consumers to understand the costs, benefits, and risks 

associated with consumer financial products and services, including debt collection.10 (The 

FDCPA and excerpts of the Dodd-Frank Act are attached as Appendix A.) Covered persons 

under the Dodd-Frank Act include not only debt collectors covered by the FDCPA, but also 

creditors who are collecting or attempting to collect on debts that relate to a consumer financial 

product or service.

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The Bureau issued an Advanced Notice of Proposed Rulemaking (ANPR) for debt collection in 

November of 2013.12 The ANPR sought information about both first- and third-party collection 

issues including, among other things, the conduct of collectors in interacting with consumers in 

trying to recover on debts through the collection process; the quantity and quality of 

information in the debt collection system; debt collection litigation; and recordkeeping, 

monitoring, and compliance issues. With regard to the FDCPA specifically, the ANPR also 

sought comment about interpreting the nearly forty-year old statute to address contemporary 

debt collection challenges, including questions such as how collectors apply the FDCPA to 

technology such as cell phones, text messages, and email. The FDCPA has not been significantly 

amended to address such challenges, and reliance on case law alone has created uncertainty for 

stakeholders. The Bureau’s rulemaking seeks to decrease such uncertainty.

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The Bureau received more than 23,500 comments in response to the ANPR. In developing this 

Outline of Proposals Under Consideration and Alternatives Considered (Outline), the Bureau 

has considered those comments, engaged in extensive consultation with both industry and 

consumer stakeholders, and conducted its own research and analysis.

In particular, the Bureau has been engaged in three major debt collection research projects to 

assist in making decisions in the rulemaking. First, the Bureau has conducted a Survey of 

Consumer Views on Debt that examines the debt collection experiences and preferences of a 

nationally representative sample of consumers with credit records.

14 Second, the Bureau has 

conducted and continues to conduct extensive consumer testing of model validation notices and 

other disclosures. Third, the Bureau has conducted an industry survey to obtain a better sense 

of current collector practices and procedures, so that the Bureau will be able to make informed 

decisions about the potential costs associated with various rulemaking policy options.15

 10 Sections 1031(b) and 1032 of the Dodd-Frank Act, 12 U.S.C. 5531(b) and 5532.

11 See 12 U.S.C. 5481(5), (6), (15)(A)(x).

12 78 FR 67848 (Nov. 12, 2013).

13 This Outline has been prepared in preparation for a notice of proposed rulemaking, so the Bureau’s 

statements herein regarding proposed interpretations of the FDCPA or Dodd-Frank Act do not represent 

final Bureau interpretations. The Bureau is not, in this Outline, finding that conduct either violates or is 

permissible under the FDCPA or Dodd-Frank Act. 

14 A summary of preliminary results is attached at Appendix B; a full report on survey results will be 

published in the future.

15 See Bureau of Consumer Fin. Prot., Study of Third-Party Debt Collection Operations (July 2016) 

(hereinafter Operations Study), available at http://www.consumerfinance.gov/data-research/researchreports/study-third-party-debt-collection-operations.
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B. Scope of proposals under consideration

Debt collection is a multi-billion dollar industry composed of debt owners, debt collection 

companies, law firms, and a wide variety of related service providers. Debt owners include 

original creditors as well as debt buyers who purchase debts from original creditors or from 

other debt buyers. Debt owners either use their own collectors (e.g., an in-house collection 

department) to recover in their own names on defaulted debts, place the debts with debt 

collection companies or law firms that specialize in the collection of these debts, sell the debts to 

debt buyers who may collect using their own collectors or using debt collection companies, hold 

but not actively collect on the debt, or some combination of these measures. Most debt 

collection firms are small, with over 75 percent of firms employing fewer than 20 people each. 

However, most revenue is generated by larger firms, with about two-thirds of industry revenue 

generated by collection firms with at least 100 employees.

The proposals under consideration discussed below would apply to small entities in the 

following categories for debts acquired in default: collection agencies, debt buyers, collection law 

firms, and loan servicers. While not all of the proposals under consideration will affect every 

small entity in every line of business, the majority of proposals under consideration are likely to 

affect most of the small entities invited to participate regardless of business type. For that 

reason, the Outline first covers the substantive proposals before turning to potential impacts on 

the various categories of small entities.

Further, this Small Business Regulatory Enforcement Fairness Act (SBREFA) consultation 

process applies to “debt collectors” that are subject to the FDCPA (and, in many cases, also 

subject to the Dodd-Frank Act).16 The Bureau expects to convene a second proceeding in the 

next several months for creditors and others engaged in collection activity who are covered 

persons under the Dodd-Frank Act but who may not be “debt collectors” under the FDCPA. The 

Bureau believes that holding separate SBREFA consultation processes is the most efficient way 

to proceed, particularly because it will enable participants to provide more focused and specific 

insights.

As discussed in this Outline, the Bureau is considering proposals to address many aspects of the 

debt collection lifecycle. Part III focuses on proposals under consideration that affect debt 

collectors’ compliance obligations relating to the integrity of information. This part summarizes

proposals under consideration related to the acquisition and transfer of collection accounts, as 

well as the proposed processes for obtaining information and conducting reviews at various 

stages of the debt collection process, such as after a consumer dispute or prior to filing 

collection-related litigation. Part III also outlines proposals under consideration for transferring

information obtained during the collection process when debt is returned to a creditor or debt 

buyer or sent to another collection agency. Finally, part III discusses proposals under 

consideration relating to the validation notice and a consumer Statement of Rights.

Part IV focuses on proposals under consideration for providing information to consumers in 

collection, in addition to the initial disclosures discussed in part III. Specifically, part IV

discusses other consumer disclosures that may be made throughout the debt collection process, 

including when initiating or threatening to initiate a lawsuit, and disclosures and other 

 16 For purposes of considering the proposals under consideration summarized in this Outline, SERs 

should assume that “debt collector” and other terms used have the same meaning as under the FDCPA, 

unless the Outline sets forth a specific, different meaning.
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restrictions under consideration when collecting on time-barred debt.

Part V focuses on proposals under consideration relating to communications with consumers in 

general, and part VI discusses two additional proposals relating to transfer of debts and 

recordkeeping. After summarizing the proposals that are under consideration, the Outline 

explains the Bureau’s initial analysis of the potential impacts of the proposals under 

consideration on small entities in parts VII and VIII.

II. The SBREFA Process

Pursuant to the consultation process prescribed in the SBREFA, the Bureau is seeking input 

about the FDCPA rulemaking proposals it is considering. The SBREFA consultation process 

provides a mechanism for the Bureau to obtain input directly from small debt collectors early in 

the rulemaking process. SBREFA directs the Bureau to convene a Panel when it is considering a 

proposed rule that could have a significant economic impact on a substantial number of small 

entities. The Panel includes representatives from the Bureau, the U.S. Small Business 

Administration (SBA), and the Office of Management and Budget (OMB). SBREFA requires the 

Panel to meet with a selected group of Small Entity Representatives (SERs) that are likely to be 

subject to the rules that the Bureau may issue. The industries the proposals under consideration

would cover are discussed in part VII.A.

During the Panel outreach meeting, SERs will provide the Panel with important feedback on the 

potential economic impacts of complying with proposed regulations. They may also provide 

feedback on the impacts of the regulatory options under consideration and regulatory 

alternatives to minimize these impacts. In addition, the Dodd-Frank Act directs the Bureau to 

collect the advice and recommendations of SERs concerning whether the proposals under 

consideration might increase the cost of credit for small businesses and alternatives to minimize 

any such increase. 

Within 60 days of convening, the Panel is required to complete a report on the input received 

from the SERs during the Panel process. The Bureau will consider the SERs’ feedback and the 

Panel’s report as it prepares the proposed rule. Once the proposed rule is published, the Panel’s 

final report will be placed in the rulemaking record. The Bureau also welcomes further feedback 

from the SERs during the public comment period on the proposed rule.

The Bureau has prepared this Outline to provide background to the SERs and to facilitate the 

Panel process. However, the Panel process is only one step in the rulemaking process. No debt 

collectors will be required to comply with new regulatory requirements before a proposed rule is 

published, public comment is received and reviewed by the Bureau, a final rule is issued, and the 

period designated in the final rule for firms to conform their practices to the final rule expires. 

One of the specific questions on which the Bureau will seek input during the SBREFA process is 

how long small entities would need to conform their practices to the proposals under 

consideration.

The Bureau is also conferring with other federal agencies including the FTC, the Federal 

Communications Commission (FCC), the Office of the Comptroller of the Currency (OCC), and 

other prudential regulators, and it is seeking feedback from a wide range of other stakeholders 

on the proposals under consideration.

III.Information Integrity and Related Concerns

In recent years, the most common debt collection complaint received by the Bureau concerns 
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collectors seeking to recover from the wrong consumer or in the wrong amount. The Bureau 

believes that such problems arise in significant part from two sources. First, there are often 

substantial deficiencies in the quality and quantity of information collectors receive at 

placement or sale of the debt that frequently result in collectors contacting the wrong 

consumers, for the wrong amount, or for debts that the collector is not entitled to collect. 

Second, the Bureau is concerned that the information that consumers receive in initial notices 

required under the FDCPA lack critical elements that would help consumers recognize whether 

the debt is in fact theirs, which may lead to more consumer complaints, a lack of response by 

consumers, or both.

The Bureau believes that these two problems combine to substantially harm consumers and to 

increase downstream costs to debt collectors, frequently rendering the debt collection process 

inefficient and frustrating for all participants. As discussed below, the Bureau believes poor 

information transfer may also contribute to other debt collection problems addressed in other 

parts of this Outline. Accordingly, the Bureau is considering three major interventions to 

address these two sets of problems:

• A requirement that debt collectors “substantiate,” or possess a reasonable basis for, claims 

that a particular consumer owes a particular debt. This general requirement would likely be 

combined with provisions describing more specific steps that collectors can take to satisfy in 

part their obligation to substantiate claims of indebtedness made initially, during the course 

of collections, and before filing litigation.

• A requirement that certain information that the consumer provides in the course of 

collections with one collector be passed on and reviewed by downstream collectors.

• Provision of an improved FDCPA validation notice and a Statement of Rights to provide 

consumers with the most critical information needed to determine whether they owe a 

particular debt and to navigate the debt collection process more generally. 

Each potential intervention is summarized below, with supplemental information provided in 

Appendices C through G. The Bureau believes that these changes would reshape numerous 

aspects of the debt collection process by ensuring that collectors are acting on the basis of 

reasonably reliable information. While these proposals under consideration may lead to higher 

up-front costs, the Bureau believes that they would facilitate interactions between collectors and 

consumers that are more efficient for collectors and less stressful for consumers. The Bureau is 

seeking SERs’ input on both the advantages and disadvantages of the interventions and on their 

potential consequences for other parts of the debt collection life cycle.

A. Proposals under consideration to prohibit unsubstantiated claims of 

indebtedness

1. Why is the Bureau considering proposals to require debt collectors to substantiate 

claims of indebtedness?

As discussed above, data integrity is a major concern in the debt collection process. Creditors 

generate much of the underlying information in the debt collection system, but they may not 

convey their full files to a third-party debt collector or debt buyer because transferring so much 

information between systems can be technically complicated and expensive. Instead, some level 

of basic information is typically conveyed electronically to collectors when the debt is 

transferred for collection. The quality of the information that creditors convey varies based on 
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many factors, such as the identity of the creditor, the type of debt, and the age of the debt. In 

some cases, debt owners may charge debt collectors fees to obtain some or certain underlying 

account-level documents. 

In addition to these initial quality concerns, the quality and accuracy of the information may 

degrade as debts are worked and transferred among creditors and debt collectors downstream. 

As discussed further below in part III.B, information obtained by one collector from the 

consumer may not be transmitted to subsequent collectors. Conversely, incorrect information 

may be transferred downstream, for instance when payments made by the consumer are not 

appropriately applied to the debt or fees and finance charges are inaccurately added to the debt. 

When debt collectors rely on poor-quality information to make claims of indebtedness to 

consumers, the Bureau is concerned that a variety of harms can result. Consumers may pay 

debts they do not owe, pay the wrong amount, or pay collectors that lack the legal right to 

collect. Even if consumers do not pay, they may incur costs or harms in dealing with such 

claims. For example, consumers may incur financial costs, loss of time, or other burdens in 

disputing the debt, providing information to the collector, retaining counsel, or complaining to 

government agencies. 

The data quality problems also have substantial consequences for industry participants. While 

the initial transfer of debt may be cheaper and faster when data transfers are limited, inaccurate 

or incomplete information can mean that debt collectors have to make more effort to find the 

right consumer and convince him or her that the debt is in fact legitimate. However, in light of

prevailing industry practice, the Bureau believes that individual firms may not have the ability 

or incentives to establish higher standards for the transfer of information.

2. What proposals are under consideration?

When a collector seeks to have a specific consumer pay a specific debt, the collector is at least 

implicitly claiming that the collector has reasonable support for its claims that the individual 

owes that debt or amount and that the collector is legally entitled to collect the debt. To help 

ensure that consumers are not deceived or treated unfairly, the Bureau is considering whether to 

specify how debt collectors can possess reasonable support for making such collection attempts 

at different times during the collection process. 

In considering the details of how collectors may have a reasonable basis for claims of 

indebtedness, the Bureau intends to provide flexibility to accommodate different approaches to 

substantiation that different collectors may take. Depending on the type of debt or the context 

surrounding collection, there may be alternative sets of information that could provide a 

collector with a reasonable basis to make collection claims. An overly prescriptive approach 

risks requiring collectors to undertake steps or obtain information that may be inapplicable to 

certain types of debt or unnecessary to substantiate claims of indebtedness.

At the same time, the Bureau understands that collectors may benefit from additional clarity 

regarding when a claim of indebtedness is supported by a reasonable basis. In combination with 

articulating the general substantiation requirement, the Bureau is also considering specifying 

some elements to provide additional guidance. For example, the Bureau is considering 

identifying certain fundamental information that collectors can obtain and review that, along 

with a representation of accuracy from the creditor and a review for warning signs (an 

illustrative list of such warning signs is provided below), would establish reasonable support for 

claims of indebtedness. Even collectors that are unable to obtain this specific list of 

fundamental information may be able to use such details to compare to the information they do 
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possess and evaluate whether such departures still permit them to establish a reasonable basis 

for their claims. 

3. Initial claims of indebtedness

To support initial claims of indebtedness, the proposals under consideration would articulate a 

specific list of fundamental information that a collector could obtain and review to look for 

“warning signs”—or indications that the information associated with the debt is inaccurate or 

inadequate—before commencing collections activity. The proposal under consideration would 

further allow collectors to in part establish reasonable support for claims of indebtedness by

obtaining a representation from the debt owner (i.e., creditor at the time of default or debt 

buyer) that its information is accurate. 

The list of fundamental information would provide core information about the identity of the 

consumer, the nature and amount of the debt, and the chain of title that provides the collector’s 

right to collect. The information could still be conveyed in a spreadsheet, as is done typically 

today, without transferring the full underlying records. However, the list of fundamental 

information may be more extensive than some industry participants transfer today; a list of the 

items that the Bureau is considering is provided in Appendix C. A collector could acquire a 

reasonable basis without obtaining each specific element on the list from the debt owner, for 

example, by substituting some or all of the information identified by the proposal with 

additional or alternative information. However, the collector would bear the burden of 

justifying its alternative approach.

As noted above, the proposals under consideration would also state that, to help form a 

reasonable basis, debt collectors can obtain a written representation from the debt owner that it 

has adopted and implemented reasonable written policies and procedures to ensure the 

accuracy of transferred information and that the transferred information is identical to the 

information in the debt owner’s records. The Bureau believes that this representation of 

accuracy would help ensure that debt collectors have the information they need to support 

claims of indebtedness. It would also effectively address attempts to shift responsibility for the 

accuracy of information about debts in portfolios from debt owners to collectors. As with the 

fundamental information, collectors need not obtain the representation of accuracy in order to 

possess a reasonable basis for claims of indebtedness, but they would have to justify an 

alternative approach.

The proposals under consideration would require collectors to review the information obtained

from the debt owner to look for warning signs that may raise questions as to the adequacy or 

accuracy of the information with respect to a particular consumer or with respect to the portfolio 

information in general. The Bureau believes that many collectors currently conduct a limited 

review of the information they receive from debt owners for certain purposes, including 

estimating the likelihood of repayment by the consumer. Some collectors may conduct a review 

to check for the adequacy and accuracy of the information provided. The Bureau is considering 

requiring collectors to look for warning signs that might appear within an individual account or 

across an entire portfolio, which may include the following examples:

• Information for an individual debt is not in a clearly understandable form;

• Information for an individual debt is facially implausible or contradictory;

• A significant percentage of debt in the portfolio has missing or implausible information, 
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either in absolute terms or relative to portfolios with comparable types of accounts; or

• A significant percentage of debt in the portfolio has unresolved disputes, either in absolute 

terms or relative to portfolios with comparable types of accounts.

A collector who has each of the specific elements on the list in Appendix C, a representation of 

accuracy, and no warning signs of problems would have a reasonable basis for claims of 

indebtedness. If the collector discovers warning signs during its initial review, however, the 

collector would be required to take further steps before it would be able to support and lawfully 

make claims of indebtedness regarding the account or the portfolio, as applicable. These steps 

may consist of obtaining and reviewing supplemental information from the original creditor or 

prior collectors. They also could include obtaining and reviewing information from other 

sources, such as data vendors that provide consumer contact information (also known in the 

industry as skip tracers). Establishing support for claims of indebtedness made for accounts 

from a portfolio after a warning sign arises may require obtaining and reviewing documentation 

for a representative sample of accounts—or in some cases, for all accounts—in the portfolio. 

Collectors would be responsible for taking steps in response to warning signs that they detect or 

should have detected. This standard would not require collectors to confirm all of the 

information they receive, but it also would not permit collectors to ignore potential problems.17

• Alternatives considered. The Bureau considered an alternative proposal that would have 

required collectors, before commencing collection activity, to obtain and review copies of 

original account-level documentation such as, for example, the account agreement (where 

one exists) and one or more statements sent to the consumer. The Bureau believes, 

however, that if creditors and debt buyers attest to the accuracy of the information they are 

providing, and that information reveals no initial warning signs, it is a reasonable approach 

not to require collectors in all cases to double-check the information against underlying 

documentation associated with the debt to support claims of indebtedness. The Bureau is 

concerned that requiring collectors to obtain or access and review underlying documentation 

for all claims of indebtedness for all debts in all circumstances may be overbroad and 

therefore unduly burdensome.18

4. Claims of indebtedness following the appearance of a warning sign during the 

course of collections

The Bureau is considering whether to require that debt collectors look for warning signs that 

may arise during the course of collection activity, and to obtain additional support prior to 

making any subsequent claims of indebtedness following the appearance of any such warning 

 17 The Bureau understands that the ability of collectors to support claims of indebtedness often will 

depend on receiving documents or information from debt owners. If debt owners fail to transfer accurate 

and adequate information when placing or selling a debt, or fail to make available documentation 

sufficient to resolve warning signs, then debt collectors may not have the support they would need to 

make such claims of indebtedness. As discussed below, the Bureau thus is considering in this SBREFA 

proceeding requiring debt collectors subject to the FDCPA (including debt buyers) to transfer certain 

information when they sell or transfer debt. The Bureau intends to consider comparable information 

transfer obligations for creditors and others subject to the Dodd-Frank Act, but not necessarily the 

FDCPA, in the future.

18 Note that the proposal under consideration would not prohibit collectors from obtaining underlying 

documentation as a means of establishing a reasonable basis to support initial claims of indebtedness, if 

they choose to do so.
10

sign. Effectively, the proposals under consideration would require that debt collectors analyze 

and integrate information received throughout the collection process. 

In contrast to the initial review, the ongoing review would involve warning signs that arise 

during the collections process rather than from reviewing the underlying information regarding 

the debt (e.g., a missing field in a spreadsheet). For example, warning signs that arise during 

the course of collections could include the following:

• A dispute filed by a consumer with respect to an individual debt;

• The inability to obtain underlying documents in response to a dispute; or

• Receipt of disputes for a significant percentage of debt in the portfolio, either in absolute 

terms or relative to portfolios with comparable types of accounts.

In response to warning signs, collectors would have to take additional steps such as obtaining 

and reviewing documentation necessary to provide reasonable support before proceeding with 

continued claims of indebtedness. As with the initial review, the ongoing review requirement 

would hold collectors responsible only for responding to warning signs that they detect or 

should have detected.

5. Claims of indebtedness following a dispute

The Bureau believes that if a consumer disputes a debt, orally or in writing, by asserting that he 

or she does not owe the debt or the amount being claimed, then that dispute calls into question 

the collector’s basis for claiming that the collector is pursuing the right person or the right 

amount. The Bureau is therefore considering a proposal to require collectors to obtain 

additional support before proceeding with further claims of indebtedness following receipt of 

such a dispute.

The Bureau is also considering specifying that collectors may resume making claims of 

indebtedness after receiving a dispute if they review documentation responsive to the type of

dispute submitted by the consumer, as described in Appendix D, and conclude that it provides a 

reasonable basis for further claims of indebtedness. For example, if a consumer disputed only 

the amount being claimed, the collector could resume collection communications if it reviewed 

documentation that reasonably established the amount claimed as set forth in Appendix D. 

Collectors could also support claims of indebtedness in other ways, such as by reviewing other 

documentation, but they would bear the burden of justifying any alternative approach.19 

Although the proposal under consideration would prohibit debt collectors from making 

unsubstantiated claims of indebtedness following a dispute, the Bureau also is considering 

clarifying that debt collectors are permitted to contact consumers while a dispute is pending to 

request clarification of a dispute submitted by the consumer, as long as the content of their 

communication is strictly limited to achieving this purpose and does not also include, for 

example, a request for payment. 

• Definition of dispute. The proposal under consideration would clarify that communications 

 19 Note, however, that to have reasonable support for their claims of indebtedness, collectors would not 

have to mail consumers the documentation on which they are relying to support those claims.
11

from consumers constitute disputes if they take the form of a question or challenge related 

to the validity of the debt (e.g., the amount of the debt or the identity of the alleged debtor)

or the legal right of the collector to seek payment on the debt. Questions unrelated to the 

validity of the debt or the collector’s right to collect the debt would not constitute disputes. 

The proposed definition would not require consumers to use specific words to have a 

communication treated as a dispute. However, the requirements under consideration would 

not apply in the case of a duplicative dispute, i.e., a dispute that is the same as a dispute that 

the consumer previously had submitted to the debt collector, that does not offer new and 

material information to support the dispute, and for which the collector has fulfilled its 

obligations under the proposal under consideration.

• Subsequent collectors. The requirement to reasonably support claims of indebtedness 

before resuming collection activity would apply to subsequent collectors. The Bureau 

understands that some collectors have a policy of returning disputed debt to the debt owner 

or may otherwise return disputed debts. Thus, if a consumer had disputed a debt in any of 

the ways described above but the collector had not taken steps to address the dispute, then 

under the proposal under consideration, the fact that dispute had been filed would be 

required to be transferred to the new collector, and the subsequent collector could not make 

claims of indebtedness until it had addressed the dispute.

20 

The Bureau is also considering proposals to provide greater clarity regarding certain FDCPA 

requirements where a consumer submits a written dispute within 30 days of the validation 

notice. Specifically, in such cases the FDCPA requires the collector to “obtain[] verification of 

the debt” and provide a copy of the verification to the consumer.21 But the FDCPA provides no 

explanation of these requirements, and courts have interpreted them in various ways. As a 

result, debt collectors vary in the level of documentation they obtain and provide to consumers 

to verify a debt, with many collectors currently not reviewing or providing copies of underlying 

account documentation in response to disputes. 

• Written disputes within 30 days of validation notice. The Bureau is considering clarifying 

that the types of information listed in Appendix D would satisfy the verification requirement 

under the FDCPA for the various categories of disputes. The Bureau is also considering 

clarifying that the fact that a timely written dispute had been filed would be required to be 

transferred to the new collector and the account could not be collected upon until that 

collector addressed the dispute. 

• Duplicative disputes. If a collector decided against responding to a dispute submitted in 

writing within thirty days of the validation notice because it determined that the dispute was 

duplicative of a prior dispute, the proposal under consideration would require the collector 

to notify the consumer of this fact. This notice could be made using standard language and 

would not require a consumer-specific explanation for the reason that the dispute was 

considered duplicative.

• Oral disputes within 30 days of validation notice. The Bureau is considering whether to 

require collectors to inform consumers of the right to obtain verification of the debt by 

 20 To support this possible requirement, as explained in part III.B.2, the Bureau is considering a proposal 

to require subsequent collectors to obtain (and prior collectors to transfer): (1) information about the 

dispute status of a debt, and (2) the details of any unresolved dispute.

21 15 U.S.C. 1692g(b).
12

submitting a timely written dispute, if applicable, unless the collector provides copies of 

verification in response to oral disputes as well. The Bureau is considering providing model 

language that could be used to make the disclosure.

6. Claims of indebtedness made in complaints filed in litigation

Debt collectors may attempt to collect debt by filing lawsuits against consumers. The Bureau 

believes that consumers face a higher risk of harm during litigation than during other points in 

the collection process. Many consumers fail to defend in litigation, making it easier for 

collectors to obtain judgments against the wrong consumer, for the wrong amount, or where the 

collector had no legal right to collect.22 Consumers who do defend may bear significant costs, 

including the cost of legal counsel or the cost of appearing in court. And consumers against 

whom judgments are entered may be subject to collection methods, such as garnishment, which 

are more severe than those they would otherwise encounter during the pre-litigation collection 

process. Because of the higher risk of consumer harm from claims of indebtedness made 

without reasonable support in complaints filed in litigation, the Bureau believes that a higher 

level of support is needed to make claims in litigation than in most initial collection activity.

The proposal under consideration would require debt collectors, before making such claims in a 

litigation filing, to have reasonable support for claims that the consumer being sued owes the 

amount claimed and that the collector has a legal right to make the claim. Specifically, the 

proposals under consideration would specify that collectors could satisfy their reasonable 

support obligations for claims of indebtedness in complaints filed in litigation by obtaining and 

reviewing all of the documentation specified in Appendix D. Collectors that do not review the 

documentation specified for all types of disputes could acquire a reasonable basis consistent 

with this level of support through alternative means, but they would bear the burden of 

justifying any alternative approach.

Table 1: Summary of substantiation requirements under consideration

When Actor(s) Action(s)

Prior to making 

initial claim of 

indebtedness

Collector • Review information sufficient to substantiate claims of 

indebtedness

o May obtain list of fundamental information and 

representation of accuracy from debt owner

• Determine whether there are warning signs

• Obtain and review additional information or 

documentation as needed to address any warning signs 

discovered during initial review

 22 See U.S. Fed. Trade Comm’n, Repairing a Broken System: Protecting Consumers in Debt Collection 

Litigation and Arbitration, at 7 (July 2010), available at

https://www.ftc.gov/sites/default/files/documents/reports/structure-and-practices-debt-buyingindustry/debtbuyingreport.pdf.
13

When Actor(s) Action(s)

During the course 

of collections 

generally

Collector • Look for warning signs that may arise during the 

course of collections

• Cease claims of indebtedness to the consumer until 

collector obtains and reviews information or 

documentation as needed to address any warning signs 

discovered during ongoing review

After a dispute 

generally

Collector + 

subsequent 

collector, if 

applicable

• Cease claims of indebtedness to the consumer until 

collector reviews documentation as needed to address 

the dispute submitted by the consumer

o May obtain and review documentation for relevant 

dispute category, as specified in Appendix D

• Collector that receives dispute must note dispute status 

when transferring debt

• If collector has not responded to dispute, subsequent 

collector must review documentation as needed to 

address the dispute submitted by the consumer before 

making initial claims of indebtedness to the consumer

After a written 

dispute within 30 

days of the 

validation notice

Collector + 

subsequent 

collector, if 

applicable

• General dispute requirements described above, plus 

collector must provide consumer copy of verification 

responsive to consumer’s dispute (or subsequent 

collector, if applicable, must address dispute)

After an oral 

dispute within 30 

days of the 

validation notice

Collector + 

subsequent 

collector, if 

applicable

• General dispute requirements described above, plus 

either notify consumer of right to receive verification in 

response to written disputes within 30 days of the 

validation notice or simply provide verification in 

response to timely oral disputes

Prior to making 

claim of 

indebtedness in 

litigation

Collector • Review documentation sufficient to substantiate claims 

of indebtedness

• May obtain and review all of the documentation 

specified in Appendix D

B. Proposal under consideration to require review and transfer of certain 

information

1. Why is the Bureau considering a proposal to require collectors to review and 

transfer certain information?

As discussed above, the subsequent placement or sale of debt to new debt collectors may 

exacerbate informational problems because information the consumer provided to the prior 

collector may not be transferred along with the debt. When subsequent collectors do not receive 

updated or new information resulting from prior collection activity, consumers have little 

practical alternative but to provide the same information again. The Bureau understands that 

consumers may not resubmit information to each collector seeking to recover on a debt because 

it may be inconvenient or frustrating to do so, yet the failure to resubmit this information each 

time that the debt is transferred can have significant consequences for the consumer. 
14

Additionally, several federal laws other than the FDCPA regulate the conduct of collectors 

during the debt collection process. If subsequent collectors lack certain information prior 

collectors had, subsequent collectors may engage in collection activity that contravenes these 

laws or undermines their protections.

Finally, even after a collector is no longer seeking to collect a debt and has sold it or returned it 

to the debt owner, the collector may receive information from or on behalf of the consumer that 

could indicate that all or part of the debt could be uncollectible or is likely to lack sufficient 

support. Debt buyers likewise may receive such information after they sell a debt to another 

debt buyer. For example, after it no longer has a debt, a collector may receive a notice that the 

debt has been discharged in bankruptcy, an identity theft report, or a dispute. Similarly, the 

collector may receive a misdirected payment from the consumer which would affect the amount 

that the consumer owes. Failing to convey this information to downstream entities increases the 

chances of exposing the consumer to further collection efforts regarding debt that may be 

uncollectible, in whole or in part, may be directed at the wrong consumer, or may seek the 

wrong amount.

2. Requirement to transfer and review certain information

To address these issues, the Bureau is considering a proposal to ensure that, prior to initiating 

collection activity, subsequent collectors obtain and review certain information arising from past 

collection activity. Specifically, the proposal under consideration would require subsequent 

collectors to obtain and review certain information that could either affect the subsequent 

collectors’ obligations to comply with the FDCPA and other federal consumer protection laws or 

facilitate collector behavior that may be beneficial to consumers. The proposal under 

consideration would obligate prior collectors to transfer this information if the consumer 

provided it to them in the course of collection activity, but it generally would not require 

collectors to attempt affirmatively to obtain the information. Prior collectors would be required 

to provide this information when returning a debt to the creditor, or, if the prior collectors are 

debt buyers, when selling the debt to a subsequent debt buyer. Additional details about this 

proposal under consideration are provided in Appendix E.

23

3. Requirement to forward certain information after returning or selling a debt

The Bureau is considering a proposal to require debt collectors to forward certain information 

that they may receive from consumers after they have returned the debt to the debt owner or 

sold it to a subsequent debt buyer.

The proposal under consideration would require collectors to forward to the entity to which the 

debt collector has already transferred the debt (i.e., the owner of the debt or a subsequent debt 

buyer) information that could indicate that all or part of the debt could be uncollectible or is 

likely to lack sufficient support. For example, a debt collector receiving an identity theft report 

from a consumer would forward the report to the owner of the debt to which the collector had 

previously returned it. The Bureau is considering requiring collectors to forward the following 

information: (1) payments submitted by the consumer; (2) bankruptcy discharge notices; 

 23 As with information related to the support for claims of indebtedness, the Bureau understands that the 

ability of collectors to obtain information arising from prior collection activity depends on the conduct of 

debt owners. The Bureau intends to consider in the future comparable proposals for debt owners not 

subject to this proposal under consideration.
15

(3) identity theft reports; (4) disputes; and (5) any assertion or implication by the consumer that 

his or her income and assets are exempt under federal or state laws from a judgment creditor 

seeking garnishment.

24

C. Validation notice and statement of rights

1. Why is the Bureau considering proposals relating to the validation notice and a 

statement of rights?

As noted above, the Bureau believes that a second major factor driving complaints about 

collectors seeking to recover from the wrong consumer or in the wrong amount is that the 

notices currently provided at the outset of collections lack certain information that would help 

consumers recognize past obligations. For example, debt collectors do not typically provide 

information beyond the current amount due in the validation notice; rather, consumers must 

take affirmative action to obtain this information. The Bureau believes that this is inefficient for 

consumers and collectors alike and tends to increase the need for downstream interactions. The 

Bureau is also concerned that initial materials currently provided may not give consumers 

sufficient information to navigate the collections process and understand their rights under the 

FDCPA and other federal law more generally.

Specifically, once a debt collector begins collecting a debt, section 809(a) of the FDCPA, 15 

U.S.C. 1692g(a), generally requires it to send the consumer, within five days of the initial 

communication, a written notice containing: (1) the amount of the debt; (2) the name of the 

creditor to whom the debt is owed; (3) a description of the consumer’s right to dispute the debt 

and obtain the name and address of the original creditor; and (4) a statement that unless the 

consumer disputes the debt, the collector will assume it to be valid. This written notice is 

typically referred to as a “validation notice” or “g notice.” Congress enacted section 809(a) in 

response to “the recurring problem of debt collectors dunning the wrong person or attempting 

to collect debts which the consumer has already paid.”25 

The Bureau’s complaint data26 and consumer testing suggest that the validation notices in use 

today often do not result in consumers being able to tell if the debt is theirs and if the amount 

stated as due is correct. The current notices also may not clearly inform consumers of their 

FDCPA rights and how to exercise them.27 The Bureau believes that consumers who know their 

 24 To assess the most cost-effective way of conveying this information, the Bureau will solicit feedback 

from SERs regarding whether creditor and collector systems have sufficient compatibility for transferring 

such information and the costs of applying such transfer requirements. For payments submitted by the 

consumer, the Bureau is considering also allowing debt collectors to either forward the payment to the 

owner of the debt or return the payment to the consumer with information concerning to whom the 

consumer should direct the payment.

25 S. REP. NO. 95-382, at 4 (1977).

26 For example, during calendar year 2015, 40 percent of the debt collection complaints received by the 

Bureau related to continued attempts to collect debt not owed. See Bureau of Consumer Fin. Prot., 

Consumer Response Annual Report: January 1 – December 31, 2015, at 16 (Apr. 2016), available at

http://files.consumerfinance.gov/f/201604_cfpb_consumer-response-annual-report-2015.pdf. The 

Bureau believes that some of these complaints may be attributable to consumers’ lack of information 

about the debt itself.
16

rights (and related legal restrictions on debt collectors) are better able to protect themselves 

from collection practices that violate the FDCPA and other consumer protection laws. 

2. Content requirements

The proposals under consideration would require validation notices to contain enhanced and 

clarified information about the debt and the consumer’s rights, along with an action-item “tearoff” to facilitate exercise of the dispute and original-creditor-information rights. Appendix F

contains a list of information that the proposals under consideration would require to be 

included in the validation notice. In addition to the validation notice, the proposals under 

consideration would require debt collectors to provide consumers with a one-page statement of 

rights document (Statement of Rights). Appendix G contains a list of information that the 

proposals under consideration would require to be included in the Statement of Rights.

To simplify compliance, the Bureau is considering issuing a model validation notice and 

Statement of Rights. A debt collector would be free to use either the Bureau’s models or forms

that the collector developed, but using the Bureau’s models would satisfy the relevant content

requirements. Although the Bureau continues to test and refine both models, Appendices F and

G include examples of what such documents might look like.

3. Delivery requirements

As noted above, under FDCPA section 809(a), a debt collector generally must send the 

consumer a validation notice within five days of the initial communication. The proposals under 

consideration would require debt collectors to provide a written copy of the Statement of Rights 

in the same mailing as the validation notice.

To ensure that consumers have this information throughout the debt collection process, the 

Bureau is considering a proposal to require that debt collectors offer, in the first communication 

made more than 180 days after the consumer received the validation notice and accompanying 

Statement of Rights, an additional copy of the Statement of Rights. The Bureau does not 

anticipate providing model language for this offer, because it would be relatively short and 

straightforward. Where the first post-180-day communication is written, debt collectors would 

be permitted to comply with the requirement by including the Statement of Rights together with 

that written communication rather than offering to provide it to consumers. 

4. Non-English language requirements

Disclosures are not useful if consumers do not understand them, and the Bureau is concerned 

that consumers with limited English proficiency (LEP consumers) may have difficulty 

understanding disclosures rendered only in English. 

The LEP population in the United States is large and growing. According to the Census Bureau, 

approximately 25.6 million individuals speak English “less than very well.”28 A majority of these 

 27 See U.S. Fed. Trade Comm’n, Collecting Consumer Debts: The Challenges of Change – A Workshop 

Report, at v (Feb. 2009) (hereinafter FTC Collecting Consumer Debts Report), available at

https://www.ftc.gov/sites/default/files/documents/reports/collecting-consumer-debts-challengeschange-federal-trade-commission-workshop-report/dcwr.pdf.

28 U.S. Census Bureau, 2014 American Community Survey 1-Year Estimates, Selected Social 

Characteristics in the United States, available at
17

individuals—approximately 16.4 million people—are Spanish speakers.29 Given the overall 

number of consumers who speak English “less than very well,” the Bureau believes that a 

substantial number of consumers would benefit from receiving translated versions of the 

validation notice and Statement of Rights. 

The Bureau is considering whether to adopt one of two alternative proposals related to the use of 

translated validation notices and Statements of Rights. Under both alternatives, the Bureau 

would develop model translations and refine their contents and design based on consumer 

testing.

• First alternative under consideration. The first alternative under consideration would 

require debt collectors beginning collection on an account to send translated versions of the 

validation notice and Statement of Rights to a consumer if: (1) the debt collector’s initial 

communication with the consumer took place predominantly in a language other than 

English or the debt collector received information from the creditor or a prior collector 

indicating that the consumer prefers to communicate in a language other than English; and 

(2) the Bureau has published in the Federal Register versions of the validation notice and 

Statement of Rights in the relevant non-English language. The Bureau anticipates that it 

would start by developing Spanish-language forms, but it might develop versions in other 

languages over time. 

• Second alternative under consideration. The second alternative under consideration would 

require debt collectors beginning collection on an account to include a Spanish translation 

on the reverse of every validation notice and Statement of Rights. 

The Bureau is interested in SERs’ thoughts on the costs and other tradeoffs between the two 

alternatives.

5. Credit reporting requirements

Debt collectors may furnish information to consumer reporting agencies for inclusion in 

consumer reports. Although collectors often contact consumers about their debts before 

furnishing such information, some collectors furnish such information without first contacting 

consumers. Collectors often engage in such “passive collection” (sometimes referred to by 

consumer advocates as “debt parking”) if the cost of actively attempting to reach consumers 

exceeds the expected return from engaging in such collections.

The Bureau is concerned about the harm to consumers caused by passive collection. Some 

collectors furnish information to consumer reporting agencies for debts about which the original 

debt owner did not furnish, for debts that the consumer believes have been settled, or for debts 

that have been mistakenly attributed to the consumer. If collectors do not contact consumers 

prior to furnishing credit reporting information, consumers may be unaware they have a debt in 

collection unless they request and review their credit report. Often, consumers learn that the

debt is in collection only when applying for credit, housing, employment, or another good or 

service—circumstances in which companies may pull their consumer reports. At this point, a 

consumer may feel pressure to pay the item merely to have it removed from the report or as a 

 

http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_14_1YR_DP02

&prodType=table.

29 Id.
18

condition of obtaining the product or service for which the company pulled the report, even if 

the consumer would have disputed the debt had he or she learned of it earlier. 

To address this harm, the Bureau is considering a proposal that would prohibit debt collectors 

from furnishing information about a debt to a consumer reporting agency unless the collector 

has communicated directly about the debt to the consumer, which usually would occur by the 

collector sending a validation notice.

IV. Other Consumer Understanding Initiatives

In addition to proposals under consideration to provide a revamped FDCPA validation notice 

and Statement of Rights at the outset of the collections process, the Bureau is considering two 

other sets of interventions designed to address issues in the debt collection process that the 

Bureau believes many consumers may not understand. The first such potential intervention is 

to require a brief disclosure regarding the possibility of litigation. The second is to require

disclosures and impose certain restrictions in connection with older debts that are beyond the 

applicable statute of limitations or generally barred from appearing on credit reports.

A. Litigation disclosure

1. Why is the Bureau considering a proposal to require a litigation disclosure?

Debt collectors often seek to recover on consumer debt through litigation. The FTC has 

concluded that “[t]he majority of cases on many state court dockets on a given day often are debt 

collection matters.”30 But few consumers who are sued for allegedly unpaid debts actually

contest those allegations in court. Indeed, participants in a series of 2009 roundtables convened 

by the FTC estimated that between 60 and 95 percent of consumer debt collection lawsuits 

result in default judgments.31 Some consumers against whom default judgments are entered 

may have had valid defenses had they appeared to defend themselves in court.32

The Bureau believes that some consumers fail to defend because they lack familiarity with court 

processes, do not understand the consequences of not defending, and do not know where to find 

an attorney they can afford. These consumers would benefit from additional information about 

debt collection litigation.

2. Requirement to provide a litigation disclosure

The proposals under consideration would require debt collectors to provide a brief “litigation 

disclosure” in all written and oral communications in which they represent, expressly or by 

implication, their intent to sue. The disclosure would inform the consumer that the debt 

collector intends to sue; that a court could rule against the consumer if he or she fails to defend a 

lawsuit; and that additional information about debt collection litigation, including contact 

information for others’ legal services programs, is available on the Bureau’s website and through 

 30 FTC Collecting Consumer Debts Report, at 55.

31 U.S. Fed. Trade Comm’n, Repairing a Broken System: Protecting Consumers in Debt Collection 

Litigation and Arbitration, at 7 (July 2010), available at

https://www.ftc.gov/sites/default/files/documents/reports/structure-and-practices-debt-buyingindustry/debtbuyingreport.pdf.

32 Id. at iii.
19

calling the Bureau’s toll-free telephone number. Under the proposal under consideration, debt 

collectors would provide the disclosure at the same time as—and using the same medium in 

which—they represent that they intend to sue. The Bureau does not anticipate providing model 

language at this time but is interested in receiving feedback from the SERs about the usefulness 

of model language.

B. Time-barred debt and obsolete debt

1. Why is the Bureau considering proposals related to time-barred debt and obsolete 

debt?

Time-barred debt, sometimes referred to as “out of statute debt,” is debt as to which the statute 

of limitations has expired. In a few states, collectors are affirmatively prohibited from bringing 

suit on time-barred debt under state law, but the more common rule is that courts will dismiss 

lawsuits filed on such debt if the consumer proves the statute of limitations as an affirmative 

defense. Most statutes of limitation fall in the three-to-six-year range, although in some 

jurisdictions they may extend to fifteen years for certain types of debt.33

One of the reasons states impose statutes of limitations on lawsuits to recover debt is because of 

a concern that evidence may become less reliable over time, making it more difficult for the 

parties and the courts to resolve the matter. Because the risk of a lawsuit may play a major role 

in how consumers choose to respond to a demand for payment, consumer understanding 

regarding the nature and implications of time-barred debt is important. Concepts related to 

statutes of limitations are challenging for consumers to understand, especially the fact that in 

some jurisdictions consumers may “revive” a debt and reset the statute of limitations by making 

a partial payment or acknowledging the debt in writing. 

A related issue is obsolete debt, which is debt that, because of its age, is generally barred from 

appearing on credit reports under the Fair Credit Reporting Act. This typically occurs 

approximately seven years after the delinquency began. Again, because the risk of negative 

information appearing on a credit report may play a role in how consumers choose to respond to 

a collector’s demand for payment, the Bureau believes that consumer understanding regarding 

the nature and implications of obsolete debt is important. 

2. Proposal under consideration to prohibit suit and threats of suit on time-barred 

debt

The Bureau is concerned that some debt collectors sue or threaten to sue on time-barred debt. 

The consumer protection risks associated with these practices are plain. Few consumers know 

that a statute of limitations can be used to defend against legal claims—much less whether their 

own debts are time-barred. Debt collectors that sue on time-barred debt may secure judgments 

on claims against which consumers have viable defenses based on the statute of limitations. 

Similarly, debt collectors that threaten suit on time-barred debt take advantage of this lack of 

understanding by representing, expressly or by implication, that they are legally entitled to 

 33 The statute of limitations applicable to a particular debt generally depends on state law and the type of 

debt. The statutory period usually starts to run from the date of delinquency or the date of last payment. 

See U.S. Fed. Trade Comm’n, The Structure and Practices of the Debt Buying Industry, at 42 (Jan. 2013)

(hereinafter FTC Debt Buying Industry Report), available at

https://www.ftc.gov/sites/default/files/documents/reports/structure-and-practices-debt-buyingindustry/debtbuyingreport.pdf.
20

enforce the debt in court, thereby inducing consumers to pay debts they would not otherwise 

have paid (including debts they do not actually owe). The proposals under consideration would 

prohibit suit and threats of suit on time-barred debt.

3. Proposal under consideration to require disclosures, and to waive revival, in 

connection with the collection of time-barred debt and obsolete debt

Consumer protection concerns exist even when a debt collector attempts to collect time-barred 

debt without suing or threatening suit. Again, this is because few consumers know the statute of 

limitations applicable to any particular debt or whether the limitations period has run. 

Consumers may take away from an attempt to collect a debt the implied claim that the debt is 

enforceable in court if they do not pay—a claim that is false for time-barred debts. Further, a 

consumer who does not know that the statute of limitations has run on a particular debt may 

pay or prioritize a debt, including one the consumer does not owe, over a different obligation.

These concerns are heightened in jurisdictions with so-called revival statutes. In these 

jurisdictions, the statute of limitations “revives”—that is, it starts anew—when the borrower 

makes a payment or acknowledges the debt in writing. The Bureau believes that most 

consumers are unaware of the potential legal consequences of making a payment or 

acknowledging a debt in writing. Indeed, many consumers may find it counterintuitive that 

making a payment—which they believe ought to have positive consequences for them—may 

actually have negative consequences.

The proposals under consideration would require disclosures whenever a debt collector seeks 

payment on time-barred debt and limit the collection of debts that can be revived. The purpose 

is to help ensure that consumers are neither deceived nor treated unfairly in connection with the 

collection of time-barred debt.

• Time-barred debt disclosure. The Bureau is considering a proposal that would require a 

debt collector to provide a time-barred debt disclosure when it seeks to collect a time-barred 

debt. The Bureau is considering whether a collector should be required to make this 

disclosure only if the collector knew or should have known that the debt was time-barred, or 

whether a collector should be strictly liable (i.e., liability would attach regardless of the 

collector’s state of knowledge).34 The Bureau would develop a disclosure and refine its 

contents and design based on consumer testing.

The disclosure itself would consist of a brief, plain-language statement informing the 

consumer that, because of the age of the debt, the debt collector cannot sue to recover it. 

The proposal under consideration would require debt collectors to include such a statement 

in the validation notice and in the first oral communication in which they request payment.35 

The Bureau is also considering whether debt collectors should provide the disclosure at 

additional intervals, including possibly in each communication in which they seek payment.

 34 As with other provisions of the proposed rule, the bona fide error defense under FDCPA section 813(c), 

15 U.S.C. 1692k(c), would be available to debt collectors.

35 Where a debt becomes time-barred during collections, debt collectors would be required to provide the 

disclosure in the first communication in which they seek payment after the statute of limitations has 

expired. If the first communication is oral, then the time-barred debt disclosure would also have to be 

provided in the first subsequent written communication. The Bureau is also considering whether to 

require the disclosure at additional intervals.
21

• Binding later collectors. Given the frequency with which debts are transferred between 

collectors, the Bureau is concerned that a consumer might rely on one debt collector’s 

representation that a debt is time-barred only for a subsequent collector to sue the consumer 

after making a different determination about the same debt. To avoid this concern, the 

proposal under consideration would prohibit a subsequent collector from suing on a debt as 

to which an earlier collector provided a time-barred debt disclosure. The proposal under 

consideration would also require the later collector to provide a time-barred debt disclosure 

in the validation notice and the first oral communication in which it requests payment, and 

possibly at additional intervals. Earlier collectors would have to indicate when they transfer 

the debt to others if they have given the time-barred debt disclosure to the consumer. 

• Obsolescence disclosure. The Bureau is concerned that consumers may make erroneous 

assumptions about credit reporting on debts that they are told cannot be sued on, and that 

these assumptions may lead them to take action they would not have taken otherwise. 

Therefore, the Bureau is considering whether to require a disclosure that would inform the 

consumer whether a particular time-barred debt generally can or cannot appear on a credit 

report. The Bureau would develop a disclosure and refine its contents and design based on 

consumer testing. The proposal under consideration would require that the disclosure 

appear on the validation notice, although the Bureau is also considering whether to require 

it at additional intervals. The Bureau seeks information from SERs about the frequency with 

which debt collectors furnish information to consumer reporting agencies on debts that are 

both time-barred and obsolete and the challenges of providing disclosures to consumers 

relating to obsolescence. 

• Waiver of revival. Consumers may revive a time-barred debt under state law if they make a 

payment on it or acknowledge that the debt is theirs. Consumers may believe that these 

actions would be beneficial to them. To try to correct this impression, collectors could 

attempt to disclose that these actions in fact could permit collectors to subsequently file a 

lawsuit because the debt has been revived. However, the Bureau’s testing to date suggests 

that consumers may not fully understand such a disclosure, because it seems counterintuitive to them. Consequently, the Bureau is considering whether to prohibit collectors 

from collecting on time-barred debt that can be revived under state law unless they waive 

the right to sue on the debt. In other words, even if a consumer makes a payment or 

acknowledges the debt in writing, the rule would prohibit a debt collector from suing 

because the collector, by operation of the Bureau’s rules, would have waived any right to sue 

by collecting on the debt.

• Alternatives considered. The Bureau has considered two alternative proposals, one to ban 

the sale of time-barred debt and one to ban the collection of time-barred debt. The Bureau is 

not currently planning to propose these alternatives because the other proposals under 

consideration described in this Outline may adequately address the risks to consumers 

posed by the sale and collection of time-barred debt. The Bureau also notes that banning the 

sale or collection of time-barred debt could have unintended consequences for consumers. 

For example, if collectors cannot sell or collect time-barred debt, they may have more 

incentive to sue consumers in advance of the expiration of the statute of limitations, a result 

which often is not in the interest of consumers who would prefer not to be sued or collectors 

who may incur costs related to litigation.
22

4. Proposal under consideration to require consumer acknowledgement before 

accepting payment on debt that is both time-barred and obsolete

If consumers cannot be subject to either lawsuits or credit reporting, the Bureau believes that it 

is especially important for them to know about their rights to ensure they do not pay as a result 

of a debt collector’s unlawful conduct. The Bureau therefore is considering a proposal to 

prohibit a debt collector from accepting payment on such a debt until the collector obtains the 

consumer’s written acknowledgement of having received a time-barred debt disclosure and an 

obsolescence disclosure. Debt collectors would be free to include, as a separate document that 

accompanies the validation notice, a form that consumers may use to acknowledge receipt. The 

Bureau does not anticipate providing a model form for this purpose.

V. Collector Communication Practices

The second largest source of Bureau complaints about debt collection focuses on 

communication practices. Although the FDCPA has established multiple protections and 

requirements regarding debt collection communications throughout the debt collection lifecycle, 

consumers consistently complain about frequent or repeated collections telephone calls, 

disclosures of debts to third parties, and other concerns related to debt collection 

communications.36 Communications-related conduct also drives a substantial number of 

FDCPA lawsuits. 

Communications are also a major source of frustration and inefficiency for debt collectors, who 

often feel caught between different sets of FDCPA requirements, such as those requiring 

collectors to identify themselves as collectors and those prohibiting revealing the existence of a 

debt to third parties. In particular, many collectors feel that it is too legally risky for them to 

leave messages for consumers because of the risk that a third party might hear or see the 

message containing the required FDCPA content and thus learn of the debt. Thus, some 

collectors call consumers repeatedly without leaving messages, which in turn can leave 

consumers feeling frustrated and harassed.

The Bureau believes that improving the quality of information in the debt collection system and 

providing consumers with the initial disclosures discussed in part III might decrease the amount 

of time and effort that collectors spend trying to locate and initiate contact with consumers. 

Nevertheless, the Bureau is considering several other potential proposals to give consumers 

more control over the rhythm and channels of communications and to provide greater 

regulatory certainty for all parties. The most significant interventions under consideration 

include:

• Regulations to govern contact frequency and the leaving of messages;

• Regulations to govern the time, place, and manner of collector contacts; and

 36 Communication tactics ranked second in debt collection complaints submitted to the Bureau during 

2015, and the majority of complaints in this category—52 percent, or almost 8,000 complaints during 

2015—were about frequent or repeated telephone calls. See 2016 FDCPA Annual Report, supra note 4, at

19.
23

• Regulations relating to situations in which the consumer alleged to owe the debt dies 

(decedent debt).

Each of these categories of interventions is summarized below, along with proposals the Bureau 

is considering related to consumer consent to communications that, without consent, would 

otherwise violate the FDCPA or implementing regulations. In addition, Appendix H lists certain 

collector practices that the Bureau is considering specifying violate the FDCPA. Again, the 

Bureau believes that the proposals under consideration regarding communications would have 

both benefits and costs for small entities. The Bureau seeks the SERs’ input on how the 

combined impacts would affect their businesses and the broader debt collection industry,

particularly in light of the information integrity measures discussed above.

A. Proposals under consideration regarding contact frequency and the leaving 

of messages

1. Why is the Bureau considering proposals relating to contact frequency and the 

leaving of messages with consumers and with third parties?

As noted, consumers often complain that the frequency with which debt collectors contact them 

is harassing.

37 Collectors, on the other hand, observe that multiple contact attempts are 

necessary, particularly when trying initially to locate and establish contact with a particular 

consumer who owes a particular debt. 

In addition, uncertainty over the intersection of certain FDCPA requirements substantially 

complicates the communication process. As mentioned above, many collectors believe that, 

under the FDCPA, they may not be able to leave voicemails or other messages for consumers 

because the FDCPA requires them to leave information identifying themselves as a collector and 

provide certain warnings to the consumer. If such content is seen or heard by a third party, 

however, that would risk violating FDCPA prohibitions against revealing debts to third parties.38 

As a result, when consumers do not answer collections calls, some debt collectors simply hang 

up and call back, repeating this process until the consumer picks up the call. This may result in 

consumers receiving many more collection calls than they presumably would if debt collectors 

could leave a simple message.

The Bureau believes that setting forth clear standards regarding both permissible contact 

 37 Section 806(5) of the FDCPA prohibits collectors from “causing a telephone to ring or engaging any 

person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any 

person,” and section 806 more generally prohibits conduct by debt collectors that has the natural 

consequence of harassing, oppressing, or abusing any person.

38 The intersection between the two FDCPA requirements was raised in the 2006 decision in Foti v. NCO 

Financial Systems, 424 F. Supp. 2d 643 (S.D.N.Y. 2006) and is commonly referred to as the Foti

dilemma. Under the Foti line of cases, a voicemail message that includes the collection company’s name, 

states that the call is about an important business matter, and provides a toll-free call-back number has 

been considered a “communication” under the FDCPA. Debt collectors that have left such voicemails 

without providing the required warnings—i.e., a statement that the debt collector is attempting to collect a 

debt and that any information obtained will be used for that purpose, or a statement that the 

communication is from a debt collector—have faced liability under FDCPA section 807(11). Because such 

warnings, also known as the “mini-Miranda” warning, necessarily contain information about a 

consumer’s debt, however, debt collectors leaving messages with the mini-Miranda also could face 

liability under FDCPA section 805(b) if a third-party were to overhear the message.
24

frequency and how collectors may leave messages for consumers could benefit both consumers 

and industry by reducing contact frequency while maintaining or enhancing debt collectors’ 

ability to communicate with consumers.

2. Permitting certain limited-content voicemails and other messages

The Bureau is considering a proposal that would provide that no information regarding a debt is 

conveyed—and no FDCPA “communication”39 occurs—when collectors convey only: (1) the 

individual debt collector’s name, (2) the consumer’s name, and (3) a toll-free method that the 

consumer can use to reply to the collector. For example, a voicemail could state, “This is John 

Smith calling for David Jones. David, please contact me at 1-800-555-1212.” This would allow 

collectors to leave such limited-content messages in a voicemail message, with a third-party in a 

live conversation, or through another method of communication (e.g., in a text message or an 

email), without triggering the requirement to provide the FDCPA warnings.40 If the collector 

succeeds in reaching the consumer or if the consumer contacts the collector after receiving the 

message, these FDCPA requirements would apply immediately.

The Bureau is seeking feedback on whether permitting limited-content messages is an 

appropriate and practical way to cut down on repeat contacts without messages, protect against 

third-party disclosures, and ensure that consumers understand the nature of the 

communication as soon as there is direct contact with the collector. To ensure that such 

communications do not become an avenue for evading FDCPA requirements, the Bureau also is 

considering specifying that debt collectors engage in harassing or abusive conduct in violation of 

FDCPA section 806 if they use the limited-content voicemails or other messages to engage in 

contacts that would be prohibited if they were FDCPA “communications.” For example, a debt 

collector who used limited-content voicemails to continue to contact consumers after receiving a 

written cease communications request41 would violate FDCPA section 806 and the Bureau’s 

rules implementing that section.

3. Restricting debt collection contacts with consumers

In combination with solving the current uncertainty over leaving messages, the Bureau is 

considering proposing regulations limiting the frequency with which debt collectors may 

contact, or attempt to contact, consumers. As discussed further in part VII, the Bureau believes 

that current collector practices vary widely with regard to frequency of contact but that some 

debt collectors do not call frequently enough to be affected by the caps under consideration. 

Smaller respondents to the Bureau’s industry survey on current collector practices and 

procedures, in particular, reported that they are unlikely to call consumers more than one to two 

 39 FDCPA section 803(2) defines the term “communication” to mean “the conveying of information 

regarding a debt directly or indirectly to any person through any medium.”

40 As discussed in Appendix F, the proposals under consideration would also prohibit debt collectors from 

including information in the “from” and “subject” lines of emails and from using telephone numbers such 

as “1-800-PAYDEBT” that that would convey that the message is from a debt collector.

41 Consumers may ask collectors orally to stop communicating with them about a debt. Although the 

proposals under consideration would not necessarily make it a violation for a collector not to honor an 

oral cease communication request, the Bureau notes that a debt collector that continues to contact a 

consumer after receiving such an oral request to cease communications may be engaging in harassing 

conduct in violation of FDCPA section 806. 
25

times per week and generally would not speak to a consumer more than one time per week.

42

In considering proposals to restrict contact frequency, the Bureau believes that it would make 

sense to establish different numerical restrictions depending on whether the collector has 

successfully established contact with the consumer who is alleged to owe the particular debt. 

The Bureau believes such an approach may be appropriate because prior to such “confirmed 

consumer contact,” the collector may attempt to reach the consumer through different phone 

numbers or different media and may not know how best to reach the consumer. Once the 

collector has reached the consumer and confirmed that certain contact information is effective, 

the collector will know how best to reach the consumer and need not attempt to initiate contact 

as frequently.

43

The Bureau is considering a rule that would provide that “confirmed consumer contact” exists

once any collector—i.e., whether the current collector or a prior one—has communicated with 

the consumer about the debt, and the consumer has answered when contacted that he or she is 

the debtor or alleged debtor. Confirmed consumer contact would not exist either: (1) prior to 

the consumer answering that he or she is the person whom the collector sought to contact, 

or (2) if the collector reasonably believes that previously confirmed contact information for the 

consumer has become inaccurate. In general, confirmed consumer contact would pass from 

collector to collector.

The contact caps under consideration would limit both successful and attempted contacts. For 

instance, a contact attempt that ends with the collector leaving a limited-content message as 

described above would count toward the cap.

The Bureau also is considering whether to apply the contact caps equally to all communication 

channels (e.g., telephone, mail, email, text messages, and other newer technologies), and 

whether to create separate limits per unique phone number or address as well as for total 

contacts per week. Because collectors may have or obtain several phone numbers as well as 

potentially one or more email and mailing addresses for a consumer, the Bureau believes that it 

would be excessive for a debt collector to make contact attempts through any one of these points 

of contact more than a certain number of times per week. The Bureau also believes that overall 

contact attempts by a given debt collector through different points of contact can have the same 

harassing consequence.

The Bureau is considering whether to structure the caps as “hard” bright-line limits or to 

provide more flexibility. For instance, one option would be to establish a general bright-line rule 

but with some specific exceptions. Another option would be to establish a rebuttable 

presumption that contacts or attempted contacts above the threshold constitute harassing, 

oppressive, or abusive conduct, and contacts or contact attempts at or below the thresholds do 

 42 Operations Study, supra note 15, at sec. 5.2.

43 The Bureau continues to consider whether confirmed consumer contact status should be established 

only after the collector communicates with the consumer obligated or allegedly obligated to pay the debt 

(and not, e.g., to the consumer’s spouse). The Bureau is contemplating that collectors would not be 

limited to the stricter contact caps associated with confirmed consumer contact status until they have 

communicated with the debtor or alleged debtor, because a successful contact with a section 805(d) 

consumer (e.g., a spouse) would not necessarily mean that the collector has located the alleged debtor. In 

the case of decedent debt, confirmed consumer contact could be established when the collector has 

communicated with an executor, administrator, or personal representative of the estate.
26

not. Under such an approach, if the collector knew or had reason to know that a contact or 

contact attempt in excess of the cap would not result in harassing, oppressive, or abusive 

conduct for a particular consumer, the collector would not violate the regulation by contacting 

or attempting to contact the consumer more often than the thresholds otherwise would allow. 

On the other hand, if the collector knew or should have known that a contact or contact attempt 

below the threshold would be harassing, the collector would violate the regulation by contacting 

or attempting to contact the consumer at that frequency.

When analyzing contact frequencies, the Bureau is weighing the competing interests of debt 

collectors in being able to make the repeated contact attempts often necessary to establish 

confirmed consumer contact and collect debts, and the interests of consumers in minimizing the 

number of debt collection calls they receive.44 The Bureau believes that the caps under 

consideration may appropriately balance the risks to consumers of being annoyed, harassed, 

oppressed, or abused by too-frequent contacts or contact attempts via multiple points of contact 

with the risks to collectors from being unable to communicate sufficiently with consumers. The 

Bureau further believes that—particularly when taken together with the Bureau’s proposed 

approach to leaving messages discussed above—these caps would significantly reduce the 

number of contacts and contact attempts that consumers experience, while simultaneously 

allowing collections to continue without undue burden.

Specifically, the proposals under consideration would set the limits in Table 2 below. Note that, 

when confirmed consumer contact exists, the Bureau is considering whether to provide that 

more than one live conversation per week would be generally prohibited. Except under a strict 

hard cap approach, a consumer could consent to greater frequency than reflected in the caps for 

confirmed consumer contact status, for example, by agreeing during the first conversation about 

a particular account that week that the collector could call the consumer back at a specific date 

and time later in the week. To be effective, the consent would need to meet the minimum 

requirements described later in part V.D.

Table 2: Permissible Consumer Contacts (or Contact Attempts)

Per Account Per Week

Collector Activity

Collector Does Not Have

Confirmed Consumer 

Contact

Collector Has Confirmed 

Consumer Contact

Attempts per unique address 

or phone number 3 2

Total contact attempts 6 3

Live communications N/A 1

• Alternatives considered. The Bureau considered applying the caps on a per-consumer, 

rather than on a per-account, basis for all types of debts. In rejecting this approach, the 

Bureau considered that: (1) a collector working on multiple accounts for multiple creditors 

 44 The Bureau considered consumer complaints about—and anecdotal evidence of consumer harm from—

too-frequent contacts or contact attempts by collectors, feedback from consumers in response to the 

Bureau’s Survey of Consumer Views on Debt (preliminary results attached at Appendix B), anecdotal data 

from collectors about call frequency required by debt owners, and relevant case law and states’ laws.
27

might not be able to work on each account if the collector could only communicate with the 

consumer one time per week; (2) creditors might seek to place their accounts with collectors 

who exclusively work their accounts, or work only a certain type of debt, which might make 

collection activity less efficient; and (3) it could be impracticable or otherwise problematic 

for collectors to merge information across different creditors’ accounts for purposes of 

counting contacts or contact attempts. The Bureau recognizes that the proposal under 

consideration would permit a higher number of contacts and contact attempts to consumers 

with multiple accounts in collection. However, the disadvantages of a per-consumer cap 

structure and the other measures that the Bureau is considering to increase consumer 

awareness of, and ability to limit, communications suggest that a per-account approach may 

be most appropriate. The Bureau continues to consider whether a per-consumer, rather 

than a per-account, contact cap may be preferable for particular categories of debt, such as 

student loan or medical debt, where one collector likely may be collecting on multiple 

accounts for the same consumer simultaneously.

4. Location contacts and frequency of general third-party contacts

Section 804 of the FDCPA permits debt collectors to contact persons other than the person (or 

persons) who owes or allegedly owes the debt to acquire location information for that individual. 

It also prescribes requirements regarding such location communications. The Bureau 

understands that there are concerns about consumer harms from debt collectors using location 

contacts improperly by, for example, repeatedly contacting or attempting to contact third 

parties, asking or encouraging third parties to pay the debt, or enlisting third parties to pressure 

consumers to contact collectors.

The Bureau is considering a set of contact caps that would allow collectors to make a limited 

number of location contacts (or attempted location contacts) with third parties when the 

collector does not have confirmed consumer contact. Like the consumer contact caps under 

consideration, the contact caps being considered for location communications would: (1) apply 

to all contact channels; (2) restrict both attempts per unique address or phone number and total 

attempts per week; and (3) apply per account, rather than per consumer. Similarly, the Bureau 

is considering whether to establish a hard cap, a general cap with limited exceptions, or a 

rebuttable presumption structure.

The proposals under consideration would set the limits in Table 3 below. As with consumer 

contacts, attempts to contact a third party would count toward the cap; for instance, a contact 

that ends with the collector leaving a message for a third party would count as a contact attempt. 

Consistent with the FDCPA, the caps would prohibit a collector from initiating a contact with 

any particular third party that the collector already had contacted to obtain location 

information, unless specifically requested to do so by the third party, or unless the collector 

reasonably believed that the location information that it had received from the third party was 

incorrect or incomplete. However, the caps would not restrict the total location attempts made 

to all third parties per account per week absent harassment or other conduct that would violate 

FDCPA section 806, since attempts to one third party generally are not likely to harass another 

third party.
28

Table 3: Permissible Number of Location Contacts (or Contact Attempts) 

to a Third Party Per Account Per Week

Collector Activity Collector Does Not Have

Confirmed Consumer Contact

Collector Has Confirmed 

Consumer Contact

Attempts per unique address 

or phone number per third 

party

3 0

Total contact attempts per 

third party 6 0

Total contact attempts across 

all third parties No specific limit 0

Live communications per 

third party (total, not weekly) 1 0

When the debt collector has confirmed consumer contact, the caps would bar all further location 

communications. A collector who has reached the consumer obligated or allegedly obligated to 

pay the debt may no longer need to obtain location information for the consumer. Therefore, 

future purported location contacts likely may be made for a purpose other than to obtain the 

consumer’s location information. As noted in part V.A.3, above, if the collector reasonably 

believes that previously confirmed contact information for the consumer has become inaccurate, 

confirmed consumer contact would be deemed not to exist, and the collector would be permitted 

to resume contacting third parties to obtain location information.

B. General time, place, manner restrictions 

FDCPA section 805(a) limits the times and places at which collectors may communicate with 

consumers in connection with the collection of debts. For example, it generally prohibits debt 

collectors from communicating with consumers about a debt at any unusual time or place, or at 

a time or place that the collector knows or should know is inconvenient for the consumer, unless 

the collector has received consent directly from the consumer. The statute further specifies that, 

in the absence of knowledge of circumstances to the contrary, debt collectors shall assume that 

the convenient time for contacting consumers is after 8:00 a.m. and before 9:00 p.m. in the 

consumer’s location.

Notwithstanding section 805(a)’s protections, consumers have complained that debt collectors 

contact them at inconvenient times and places, and that they have not been able to prevent such 

contacts. At the same time, debt collectors may face uncertainty about whether and how section 

805(a) applies to communications via newer technologies such as email.

The Bureau believes that this rulemaking presents an opportunity to clarify FDCPA section 

805(a) for consumers and collectors alike. Importantly, the proposals under consideration 

would underscore that collectors must abide by section 805(a)’s protections unless they receive 

consent to do otherwise directly from consumers. Under the proposal under consideration, 

collectors would not be able to rely on the consumer consent provided to the original creditor or 

a prior collector. See also part V.D regarding consent, below.
29

1. Clarifications regarding inconvenient times

The Bureau is considering a proposal to clarify the FDCPA’s limitations on contacting 

consumers at inconvenient times. Under section 805(a)(1), the consumer’s location affects the 

presumptively convenient times that a collector may contact the consumer. The Bureau is 

considering a proposal that would specify how a debt collector determines a consumer’s location 

when the debt collector has conflicting location information for the consumer. For example, 

when a consumer has a mobile phone number in one time zone and a street address in another, 

a debt collector may be unsure which time zone reflects the consumer’s actual location when a 

call is placed.45 The proposals under consideration would provide that, in this situation, and in 

the absence of knowledge of circumstances to the contrary, a debt collector knows or should 

know that it is convenient to communicate with a consumer if it would be convenient in all of 

the locations in which the collector’s information indicates the consumer might be. The Bureau 

understands that some collectors may already have adopted this practice for determining the 

convenient time to contact consumers when the collector has conflicting location information.

The proposals under consideration would also clarify how the presumptively convenient time 

restrictions in section 805(a)(1) apply to newer technologies. They would provide that whether 

a communication is sent at an unusual or inconvenient time is determined by the time at which 

the message generally is available for the consumer to receive it. Because an email or text 

message is generally available for consumer’s receipt when the debt collector sends it, the time 

of sending will be the determining factor—not, for example, when the consumer sees or opens it. 

Using the time the message is sent also will provide greater certainty to collectors in 

determining if they are communicating at a presumptively inconvenient time.

2. Clarifications regarding inconvenient places

a. General clarifications

FDCPA section 805(a)(1) prohibits collectors from communicating with consumers at any place 

that the collector knows or should know is inconvenient for the consumer. The proposals under 

consideration would specify certain locations that trigger the FDCPA presumption and thus a 

collector would not be able to continue the communication, absent affirmative consumer 

consent as discussed below. Under the proposal under consideration, a consumer would not 

have to state that the communication is inconvenient; simply stating that the consumer is in one 

of the four specified presumptively inconvenient places would be sufficient to trigger the 

FDCPA’s restriction. 

The Bureau is considering stating that the following four categories of places are presumptively 

inconvenient for consumers: (1) medical facilities, including hospitals, emergency rooms, 

hospices, or other places of treatment of serious medical conditions; (2) places of worship, 

including churches, synagogues, mosques, temples; (3) places of burial or grieving, including 

 45 The Bureau also is considering a related proposal that would provide that a collector who contacts a 

consumer outside the presumptively convenient time would not violate the law if the contact was 

permissible according to the contact information the collector has about the consumer and the collector 

did not know, or should not have known, that the consumer was receiving the communication at a 

presumptively inconvenient time. A collector could lack such knowledge where, for example, the 

consumer had traveled to a different time zone with his or her mobile phone, or was receiving phone calls 

automatically forwarded from a landline phone in a different time zone. 
30

funeral homes and cemeteries; and (4) daycare or childcare centers or facilities. 46 The Bureau 

believes that it is highly unlikely for it to be convenient for consumers to receive debt collection 

communications (or communication attempts) while consumers are physically located at one of 

these places. In addition, most consumers are not at these locations permanently, and collectors 

will be able to resume communications with these consumers once they are no longer at these 

places.

As noted, the presumption would apply only if the collector knows or should know that the 

consumer is at one of the places. Under this standard, collectors would not be required to 

investigate a consumer’s whereabouts before attempting to communicate. However, collectors 

would be prohibited from ignoring information that they may have received about a consumer’s 

location, for example in prior communications with the consumer, in order to contact the

consumer at one of the places.

Conversely, a collector who contacted a consumer who was at one of the listed places would not 

violate the regulation if the collector did not know, and had no reason to know, that the 

consumer was at the presumptively inconvenient place. This should accommodate inadvertent

contacts by mobile phone or other portable technologies in which it is difficult for collectors to 

determine where a consumer physically is at the time that the collector initiates a contact. 

However, if the collector learned during the communication that the consumer was at such a 

place, the collector would be required to discontinue the communication. The collector could 

not use the opportunity to seek the consumer’s consent for a debt collection communication or 

to ask the consumer to pay the debt. Rather, to consent to a communication at a presumptively 

inconvenient place, the consumer would have to affirmatively express an interest in and consent 

to discussing the debt at the place without prompting from the collector.

The Bureau is considering providing that the general principle would apply to communications 

with the consumer at the place, regardless of the communication method used.47 Thus, for 

example, if a collector knows or should know that a consumer is in the hospital, and the 

consumer has both a landline telephone in the hospital room and a mobile phone, the collector 

presumptively would be prohibited from calling or texting the consumer at either of those 

numbers. By contrast, the collector would not be prohibited, for example, from calling a 

landline telephone at, or from mailing a letter to, the consumer’s home address while the 

consumer is at the hospital (though other restrictions, such as discussing the debt with a thirdparty, would still apply). The Bureau continues to consider how the presumption would apply to 

other, newer technologies such as email.

b. Servicemember inconvenient places

The Bureau understands that it often may be inconvenient for servicemembers to receive debt 

collection communications in military combat zones and similar areas. The Bureau also 

recognizes, however, that it may be in servicemembers’ interests to know that a debt is in 

 46 The proposals under consideration would limit attempts to communicate, as well as actual 

communications. The Bureau believes that, when a consumer is at one of the presumptively inconvenient 

places and does not wish to speak to a collector, the consumer would be inconvenienced by repeatedly 

receiving, for example, phone calls from the collector that the consumer must then ignore.

47 But note that a collector could contact a consumer whom the collector knows or should know is at one 

of these places (e.g., a hospital) if the consumer was employed at the place (e.g., a doctor) and was not a 

customer or a client of the place (e.g., a hospital patient) or visiting such a person.
31

collections and to seek to resolve debts during sometimes lengthy deployments. The Bureau is 

seeking feedback about the advantages and disadvantages to servicemembers and collectors of 

including military combat zones or qualified hazardous duty postings in the list of presumptively 

inconvenient places.

c. Alternatives considered

The Bureau is not currently contemplating proposing the consumer’s workplace as a 

presumptively inconvenient place. While such an approach would help to protect consumers 

from the risks of workplace communications—e.g., the risks of third-party disclosures—it could 

also result in only permitting contact attempts during relatively brief periods before and after 

work at consumers’ homes. Many consumers may prefer not to get such contacts at home or at 

such times. Such a narrow window to contact consumers could significantly decrease collectors’ 

ability to reach consumers, which in turn could increase collections litigation and increase 

substantially the costs of collection. 

3. Clarifications regarding inconvenient communication methods

a. General clarifications

The Bureau is considering a proposal that would provide that a collector is prohibited from 

communicating (or attempting to communicate) with a consumer using a communication 

method that the collector knows or should know is inconvenient. The proposals under 

consideration would specify that collectors know or should know that a particular 

communication method is inconvenient if the consumer indicates, either expressly or by 

implication, that the method is inconvenient.

The proposals under consideration would provide that a consumer need not utter any “magic 

words,” such as the word “inconvenient,” to provide a collector with the requisite knowledge 

that a time, place, or communication method is inconvenient. The Bureau believes that a “magic 

words” approach would be too burdensome on consumers. At the same time, the Bureau 

recognizes that collectors may need to ask clarifying questions if a consumer makes an 

ambiguous statement. Accordingly, if a consumer stated “I cannot talk on the phone about this,” 

the collector could ask the consumer to clarify if a different time or phone number would be 

acceptable. In the absence of such information, however, the collector thereafter would be 

limited to contacting the consumer using methods other than calls.

b. Specific clarifications regarding work email addresses

The Bureau is also considering proposals that would generally prohibit collectors from using an 

email address that they know or should know is the consumer’s workplace email for debt 

collection communications. The Bureau is concerned that workplace communications run a 

particularly high risk of violating the FDCPA’s prohibition against disclosing consumer debt to 

third parties because many consumers’ employers have a legal right to review employees’ emails 

on their workplace accounts. This creates a risk that employers would read emails from 

collectors sent to the work email addresses of consumers.

The proposal under consideration would allow collectors to use a consumer’s work email 

address for collections communications if the consumer specifically consented to being 

contacted at his or her work email. The consumer could provide consent directly to the debt 

collector, or could identify a workplace email address in a communication with the collector as a 

place to which to send return emails. For example, if a consumer emailed a collector from a 
32

certain email address, that could constitute consent to use that email address for future 

communications so long as the content of the email did not convey otherwise. Consistent with 

the minimum requirements for consent discussed in part V.D, however, collectors could not rely 

on consumer consent provided to the original creditor or to a prior collector. 

C. Issues concerning decedent debt

Section 805(b) of the FDCPA generally provides that a collector may not communicate with 

anyone other than the consumer about the collection of the consumer’s debt. Section 805(d) of 

the Act defines “consumer” to include the consumer’s spouse, the parent or guardian of a minor 

consumer, and the executor or administrator of a deceased consumer’s estate.48 Thus, collectors 

can generally communicate with “section 805(d) consumers” without violating the FDCPA. 

However, in situations in which a consumer who is alleged to owe a debt dies, a number of 

interpretive issues can arise with regard to how the FDCPA communications restrictions apply.

The Bureau is considering a number of proposals to clarify these issues. Specifically, the 

proposals under consideration include clarifying that it is generally permissible for collectors to 

contact surviving spouses, parents of deceased minors, and individuals who are designated as 

personal representatives of an estate under state law. However, the proposals would establish a 

30-day pause after the consumer’s death before such contacts could begin.

1. Status of surviving spouses, parents, and personal representatives

First, the proposals under consideration would clarify that the Bureau interprets the terms 

“spouse” and “parent” as used in section 805(d) to include surviving spouses and parents of 

deceased minor consumers, so that they could continue to speak to collectors about the 

decedent’s debts, subject to certain restrictions discussed below. 

The proposals also would interpret section 805(d) generally to apply to personal representatives 

of a deceased consumer’s estate. Since the FDCPA’s adoption, state law and practice regarding 

probate processes have evolved, and a number of states now refer to a “personal representative” 

as part of, in addition to, or instead of the labels of executor or administrator.49 For many 

consumers, the use of personal representatives and more informal probate processes to resolve 

estates may be more efficient and less expensive, and cost often is a particularly important 

consideration for individuals of limited means. The Bureau thus is considering a proposal to 

interpret section 805(d) to include personal representatives of deceased consumers’ estates. 

The Bureau is considering defining “personal representatives” as those individuals who have 

been recognized under state probate or estate laws as having responsibilities to perform many of 

the same functions as executors and administrators. Limiting “personal representatives” to 

those defined in accordance with state law50—and not, for example, to include all individuals 

 48 Collectors can communicate with section 805(d) consumers about a consumer’s debt without violating 

section 805(b)’s prohibition against disclosing debts to third parties; such communications, however, are 

subject to all other FDCPA communications restrictions.

49 See, e.g., UPC § 1-201(35) (defining “personal representative” to include, among others, an executor or 

administrator).

50 The Bureau is considering specifying that debt collectors would not engage in unlawful third-party 

disclosure if they rely on state-approved documentation to determine that an individual they contact is a 

personal representative.
33

who merely describe themselves as personal representatives—should limit collector contacts to 

particular, identifiable individuals who have the legal status of “personal representative.”51 The 

Bureau, however, is interested in receiving feedback about the advantages and disadvantages of 

defining “personal representative” more broadly, to include, for example, any person with the 

authority to pay the decedent’s debts out of the assets of the decedent’s estate.

2. Waiting period for decedent debt

As discussed, the proposals under consideration would permit debt collection communications 

between collectors and surviving spouses and (for minor consumers) surviving parents of 

deceased debtors. While these communications may enable such individuals to resolve their 

loved ones’ debts, the Bureau is concerned about the potential for consumer harm from debt 

collection communications during the vulnerable time after a loss. The Bureau is concerned, for 

example, about the possibility that a surviving spouse who is not responsible for the deceased 

consumer’s estate nor otherwise obligated to pay the debt could, if contacted by a collector 

shortly after the consumer’s death, be vulnerable to paying collection requests without full 

consideration.

To address this concern, the proposals under consideration would specify a 30-day waiting 

period during which collectors would generally be prohibited from communicating with section 

805(d) consumers after the consumer alleged to owe a debt has died. Specifically, if a debt 

collector knows or should know that the consumer has died, the proposals under consideration 

would prohibit the debt collector from communicating or attempting to communicate with any 

section 805(d) consumer (e.g., a surviving spouse) about the debt for 30 days following the date 

of death. The waiting period would apply regardless of the communication method the collector 

used (e.g., phone, email, mail, text message).

The Bureau believes that a 30-day waiting period could prevent such consumers from receiving 

inconvenient communications during the early stages of the grieving process, while also 

protecting their interests in the prompt resolution of estates and in not being deprived of 

information that they may want from collectors. The Bureau also believes that its proposal 

under consideration is in line with the practice of a number of specialty collectors of decedent 

debt that already observe a pause for debt collection communications during the period 

immediately after a consumer dies. The Bureau, however, is interested in feedback from SERs 

about a 60-day waiting period as an alternative.

The Bureau is considering specifying that the debt collector could communicate with a section 

805(d) consumer (e.g., a surviving spouse) during the waiting period if the consumer consented 

directly to the debt collector. Collectors, however, would not be permitted to contact a section 

805(d) consumer during the waiting period to request consent. Instead, the section 805(d) 

consumer would have to contact the collector during the waiting period to express an interest in,

and consent to, discussing the decedent’s debt.

The Bureau also is considering specifying that a collector who contacts a section 805(d) 

consumer during the 30-day waiting period without knowing or having reason to know that the 

consumer obligated or allegedly obligated on the debt had died would not violate the regulation. 

 51 The definition being considered would encompass a more limited set of individuals than are covered 

under the FTC’s 2011 Statement of Policy Regarding Communications in Connection with the Collection 

of Decedents’ Debts. 76 FR 44915, 44918-23 (July 27, 2011).
34

However, upon learning of the consumer’s death, the collector would be required either to 

terminate the communication or to seek solely location information for the decedent’s executor, 

administrator, or personal representative.52 As noted above, the collector could not use the 

opportunity to seek the section 805(d) consumer’s consent for a debt collection communication 

or to ask the consumer to pay the debt.

The proposal under consideration would not prohibit debt collectors from initiating or engaging 

in location contacts with section 805(d) consumers during the decedent debt waiting period, 

such as contacting a surviving spouse solely to get the contact information of the executor of an 

estate. The Bureau is, however, interested in feedback from the SERs about the costs and 

benefits to consumers and collectors of such a prohibition, including whether such costs and 

benefits would vary depending on the communication method used (e.g., written versus oral).

D. Consumer consent

Various FDCPA restrictions on communications can be waived by consumer consent. The 

Bureau is considering proposals to clarify the parameters of obtaining consent from consumers. 

Most importantly, consistent with FDCPA section 805—which provides that the consumer must 

give consent directly to the debt collector—the Bureau is considering including in its proposed 

rules the requirement that each collector, to obtain consent, must obtain it directly from the 

consumer (whether orally or in writing). Thus, for example, each debt collector who obtains a 

debt following a sale or placement would be required to obtain consent anew rather than being 

able to rely on the consent provided to the creditor or to a prior collector. Not only is such a 

requirement consistent with the section 805(b) of the FDCPA, but it also would protect 

consumers by giving them an opportunity to reassess and re-set communication parameters for 

each collector with which they interact.53

In addition, the Bureau also is considering requiring collectors to clearly and prominently 

disclose to the consumer—either orally or in writing—what the consumer is consenting to (e.g., 

that the consumer consents to communications at a specific date and time, or to the debt 

collector revealing information about a debt to a third party). The Bureau is continuing to 

consider how to implement this requirement, for example, whether to specify when and how 

collectors should make such a disclosure, and how specific the disclosure must be.

The Bureau also is considering requiring collectors to memorialize consent. The Bureau is 

considering specifying that, if a consumer provides consent orally, the debt collector may 

memorialize consent by recording the conversation or by noting the consumer’s consent in the 

account file. If the communication occurs in writing, then the collector could memorialize 

consent by maintaining records of it in the account file. The Bureau is interested in receiving 

feedback about the most effective and least burdensome methods for memorializing consent.

Finally, the Bureau is considering specifying that consumers may revoke consent previously 

provided to the collector. The Bureau is continuing to consider how to implement such a 

 52 The Bureau is considering proposing that location information would include email addresses and cell 

phone numbers, as well as contact information for the executor, administrator, or personal representative 

of a deceased consumer’s estate.

53 In particular, this requirement would protect servicemembers by underscoring that a debt collector may 

not rely on consent provided to the original creditor to communicate with a servicemember’s 

commanding officer about a debt.
35

proposal and is interested in receiving feedback about the most effective and least burdensome 

methods for both consumers and collectors. 

• Alternatives considered. The Bureau considered two other proposals regarding the 

minimum requirements for consent. First, the Bureau considered a proposal to require that 

consumers provide consent in writing, rather than orally. Second, the Bureau considered a 

proposal to establish separate requirements for consent by specific groups of consumers, 

such as surviving spouses handling decedent debt collection communications. The Bureau is 

not contemplating proposing these alternatives, however, because the elements of effective 

consent outlined above appear to contain safeguards sufficient to protect consumers.

VI. Additional Proposals

A. Prohibition on transferring debt to certain entities or in certain 

circumstances

The proposals under consideration described above are designed to address longstanding 

problems in the debt collection market. However, the Bureau recognizes that, even after a debtcollection rule takes effect, certain collectors may try to operate unlawfully. To supplement the 

proposals under consideration described above, the Bureau is considering an additional 

proposal to prohibit debt buyers from placing debt with, or selling debt to: (1) those subject to a 

judgment, order, or similar restriction prohibiting them from purchasing or collecting debt in 

the state in which the consumer resides; or (2) those that lack any license required to purchase 

or collect debt, as applicable, in the state in which the consumer resides.

The purpose of the proposal under consideration is to keep debt out of the hands of those who 

cannot collect on debts lawfully. The Bureau seeks input from the SERs about the costs 

associated with prohibiting transfers to these two categories of entities. The Bureau also seeks 

input whether the two categories described above should be expanded or contracted, or whether 

additional categories should be added.

Additionally, the Bureau is considering a proposal to prohibit the sale or placement for 

collection of debt when the debt buyer knows or should know that the debt was paid or settled, 

discharged in bankruptcy, or the result of identity theft.

B. Recordkeeping

The Bureau is considering a proposal to require a debt collector to retain records documenting 

the actions it took with respect to a debt for three years after its last communication or 

attempted communication (including communication in litigation) with the consumer about the 

debt. This retention requirement would encompass all records the debt collector relied upon for 

the information in the validation notice and to support claims of indebtedness, for example, the 

information the debt collector obtained before beginning to collect, the representations the debt 

collector received from the creditor before beginning to collect, and the records the debt 

collector relied upon in responding to a dispute. It also would encompass all records related to 

the debt collector’s interactions with the consumer, for example, written communications to and 

from the consumer, oral communications to and from the consumer, and individual collector 

notes.

The Bureau notes that while this recordkeeping requirement would apply to recorded telephone 

calls, entities that do not record telephone calls would not be required to begin doing so.
36

VII. Potential Impacts on Small Entities

This section summarizes both the Bureau’s preliminary assessments of the potential impacts on 

small entities of the proposals under consideration and the methods used to derive the 

assessments. It is meant to provide context for a discussion of how the requirements under 

consideration can be improved for small entities, while still achieving their purposes. The 

Bureau encourages contributions of data and other factual information that will help it to 

understand better the potential compliance burdens of small entities and to develop a proposed 

rule that achieves appropriate goals, including those discussed in this Outline.

A. Entities subject to the proposals under consideration

The proposals under consideration would apply to “debt collectors,” as defined in the FDCPA. 

The Bureau has identified several categories of small entities that meet this definition using 

definitions for small entities that are set by the SBA in other contexts: collection agencies with 

$15.0 million or less in annual receipts; debt buyers with $38.5 million or less in annual 

receipts; collections law firms with $11.0 million or less in annual receipts; and small entity loan 

servicers that acquire accounts in “default,” which generally are either depository institutions 

with $550 million or less in assets or non-depositories with $20.5 million or less in annual 

receipts.

• Collection agencies. The Census Bureau defines “collection agencies” (NAICS code 561440) 

as “establishments primarily engaged in collecting payments for claims and remitting 

payments collected to their clients.”54 In 2012, according to the Census Bureau, there were 

4,000 collection agencies with paid employees in the United States.55 Of these, the Bureau 

estimates that 3,800 collection agencies have $15.0 million or less in annual receipts and are 

therefore small entities.56 Census Bureau estimates indicate that in 2012 there were also 

more than 5,000 collection agencies without employees, all of which are presumably small 

entities.

• Debt buyers. Debt buyers purchase delinquent accounts and attempt to collect amounts 

owed, either themselves or through agents. The Bureau estimates that there are 

approximately 330 debt buyers in the United States, and that a substantial majority of these 

are small entities.57 Many debt buyers—particularly those that are small entities—also 

collect debt on behalf of other debt owners.58

 54 As defined by the Census Bureau, collection agencies include entities that collect only commercial debt, 

and the proposals under consideration apply only to collectors of consumer debt. However, the Bureau 

understands that relatively few collection agencies collect only commercial debt.

55 Census Bureau estimates indicate that in 2012 there were also more than 5,000 collection agencies

without employees, all of which are presumably small entities.

56 The Census Bureau estimates average annual receipts of $95,000 per employee for collection agencies. 

Given this, the Bureau assumes that all firms with fewer than 100 employees and approximately half of 

the firms with 100 to 499 employees are small entities, which implies approximately 3,800 firms.

57 DBA Internati0nal, the largest trade group for this industry segment, states that it has approximately 

300 debt buyer members and believes that 90 percent of debt buyers are current members.

58 The Bureau expects that debt buyers that are not collection agencies would be classified by the Census 

Bureau under “all other nondepository credit intermediation” (NAICS Code 522298).
37

• Collection law firms. The Bureau estimates that there are 1,000 law firms in the United 

States that either have as their principal purpose the collection of consumer debt or regularly 

collect consumer debt owed to others, so that the proposals under consideration would apply 

to them. The Bureau estimates that 95 percent of such law firms are small entities.59

• Loan servicers. Loan servicers would be covered by the proposals under consideration if 

they acquire servicing of loans already in default.60 The Bureau believes that this is most 

likely to occur with regard to companies that service mortgage loans or student loans. The 

Bureau estimates that approximately 200 such mortgage servicers may be small entities and 

that few, if any, student loan servicers that would be covered by the proposals under 

consideration are small.61

B. Bureau review of debt collection processes and costs

The Bureau has collected information about the effect that the proposals under consideration 

might have on debt collectors, including those that are small entities.

As noted, in 2013 the Bureau published an ANPR that asked for information related to potential 

rules for debt collection and how they might affect industry. A number of responses addressed 

the likely impacts on collectors of rules similar to the proposals under consideration. However, 

few of the responses included specific data needed to estimate impacts on small entities.

Between January and March 2015, the Bureau surveyed a nationally representative sample of 

consumers to obtain comprehensive data on their debt collection experiences. The survey 

provided the Bureau information relevant to the potential effects of the proposals under 

consideration, such as how often consumers are contacted by debt collectors, the methods 

collectors use to make contact, and why and how often consumers dispute the validity of debts.

The Bureau conducted a qualitative study of debt collection firms during the summer and fall of 

2015 that included a written questionnaire, which was completed by 58 debt collectors, and 

phone interviews of 19 debt collectors and 15 vendors to the collections industry, most of which 

were small entities.62 The study sought information on a range of topics related to collectors’

operations costs, including employees, types of debt collected, clients, vendors, software, 

policies and procedures for consumer interaction, disputes, furnishing data to credit bureaus, 

 59 The primary trade association for collection attorneys, the National Creditors Bar Association (NARCA),

states that it has approximately 600 law firm members, 95 percent of which are small entities. The 

Bureau estimates that approximately 60 percent of law firms that collect debt are NARCA members and 

that a similar fraction of non-member law firms are small entities.

60 The Bureau expects that loan servicers are generally classified under NAICS code 522390, “Other 

Activities Related to Credit Intermediation.” Some depository institutions (NAICS codes 522110, 522120, 

and 522130) also service loans for others and may be covered by the proposals under consideration.

61 Based on 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. The Bureau’s 

estimate is based on the assumption that all those servicing more than 5,000 loans may acquire servicing 

of loans when loans are in default and that at most 100 of those servicing 5,000 loans or fewer acquire 

servicing of loans when loans are in default.

62 See generally Operations Study, supra note 15.
38

litigation, and compliance. The Bureau also held a number of meetings with stakeholders and 

engaged in other outreach to discuss the debt collection industry and potential regulations. 

Stakeholders included consumer advocacy groups, industry groups, vendors to the debt 

collection industry, and debt collectors. This outreach provided the Bureau with helpful 

information related to the costs of operating a debt collection business and potential impacts of 

the proposals under consideration. The Bureau also has obtained information through 

supervision and enforcement activities, market monitoring, and related rulemaking activities 

that intersect with debt collection. For example, in preparing its 2015 Consumer Credit Card 

Market Report, the Bureau surveyed a number of large credit card issuers regarding several 

topics, including credit card debt collection, recovery, and debt sales.63

C. Activities of debt collectors and impact of recent regulatory changes

This section summarizes the Bureau’s understanding of certain activities of debt collectors that 

could be affected by the proposals under consideration and discusses the effect recent regulatory 

changes have had on debt collectors. To establish a baseline for understanding the impacts of 

the proposals under consideration, this section describes the Bureau’s understanding of 

practices of collectors that seek to comply with the FDCPA and follow industry best practices 

such as those outlined in DBA International’s (DBA) certification program and ACA 

International’s Code of Ethics.

1. Debt collection activities

In general, collecting debt involves obtaining data on accounts, contacting consumers to request 

payment, responding to consumer disputes, furnishing information to credit reporting agencies, 

and suing consumers. Many of these steps could be affected by the proposals under 

consideration. For example, disclosure requirements and limits on how frequently debt 

collectors can attempt to contact consumers would affect the process of contacting consumers, 

and information flow requirements may affect what data must be tracked and how it is used. 

This subsection provides background on debt collector operations that the Bureau believes is 

important to understanding the proposals under consideration. The next subsection describes 

the Bureau’s analysis of the likely impact of the proposals under consideration on these 

activities.

a. Creditor agreements

The nature of the arrangement between the creditor and the debt collector varies across 

collection agencies, debt buyers, collection law firms, and loan servicers.

Collection agencies. Most debt collection firms work on a contingency basis; that is, a creditor 

“places” accounts with a debt collector that retains a share of the funds it collects from 

consumers. The agreement between a creditor and a collection agency also addresses factors 

such as settlement authority, the length of placement, contact limits, audits, litigation, and 

furnishing information to credit reporting agencies. As described below, some terms tend to 

vary based on the size of the creditor or the type of debt collected.

 63 Bureau of Consumer Fin. Prot., Consumer Credit Card Market Report, at 256 (Dec. 2015) (hereinafter 

Card Market Report), available at http://files.consumerfinance.gov/f/201512_cfpb_report-theconsumer-credit-card-market.pdf.
39

• Length of placement. Many large creditors place debt with collection agencies for a specified 

time, after which any uncollected accounts are returned to the creditor (at which point they 

may be placed with another collection agency, referred for litigation, sold, or warehoused). 

Placements can last from three months or less to more than a year, depending on the type of 

debt and the extent of delinquency. Other creditors, in particular smaller creditors or health 

care providers, typically place accounts indefinitely with no return date specified.

• Contact limits. Some creditors (particularly larger creditors) limit how often collectors can 

call consumers, and they may specify voicemail policies or impose other restrictions on 

consumer contacts.64 Collectors may also be required to make a minimum number of 

contact attempts for each consumer, although the Bureau understands that this practice is 

becoming less common.

• Client audits. Many creditors retain the right to audit their collectors’ performance, 

including compliance with federal and state laws.

65 These audits may be on site or remote 

and may involve listening to calls or call recordings, reviewing dispute records, and 

otherwise analyzing collector procedures and practices. The frequency of audits depends on 

the size of the collection agency. Larger collection agencies, which tend to work for larger 

clients, are more likely than smaller collection agencies to report that they are audited 

frequently by their clients, often facing more than one audit per year.

66

• Litigation. Many creditors rely on collection agencies to manage litigation, though creditor 

approval is generally required to initiate a lawsuit. On the other hand, many collection 

agencies never litigate accounts, with creditors that own the accounts either choosing not to 

litigate at all or placing accounts they choose to litigate with other debt collectors.

• Credit reporting. While some creditors require their collectors to furnish data to the credit 

bureaus, others prohibit them from doing so or leave the decision to the collector.67

• Settlement. Contracts between creditors and collectors often specify terms and conditions 

whereby the collector may accept less than the balance owed to settle the account in full.

Debt buyer purchase and sale agreements. The contracts governing the sale of accounts to debt 

buyers generally include representations and warranties by the seller about the accounts sold. 

The contract also describes business conduct prior to and following the sale, such as how the 

account information will be transferred, the debt buyer’s ability to resell the debt, what 

documentation the debt seller will provide along with the accounts, what rights the debt buyer 

has to retrieve additional account documents, and conditions under which the debt buyer can 

sue consumers. These agreements may also provide for post-sale audits of the debt buyer’s 

 64 Twenty-five of the 58 respondents to the Operations Study reported that their clients sometimes limit 

how frequently the collector can call consumers. Operations Study, at Table 9. 

65 Forty-four of the 58 respondents to the Operations Study reported having clients that audit the 

collector’s compliance with federal and state law. Id. at sec. 3.7.

66 Of 16 respondents to the Operations Study with 19 or fewer employees, only two said that their clients 

frequently conduct audits, and nine said that their clients never conduct audits. Of 29 respondents with 

at least 100 employees, 22 said that they face frequent audits. Id. at Table 7.

67 Seventeen of the 58 respondents to the Operations Study reported that the client always or often left the 

choice of furnishing to the collector. Id. at Table 6.
40

collection activities by the seller.

Law firm agreements. Collection law firms generally only receive accounts intended for 

litigation and retain those accounts until they are resolved. The Bureau understands that 

collection law firms are frequently subject to creditor audits and generally do not furnish 

information to consumer reporting agencies. Collection law firms may be compensated on a 

contingency basis or with fixed fees.

Servicing agreements and servicing guidelines. Loan servicers work on behalf of creditors to 

send statements to consumers, accept payments, and otherwise interact with consumers 

regarding their loans. Servicing agreements may specify what options servicers can offer 

consumers who are having trouble making payments and how servicers are compensated for the 

costs of managing delinquencies and litigation, including foreclosure. Servicers of federal 

student loans or of mortgages owned or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae 

must adhere to servicing guidelines that may specify steps servicers must take when loans 

become delinquent, options for modifying delinquent loans, and procedures for pursuing 

foreclosure.

b. Obtaining and tracking account information

Before they can begin collecting, debt collectors must obtain information from creditors about 

each account and make that information available to their collection staff. Debt collectors 

generally track account information using a software platform referred to as a “collection 

management system.” The collection management system is the core infrastructure of a debt 

collection firm. It maintains account-level information about debts in collection; makes the 

information available to individual collectors; and tracks the status of accounts in collections, 

including, for example, calls made, letters sent, the outcome of discussions with consumers, and 

payments made. Most collection agencies and debt buyers use collection management systems 

provided by one of several software vendors that cater to the debt collection industry. These 

vendors generally provide some level of software support and provide periodic software updates 

under a subscription or licensing agreement. A minority of collectors, both large and small, use 

“proprietary” systems developed in-house.68

The information received by collection agencies and debt buyers typically includes consumer 

identifying information and details about the account, such as account number, amount owed, 

and last payment date. Creditors generally provide this information to debt collectors in an 

electronic format, often via a secure FTP site. Creditors may also provide electronic versions of 

underlying account documentation, such as account statements or account agreements, either 

transferring electronic versions of these documents to collectors or providing collectors with 

remote access to documents retained on the creditor’s system.

Collectors frequently adjust or update their collection management systems, often to 

incorporate creditor requirements and sometimes to accommodate changes to state law or other 

regulatory considerations. For vendor-provided systems, updates to incorporate new legal 

requirements are generally provided by the vendors at no additional charge as part of periodic 

or one-time software updates, although collectors may bear some programming costs where 

 68 One vendor estimated approximately 10 to 15 percent of collection firms use a proprietary collection 

management system. This is roughly consistent with what the Bureau found in the Operations Study, in 

which eight of 58 respondents indicated that they use a proprietary system. Id. at sec. 4.3.
41

they have customized a vendor’s system. For some such updates, collectors may bear other 

expenses to test and validate changes or to train employees.

Collection law firms generally use collection management systems that are tailored to the needs 

of litigation. The Bureau understands that these systems may be more costly to adjust than 

those used by collection agencies and debt buyers.

Loan servicers that receive a transfer of servicing rights typically receive complete 

documentation about each account transferred, including the loan agreement, complete 

payment history, underwriting information, and other information needed to generate periodic 

statements and other notices that are generally provided to consumers. Most servicers use 

software platforms provided by large software vendors, which generally provide software 

updates incorporating legal or regulatory changes.

c. Updating account information

After receiving new accounts, debt collectors typically work with one or more data vendors to 

supplement the account data by appending new or updated contact information and identifying 

consumers who may be deceased or have filed for bankruptcy (often referred to as a “scrub” of 

the data). Some collectors also use this process to identify consumers who may be protected by 

the Servicemembers Civil Relief Act as well as consumers who have filed lawsuits or other 

complaints against collectors. These scrubs often include a “recovery score” designed to inform 

the collector about the likelihood the consumer will repay. This process is generally automated 

and takes place during the first night after the accounts are received from the creditor. The 

Bureau understands that the total cost to conduct these scrubs is approximately $0.40 to $1.00 

per account depending on, among other things, the information requested and the volume of 

requests from the debt collector.69 Vendors may charge only for accounts that generate a “hit” 

(such as a report that a consumer has filed for bankruptcy), in which case the average cost of 

account scrubs may be lower, but the cost for those accounts that generate a hit may be higher.

Debt collectors also use data vendors to locate or confirm valid consumer contact information 

when the available account information appears to be inadequate or out of date. These efforts 

may include purchasing specialized reports from data vendors, which the Bureau understands 

may cost approximately $0.25 to $1.00 per account, and can also include more manual efforts 

by collectors’ staff to locate consumers, including calls to relatives, former employers, current 

and former landlords, or others to ask for current location information.

Debt collectors update the account information in their collection management system to 

incorporate information from data vendors and from the consumer (such as payments made, 

disputes, or cease communications requests). Information provided by the consumer may be 

captured in defined fields or as free-form collector notes. Collection agencies may provide this 

information to creditors on an ongoing basis or at the end of placements. Similarly, collectors 

that are debt buyers may provide this information to subsequent debt buyers when portfolios 

are sold. The Bureau understands that whether particular information fields are passed on 

depends on the preferences of the creditor or debt buyer. In particular, if a creditor wants its 

collection agency to collect particular information, the collection agency will typically track that 

information in a defined field so that it can be passed back to the creditor and incorporated into

the creditor’s system. Other information may be captured in collector notes that may not be 

 69 Id. at sec. 4.1.
42

provided to the creditor and, even when they are provided, are unlikely to be incorporated into 

the creditor’s information system in any systematic way.

d. Contacting the consumer

The Bureau understands that most debt collectors mail a validation notice to the consumer 

before initiating any other contact attempts, whereas a minority of debt collectors wait to send a 

validation notice until after they have established contact with the consumer.70 The validation 

notice is generally a one-page mailing that identifies the amount owed and the creditor to whom 

the debt is owed, provides dispute-related disclosures, and often includes state-mandated 

disclosures as well (generally printed on the back of the validation notice). Most debt collectors 

use third-party vendors to mail validation notices and other written communications.71 The 

Bureau understands that such vendors charge approximately $0.50 to $0.80 to send a one-page 

8.5” by 11” letter and a return envelope; these prices are driven largely by postage costs and 

generally decrease with the volume of business. Vendors charge approximately $0.05 to $0.10 

per mailing to add an additional one-page insert.

For most debt collectors, calling consumers to request payment is a core business activity. 

Collection staff, whose principal job is to speak with consumers by phone, frequently are the 

majority of employees at collection agencies and debt buyers.72 Debt collectors often use 

technology, such as predictive dialing systems linked to the collection management system, in 

order to reduce the cost of attempting to reach large numbers of consumers by phone. As 

discussed below, recent interpretations of the Telephone Consumer Protection Act have 

increased the perceived legal risk of using predictive dialing equipment, so that the technology 

used for dialing is somewhat in flux.

For many debt collectors, the frequency with which they attempt to call consumers is limited 

either by creditor policies or by internal policies.73 Many collection firms keep track of calling 

limits through their collection management system, and they often use system restrictions to 

prevent a phone number from being called more frequently than permitted under client or 

internal guidelines.

When consumers do not answer the phone, collectors may elect to leave a message either with a 

voicemail system or with a third party that answers the phone.74 However, as described above 

and further in the next section, there is legal uncertainty about the conditions under which a 

 70 Fifty-three of the 58 respondents to the Operations Study indicated that they send a validation notice 

shortly after receiving a new placement, and two said that they send a validation notice after speaking 

with the consumer. Id. at sec. 5.1.

71 Fifty of the 58 respondents to the Bureau’s survey stated that they use a vendor for written 

communications. Id. at Table 10.

72 Based on responses to the Operations Study, collection firms generally attempted to collect on an 

average of between 1,000 and 3,000 accounts for each collector employed. Id. at sec. 3.4.

73 Twenty-five of 58 respondents to the Operations Study reported having consumer calling limits that 

were set by their clients; most interview respondents reported having internal policies that were often 

more stringent than client requirements, with client call limits of one to six calls per day and internal 

limits of two to three calls per day. Id. at Table 9.

74 Forty-two of the 58 respondents to the Bureau’s survey stated that they leave a voicemail under at least 

some conditions. Id. at sec. 5.2.
43

message can be left in compliance with the FDCPA, and this is an area of active consumer 

litigation. Thus, some collectors choose to not leave messages in order to minimize legal risk. 

Debt collectors that do leave messages often have policies restricting the conditions under which 

a message can be left. For example, some collectors leave voicemail messages only if the 

collector has previously spoken to the consumer at a particular number or if an outgoing 

voicemail recording includes the name of the (correct) consumer.

e. Call recording and call monitoring

Most debt collectors record all calls and keep the recordings for at least a year, although very 

small debt collectors are less likely to record all calls.75 Calls may be recorded to satisfy client 

requirements, to facilitate internal compliance monitoring, or to help defend against potential 

lawsuits. Collectors and their clients often monitor calls by listening to a random sample of 

recordings to identify potential FDCPA violations and other breaches of policy. Some collectors 

monitor calls by listening to live conversations. A growing number of debt collectors use voice 

analytics software that is able to screen large numbers of conversations to identify those that 

potentially reflect rule violations, although today such software is generally used only by 

collectors with more than 100 employees.

f. Consumer disputes 

Consumers may seek to dispute debts in writing or orally. Respondents to the Bureau’s 

Operations Study that provided more specific estimates of their dispute rates (derived from their 

collection management system) estimated that dispute rates were between three and four 

percent of all accounts.76

Consumers appear to submit a large share of their disputes orally or more than 30 days after 

receipt of a validation notice, ways that are not specified in FDCPA section 809(b). 

Nevertheless, most debt collectors report that they follow the same process of verifying the debt 

for these disputes as they do for disputes filed as specified in FDCPA section 809(b). Other 

collectors follow a different process—for example, some may ask consumers who file oral 

disputes or disputes more than 30 days after receipt of a validation notice to provide additional 

evidence of the validity of their disputes. According to some debt collectors, many consumers 

express disagreement about the debt when first contacted by phone (some respondents to the 

Operations Study reported that this occurs 50 percent of the time or more), but many of these 

disagreements are resolved after a discussion with the collector and, if resolved in this way, are 

not considered disputes.

Respondents to the Bureau’s Operations Study described a fairly standardized process of 

sending consumer documents in response to a dispute. These debt collectors said they cease 

 75 Forty-eight of the 58 respondents to the Bureau’s survey record all calls made to consumers, and two 

others record at least some calls. Of those respondents that record calls, all but three retain the 

recordings for a year or more, and the majority keeps them for two years or more. Eight of 16 respondents 

with fewer than 20 employees reported recording calls. Id. at sec. 6.1.3, Table 10.

76 The Bureau’s Survey of Consumer Views on Debt, an overview of which is attached at Appendix B, 

found that approximately 26 percent of consumers who had been contacted about one or more debts in 

the past year disputed at least one of those debts. A study conducted by the FTC of accounts held by large 

debt buyers found that consumers disputed 3.2 percent of accounts that the debt buyers attempted to 

collect themselves. FTC Debt Buying Industry Report, supra note 33, at iv.
44

activity on the account, obtain account documentation from the creditor (if the collector does 

not have it already), and forward the information to the consumer. In terms of staff hours, 

respondents estimated that, on average, it took between five minutes and one hour of staff time 

to resolve each dispute, with most respondents reporting 15 to 30 minutes of staff time per 

dispute (note that this does not include time or resources the creditor must devote to obtaining 

documents or otherwise addressing a dispute). The information that collectors send to the 

consumer is not standardized and is based on the information the collector or the creditor 

deems necessary to verify the dispute.

Some creditors have a policy of dealing with all disputes themselves, so that the collector simply 

returns any disputed accounts to the creditor and ceases collection on the accounts, meaning 

that the dispute-related provisions of the proposals under consideration would not affect these 

accounts. However, the Bureau understands that all or nearly all debt collectors address 

disputes on behalf of at least some of their clients.

g. Litigation

Collectors or creditors often sue consumers to compel repayment. Creditors follow different 

practices with respect to litigation. Some hire law firms directly, whereas others rely on 

collection agencies to make determinations about whether a lawsuit is appropriate and to 

manage the litigation process. Partly as a result of these different approaches, some collection 

agencies do not litigate as part of their business practices.77

Collectors may send a letter or attempt to call the consumer (or both) before litigation to give 

the consumer the notice of intent to sue and attempt to settle the debt before litigation begins. 

Following this, collectors send the account to a law firm to start the litigation process. It appears 

that a minority of consumers respond to attempts to settle the debt prior to or during litigation; 

moreover, most court filings result in default judgments, with collector estimates of default 

judgment rates ranging from 60 percent to 90 percent, depending on the jurisdiction.

Most collection law firms report that they review account documentation before filing a lawsuit, 

which may include reviewing the written account application, account statements, and the 

charge-off statement.

The costs associated with litigation vary greatly, depending largely on jurisdiction, with 

estimates of court costs ranging from $35 to $499 per consumer sued, in addition to other costs 

such as service of process.78 Court costs may be paid by creditors or by debt collectors. 

Collection law firms are generally paid on a contingency basis. When court costs are paid by 

debt collectors, debt collectors are generally entitled to recover those costs first from monies 

collected from any judgment against the consumer; however, in many cases collectors are 

ultimately unable to collect on judgments.

For mortgage servicers, litigation is generally focused on foreclosure on the home rather than 

obtaining a monetary judgment. Servicers may seek deficiency judgments from consumers after 

the foreclosure process has been completed, in some states and circumstances, but in such cases 

are likely to use third-party collection agencies. During the foreclosure process there are 

 77 Sixteen of the 58 respondents to the Bureau’s survey do not litigate. Operations Study, supra note 15, at 

sec. 3.5.

78 Id. at sec. 6.2.
45

required notices and other protections for homeowners under state and federal law, and in some 

states the foreclosure process can be long and expensive for mortgage servicers, often taking 

multiple years.

h. Furnishing data to credit reporting agencies

When accounts are placed with a collection agency, the creditors may require the agency to 

furnish data to credit reporting agencies or leave that choice up to the agency.79 Some collection 

agencies and debt buyers have a policy of furnishing data on all accounts, while others may 

furnish data only on accounts that are above a certain account balance or that are actively 

collected upon. The Bureau understands that utility, wireless, and medical providers are more 

likely to require debt collectors to furnish. On the other hand, financial institutions may not 

permit collectors to furnish because frequently they are already furnishing information about 

their accounts. Similarly, debt sales contracts may specify whether the debt buyer is permitted 

to furnish information about purchased accounts.

i. Summary of differences across types of debt collector

Table 4 below summarizes some of the key differences among categories of debt collectors that 

are relevant to how the proposals under consideration would affect small entities.

Table 4: Selected characteristics by collector type

Note: These statements are generalizations and may not apply to all collectors of a given type.

Collection agencies 

and debt buyers 

working debt owed 

to large creditors

Collection agencies 

and debt buyers 

working debt owed 

to smaller creditors Collection law firms Loan servicers 

Length of 

account 

placement and 

age of debt at 

placement

Have accounts

placed with them 

for a set period of 

time (from a few 

months to over a 

year); often receive 

accounts that have 

been previously 

worked by another 

collection firm. 

Have accounts 

placed with them 

for the life of the 

account; generally 

are the first and 

only collection firm 

to work the 

accounts.

Have accounts for 

length of judgment; 

accounts have 

generally been 

worked by another 

collection firm prior 

to placement for 

litigation. 

Generally have 

accounts 

indefinitely. 

Litigation Many never litigate Generally do litigate Litigate Pursue 

foreclosure in 

mortgage context

Furnish to 

credit bureaus

Clients often 

prohibit them from 

furnishing

Generally furnish Generally do not 

furnish

Generally furnish

Call 

restrictions

Often have client 

call restrictions

Usually do not have 

client call 

Often have client 

call restrictions

Servicing 

guidelines may 

prescribe 

 79 Forty-five of the 58 respondents to the Bureau’s survey furnished information to the credit bureaus. Id.

at sec. 3.6.
46

Collection agencies 

and debt buyers 

working debt owed 

to large creditors

Collection agencies 

and debt buyers 

working debt owed 

to smaller creditors Collection law firms Loan servicers 

restrictions minimum call 

frequency

Client audits Frequent client 

audits for 

compliance with 

state and federal 

law

Few if any client 

audits for 

compliance with 

state and federal 

law

Frequent client 

audits for 

compliance with 

state and federal 

law

Some face audits 

by government or 

governmentsponsored 

investors or 

guarantors

Non-collector 

personnel

Have dedicated IT 

and compliance 

staff

Few or no dedicated 

IT or compliance 

staff

Larger firms may 

have IT staff and 

dedicated 

compliance staff

Generally have inhouse IT and 

compliance staff

2. Regulatory developments affecting the debt collection industry

Recent changes in the regulatory environment facing debt collectors may affect how the 

proposals under consideration would affect small entities.

a. TCPA developments

The Telephone Consumer Protection Act (TCPA) protects consumers from unwanted calls to 

their cellular phones. Among other things, the TCPA prohibits the use of an automatic

telephone dialing system (ATDS) to contact any telephone number assigned to a cellular 

telephone service without prior express consent. Because the damages awarded in TCPA 

litigation can be quite large, complying with the TCPA is very important to debt collectors.

On July 10, 2015, the FCC issued a declaratory ruling interpreting the TCPA in ways that many 

collectors believe increases the risk of TCPA liability. The FCC defined an ATDS as any 

equipment with the “capacity to store or produce, and dial random or sequential numbers even 

if it is not presently used for that purpose,” and made a number of other new interpretations.80 

These interpretations are perceived by debt collectors to have increased the risk of TCPA liability 

for them, and a number of collection firms have switched to manual dialing systems. Some debt 

collectors have also indicated in their responses that increased TCPA risk is causing them to 

invest more in obtaining updated data on consumer phone numbers, so that they can make 

fewer calls to numbers more likely to yield contact with the consumer.

b. OCC debt sales bulletin

Recent actions by the OCC have had a large impact on the sale of defaulted debt originated by 

national banks, including credit card accounts. These actions seem to have curtailed the debt 

 80 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 30 FCC Rcd. 

7961, 7971-72 (July 10, 2015). In addition, the FCC created a “one-call” exemption for reassigned 

numbers, determined that the TCPA does not allow callers to define the manner in which “prior express 

consent” may be revoked, and interpreted the term “called party” as the current subscriber of the phone 

instead of the intended recipient of the call. Id. at 8009.
47

sales market for credit card debt, which has long been the most important category of debt 

purchased by debt buyers.

Specifically, in 2014, the OCC issued Bulletin 2014-37 providing guidance to national banks and 

federal savings associations engaged in debt sales.81 The bulletin described supervisory 

expectations for information exchange in debt sales, categories of debt that should not be sold, 

and due diligence practices for debt buyers, among other measures. These provisions help 

protect consumers whose accounts are sold by national banks, and at the same time, collectors 

have reported that they may impose new costs on banks and debt buyers. In light of the 

Bulletin, many credit-card-issuing banks report that they have reevaluated their debt sales 

practices, with some banks ceasing the sale of delinquent credit card portfolios at least in the 

short term. Other banks have continued to sell, but have generally restricted resale of accounts 

and reduced the number of debt buyers they are willing to sell to.82 As a result, credit card debt 

offered for sale has declined considerably, and many debt buyers report that they are unable to 

obtain accounts or may be focusing on other categories of debt to which the Bulletin does not 

apply.

c. The Dodd-Frank Act

The Dodd-Frank Act created the Bureau and generally brought greater supervisory and 

enforcement focus on collection practices, both by debt collectors and creditors. This has 

increased the stakes for many creditors and debt collectors in ensuring that their collection 

practices comply with applicable laws. 

Some industry participants have told the Bureau that increased regulatory scrutiny is driving 

consolidation in the collection market, by causing creditors to reduce the number of debt 

collectors they work with. Half of the credit card issuers surveyed as part of the Bureau’s Card 

Market Report reduced the size of their third-party contingency networks since 2012, with most 

of those issuers reducing their networks by approximately 50 percent.

83 Issuers are reducing the 

size of their networks to make them easier to supervise and monitor; at the same time, this 

reduces market opportunities, particularly for smaller debt collectors.

D. Impacts on debt collectors of the proposals under consideration 

All small-entity debt collectors would bear one-time costs to ensure that they can comply with 

the proposals under consideration. Management and, in some cases, legal and compliance 

personnel would need to review new regulations and determine whether current policies and 

procedures are in compliance and, if not, take steps to bring them into compliance. Many of the 

provisions under consideration also would impose ongoing operational costs on covered small 

entities and could reduce revenue by limiting debt collectors’ ability to collect in some cases. 

This section outlines the Bureau’s current analysis of the potential impacts on small entities that 

are collection agencies, debt buyers, collection law firms, and loan servicers.

As discussed above in the sections explaining the proposals under consideration, the Bureau 

believes that some interventions also could potentially eliminate some sources of cost, 

 81 Office of the Comptroller of the Currency, Risk Management Guidance (Aug. 2013), available at 

http://www.occ.gov/news-issuances/bulletins/2014/bulletin-2014-37.html.

82 Card Market Report, supra note 63, at 256.

83 See id.
48

uncertainty, and frustration for debt collectors. For example, the Bureau believes that the 

improved validation notice and other information integrity interventions could save debt 

collectors substantial time and expenditure trying to locate the correct consumer and helping

the consumer recognize the debt. While the Bureau has focused the following discussion 

primarily on the cost impacts of the proposals under consideration, the Bureau is particularly 

interested in input from the SERs about the extent to which some interventions also may have 

positive impacts on industry.

Some parts of the proposals under consideration may require debt collectors to make significant 

changes to their systems or may increase the operational costs of collecting certain types of 

accounts. On the other hand, the Bureau expects that some of the proposals under 

consideration would have relatively small impacts on most collectors’ operational costs because 

they are consistent with existing interpretations of the FDCPA and reflected in existing 

practices. A few of the proposals under consideration could reduce collector revenue, for 

example by limiting certain collection practices.

The Bureau expects that the largest impacts of the proposals under consideration for most debt 

collectors would be in the following areas:

• Obtaining and tracking additional information. The proposals under consideration would 

require collectors to obtain and track certain types of information and, in some cases, 

documents. There would be costs associated with adjusting systems to track this 

information, although the Bureau expects that in many cases software vendors would make 

changes and provide them to collectors as part of standard updates. Costs could be larger

where fundamental information specified in the proposal under consideration is not 

available from creditors and debt collectors need to use other information to establish a 

reasonable basis for collection claims.

• Assessing and responding to warning signs. Under the proposal under consideration, debt 

collectors would need to identify warning signs that would raise concerns about data’s 

reliability and determine procedures for investigating and responding to such warning signs. 

After identifying warning signs, collectors would be unable to collect on the account and/or 

portfolio until obtaining further substantiation.

• Validation notice and Statement of Rights. Debt collectors would incur costs to expand the 

information provided in validation notices and include an additional one-page Statement of 

Rights in some mailings to consumers. 

• Limits on contact frequency. Many debt collectors would need to establish systems to track 

the number of contacts and contact attempts made and ensure that contacts and contact 

attempts do not exceed the proposed limits. For some debt collectors, the limits on contact 

attempts might diminish the ability to establish contact with consumers. 

• Restrictions on collection of time-barred debt. The proposals under consideration could 

require collectors to make new investments to identify accounts that are time-barred. Many 

debt collectors do not generally attempt to collect debt that is time-barred, but for those that 

do, proposed disclosures could make it more difficult to collect time-barred debt. For debt 

that is both time-barred and obsolete, the requirement to obtain an acknowledgement from 

the consumer before accepting payment would impose printing and mailing costs and could 

mean consumers are less likely to pay such debt.
49

Table 5 below summarizes the Bureau’s current assessment of the likely impacts of the proposals 

under consideration, including the items discussed immediately above and other elements of 

this Outline. Where feasible, Table 5 classifies impacts as:

• “Minimal,” meaning that there would be some costs to understand regulations and confirm 

compliance but no meaningful operational changes or new expenditures;

• “Small,” meaning that there would be new expenditures or operational changes but those 

impacts would not be outside the normal course of business; or

• “Moderate,” meaning that there would be new expenditures or operational impacts that 

would be outside the normal course of business but would not alter the basic business 

model.

Each of the proposals under consideration in Table 5 is then discussed in more detail below. For 

those parts of the proposals under consideration that are not specifically mentioned in Table 5, 

the Bureau expects that debt collectors would incur some one-time costs to review the 

provisions and ensure that they are incorporated into their policies and procedures, but does not 

expect meaningful changes relative to current operations. The Bureau seeks input on whether 

there are parts of the proposals under consideration that would likely be more costly than those 

specifically addressed herein.

Table 5: Overview of likely impacts of proposals under consideration

Proposal under 

consideration

Collection agencies and 

debt buyers

Collection law firms Loan servicers covered by 

the FDCPA

Transfer of 

information prior 

to collection and 

information 

review

Small one-time costs to 

ensure systems track the 

required information

(likely less than $1,000 

for programming) and 

establish warning sign 

system (perhaps $1,200 

to $2,800 for 

programming).

Moderate ongoing costs 

to substantiate in cases 

where fundamental 

information is missing 

and to review for and 

respond to warning 

signs.

Moderate ongoing costs 

of ceasing collections 

until substantiation is 

completed.

Moderate one-time costs 

to ensure systems track 

the required information 

and establish warning 

sign system (perhaps 

$3,000 to $7,000 for 

programming). 

Moderate ongoing costs 

to substantiate in cases 

where fundamental 

information is missing 

and to review for and 

respond to warning signs.

Minimal costs; servicers 

generally have full file 

and account history for 

all consumers and 

perform accuracy checks 

post-transfer.

Substantiation of 

debt prior to filing 

suit, such as by 

review of 

documents

For collectors that sue, 

possibly some costs to 

ensure documents are 

provided to counsel up 

front. May reduce the 

ability of some firms to 

Collection law firms 

generally appear already 

to undertake such review, 

but some may incur new 

costs to review 

documents (perhaps 30 

Servicers are likely 

already to undertake such 

review prior to litigation. 

Minimal incremental 

costs to monitor and 

demonstrate compliance.
50

Proposal under 

consideration

Collection agencies and 

debt buyers

Collection law firms Loan servicers covered by 

the FDCPA

collect on some debts via 

litigation.

to 45 minutes of staff 

time per account). 

Minimal incremental 

costs to monitor and 

demonstrate compliance. 

May reduce the ability of 

some firms to sue on 

some debts.

Transfer of certain 

information at and 

after subsequent 

debt placement

For collectors working 

for larger clients and for 

debt buyers that resell 

accounts, moderate onetime costs may be 

required to ensure data 

and dispute 

documentation is 

maintained in a way that 

can be transferred; small 

ongoing costs. 

Minimal impact on 

agencies working for 

smaller clients because 

they are unlikely to 

transfer accounts once 

received.

Small one-time impact to 

ensure required 

information can be 

received; collection law 

firms generally do not 

transfer accounts once 

received.

Minimal costs; servicers 

generally have and 

transfer full file and 

account history for all 

consumers.

Validation notice Small one-time costs to 

set up new validation 

notice format and small 

one-time programming 

costs (likely less than 

$1,000) to ensure 

systems track required 

information. Potential 

ongoing costs if creditors 

cannot provide required 

data fields.

Possible increase in 

dispute-related costs if 

consumers are more 

likely to dispute debts.

Small one-time costs to 

set up new validation 

notice format and ensure 

systems track required 

information.

Possible increase in 

dispute-related costs if 

consumers are more 

likely to dispute debts.

Small one-time costs to 

set up new validation 

notice format and ensure 

systems track required 

information.

Statement of 

Rights

About $0.05-$0.10 per 

account to add a page to 

the validation notice 

mailing; some additional 

mailing costs when 

consumers request 

additional copies.

Possible increased costs 

from consumers’ 

increased exercise of 

rights.

About $0.05-$0.10 per 

account to add a page to 

the validation notice 

mailing; some additional 

mailing costs when 

consumers request 

additional copies.

Possible increased costs 

from consumers’ 

increased exercise of 

rights.

About $0.05-$0.10 per 

account to add a page to 

the validation notice 

mailing.
51

Proposal under 

consideration

Collection agencies and 

debt buyers

Collection law firms Loan servicers covered by 

the FDCPA

Foreign languages 

– trigger based 

option

Minimal cost for most 

collectors because they 

would not be subject to 

the requirements unless 

triggered; some training 

costs to ensure that 

collectors comply when 

the requirements are 

triggered.

Minimal cost for most 

collectors because they 

would not be subject to 

the requirements unless 

triggered; some training 

costs to ensure that 

collectors comply when 

the requirements are 

triggered.

Minimal cost for most 

collectors because they 

would not be subject to 

the requirements unless 

triggered; some training 

costs to ensure that 

collectors comply when 

the requirements are 

triggered.

Foreign languages 

– Spanishlanguage backer 

option

Where collectors already 

provide information on 

the back of the 

validation notice, may 

require one extra page in 

each validation notice 

mailing; approx. $0.05-

$0.10 per account.

Where collectors already 

provide information on 

the back of the validation 

notice, may require one 

extra page in each 

validation notice mailing; 

approx. $0.05-$0.10 per 

account.

Where collectors already 

provide information on 

the back of the validation 

notice, may require one 

extra page in each 

validation notice mailing; 

approx. $0.05-$0.10 per 

account.

Communication 

prior to credit 

reporting

Minimal impact on most 

debt collectors because 

they already send a 

validation notice prior to 

furnishing. Some debt 

collectors would incur 

the moderate cost of 

sending validation 

notices where they 

would not have 

otherwise

(approximately $0.50-

$0.80 per notice).

Minimal/no impact 

because collection law 

firms generally do not 

furnish.

Minimal/no impact 

because mortgage 

servicers generally send 

validation notices upon 

transfer.

Litigation 

disclosure

For collectors that 

litigate, small one-time 

costs to establish policies 

and procedures; 

minimal cost to provide 

written disclosures and 

small cost to make oral 

disclosures (perhaps 

$0.09-$0.12 per call).

Possible increase in 

litigation costs from 

consumers’ increased 

defense of suits.

Small one-time costs to 

establish policies and

procedures; minimal cost 

to provide written 

disclosures and small cost 

to make oral disclosures

(perhaps $0.09-$0.12 per 

call).

Possible increase in 

litigation costs from 

consumers’ increased 

defense of suits.

Small one-time costs to 

establish policies and 

procedures; minimal cost 

to provide written 

disclosures and small cost 

to make oral disclosures

(perhaps $0.09-$0.12 per 

call).

Time-barred debt 

requirements

Moderate one-time costs 

to set up system to 

determine when 

disclosure is required; 

ongoing costs small

(perhaps $0.09 per call 

regarding time-barred 

debt). Some reduction 

No additional cost; do not 

believe collection law 

firms are collecting on 

time-barred debt.

Minimal additional cost; 

do not believe loan 

servicers are collecting 

meaningful amounts of 

time-barred debt.
52

Proposal under 

consideration

Collection agencies and 

debt buyers

Collection law firms Loan servicers covered by 

the FDCPA

in collections of timebarred debt.

Consumer written 

acknowledgement 

before collecting 

debt that is timebarred and 

obsolete

Small costs to set up 

system to determine 

when acknowledgement 

is required. Likely 

requires one extra page 

in each validation notice 

mailing; approx. $0.05-

$0.10 per account. 

Potentially large

reduction in collections 

of debt that is both timebarred and obsolete.

No additional cost; do not 

believe collection law 

firms are collecting on 

time-barred debt.

No additional cost; do not 

believe loan servicers are 

collecting debt that is 

both time-barred and 

obsolete.

Contact caps Moderate one-time and 

ongoing costs to review 

systems and monitor 

compliance.

Little or no impact on 

calling practices for 

collectors working for 

smaller clients as they 

generally do not exceed 

proposed caps. Calling 

practices would be 

affected for some 

entities that have larger 

clients and call more 

frequently; CCC may be 

delayed in some 

instances and may 

reduce collections in 

some cases.

Moderate one-time and 

ongoing costs to review 

systems and monitor 

compliance. Little or no 

impact on calling 

practices as collection law 

firms generally do not 

exceed proposed caps. 

May benefit if creditors 

believe the policy makes

non-litigation collection 

channels less effective.

Moderate one-time and 

ongoing costs to review 

systems and monitor 

compliance.

Calling practices 

impacted in some cases; 

could delay early 

intervention in some 

cases which could affect 

servicer revenue.

Leaving messages Moderate reduction in 

legal costs and in the 

cost of establishing 

contact with consumers, 

particularly for those 

collectors most reliant 

on phone calls.

Small reduction in legal 

costs, and reduction in 

the cost of establishing 

contact with consumers.

Minimal impact on 

mortgage servicers.

Dispute 

requirements

Some collectors would 

face increased ongoing 

costs for investigating 

disputes that are not 

timely and written

(perhaps 15 to 30 

minutes of staff time per 

dispute) and ceasing 

collections in the 

meantime. Collectors 

would generally benefit 

Minimal costs, as 

collection law firms’ 

current practices may 

already be sufficient to 

satisfy the proposals 

under consideration.

Minimal costs, as 

servicers’ current 

practices may already be 

sufficient to satisfy the 

proposals under 

consideration.
53

Proposal under 

consideration

Collection agencies and 

debt buyers

Collection law firms Loan servicers covered by 

the FDCPA

from greater clarity as to 

what is required, and 

particularly from 

clarification regarding

repeat disputes.

1. Transfer of information at debt placement, information review and follow up

The Bureau is considering three proposals related to the information collectors must have before 

attempting to collect. These proposals would: (1) establish a list of fundamental information 

that a collector could obtain and review as part of its obligation to establish a reasonable basis 

for claims of indebtedness; (2) further allow collectors to in part establish reasonable support 

for claims of indebtedness by obtaining a representation from the debt owner; and (3) require 

that debt collectors review account information for “warning signs.”

a. Collection agencies and debt buyers

To comply with the proposals under consideration, collection agencies and debt buyers might 

need to: (1) ensure systems are designed to track fundamental information; (2) establish an 

alternative basis for collection claims when fundamental information is not available; (3) obtain 

representations from creditors or debt sellers; and (4) review accounts for “warning signs.” 

Adjusting systems to track fundamental information

If the proposals under consideration were adopted, the Bureau anticipates that all collectors 

would ensure that their collection management systems were capable of tracking the data fields

that would be required. Evidence examined thus far indicates that, while collectors can 

generally track most of these fields, many systems are currently unable to track payments or 

credits that took place after default but before the collector obtained the account.84 Thus, many 

collectors might have to adjust their collection management systems to track some additional 

information.

For collectors using vendor-provided systems, the Bureau anticipates based on its outreach that 

vendors would update their software to track the fields specified in the Bureau’s regulations. 

This would limit the cost to collectors of accommodating the new data fields. Many collectors 

might, however, incur costs to customize vendor-provided solutions or to test the software 

changes to ensure they permit compliance with the rule to their and their clients’ satisfaction.

Collectors using proprietary systems that do not track all of the fields specified in the proposal

under consideration would need to reprogram these systems. In interviews, collectors suggested 

that adding new fields is common and relatively inexpensive, generally done using in-house 

resources, and costs less than $1,000.

 84 All respondents to the Operations Study indicated that they at least sometimes receive the full name, 

last known address, phone number, and debt balance at charge off, implying that these respondents’ 

collection management systems must be capable of tracking this information. Fifty of 58 respondents 

indicated that they at least sometimes receive a breakdown of post-charge off interest and fees, and 45 of 

58 indicated that they at least sometimes receive account agreement documentation. Operations Study, 

supra note 15, at Table 8.
54

Some recent developments, including state law changes and DBA’s certification standards, may 

have led some entities, but by no means all, to have already taken steps that would comply with 

the proposals being considered.

85 In addition, these developments mean that providers of 

collection management system software are more likely to include the capability of tracking 

these fields as part of standard software updates.

Costs arising when the creditor does not provide fundamental information

So long as creditors provide the fundamental information specified in the proposal under 

consideration, the Bureau expects minimal ongoing costs to debt collectors from obtaining that 

information. However, some creditors may not have the fundamental information for all 

accounts or may be unable to readily provide it.86 This would impact debt collectors because 

they would need either to obtain alternative support for their claims of indebtedness or to forego 

collections on such accounts.

The Bureau believes that creditors are generally able to provide the specified fields to collection 

agencies and debt buyers in most, but not all, cases.

• Name, address, phone number, and account number with original creditor. The Bureau 

understands that debt collectors receive the consumer’s full name, last known address, and 

account number with the original creditor for all but a small fraction of accounts.87 Debt 

collectors generally receive phone numbers but phone numbers are more likely to be 

missing than full name or address information.

88 Many debt collectors receive other 

identifying information, such as a Social Security number or date of birth, which may be 

useful for substantiating the debtor’s identity if certain fundamental information is 

 85 The Debt Buyer Association’s certification standards require certified entities to use commercially 

reasonable efforts to obtain 13 specific data elements when acquiring a portfolio. DBA International, 

Receivables Management Certification Program: Program Overview (Nov. 2015), available at

http://www.dbainternational.org/certification/. Examples of state law changes include changes to New 

York’s debt collection regulations, effective August 30, 2015, requiring debt collectors to provide 

consumers with an itemization of post charge-off charges and credits, and California’s Fair Debt 

Collection Practices Act, effective January 1, 2014, requiring debt buyers to obtain a complete chain of 

title when obtaining new accounts.

86 The Bureau intends to consider in the future whether to impose certain obligations on creditors to 

transfer fundamental information or other information that supplies a reasonable basis when engaging a 

debt collector or selling debt.

87 The FTC’s Debt Buyer Report says that, for the debt buyer files obtained by the FTC in 2009, 100 

percent of debt accounts included consumer name, 99 percent of accounts included street address, and 

100 percent of accounts included the original creditor’s account number. In the Operations Study, most 

collectors said that they always receive the consumer’s full name and last known address, but some 

respondents said that they only “often” receive full name (eight of 56 respondents) or last known address 

(18 of 56 respondents). Operations Study, supra note 15, at Table 8.

88 The FTC’s Debt Buyer Report says that, for the debt buyer files reviewed by the FTC, 70 percent of 

accounts included a home phone number, and 47 percent and 15 percent included work and mobile 

telephone numbers, respectively. In the Operations Study, of 58 respondents, 10 said they “always” 

receive a phone number, 46 said that they “often” receive a phone number, and two said that they 

“sometimes” receive a phone number. Id.
55

missing.89

• Date of default and amount owed at default. The Bureau expects that creditors would be 

able to provide this information for every account once creditor and collector systems are 

capable of receiving and maintaining this information.

• Details of post-default interest and/or fees, contract terms supporting post-default interest 

and/or fees, and date and amount of each payment or credit after default. The Bureau 

understands that details of charges and credits to accounts after default are sometimes 

provided to debt collectors, but that many creditors do not provide this information. The 

Bureau expects that creditors would make this information available to debt collectors. 

However, the Bureau understands that this may require systems changes for many creditors, 

and until such changes are made, these creditors may be less able to use third-party 

collectors.

• Full chain of title information. Debt buyers purchasing accounts from another debt buyer 

(and collection agencies working on behalf of debt buyers) would need full chain of title 

information. The Bureau understands that this is not always provided when a portfolio is 

sold, but that its inclusion has become more common and that many debt buyers will not 

purchase accounts without full chain of title information. Moreover, the California Fair Debt 

Buying Practices Act, which became effective January 1, 2014, generally requires a full chain 

of title before collections can begin.90

When creditors lack fundamental information because they did not obtain it from the consumer, 

collectors would need to find other ways to support any claims of indebtedness made to 

consumers. This would likely involve ongoing costs. For example, a collector that does not 

receive a consumer’s full first name, but does receive an address, phone number, and Social 

Security number, might need to confirm with a third-party data provider that the contact 

information matches the Social Security number before contacting the consumer about the debt. 

Alternatively, debt collectors might need to manually check underlying account documentation 

or cease collection on the account. 

Obtaining representations from clients or sellers of debt

The Bureau is considering articulating that debt collectors may, as part of their obligation to 

have reasonable support for claims of indebtedness, obtain a written representation from the 

debt owner that: (1) the debt owner has adopted and implemented reasonable written policies 

and procedures to ensure the accuracy of transferred information; and (2) the transferred 

information is identical to the information in the debt owner’s records. Debt collectors would 

incur one-time costs to establish systems to ensure that they receive the representations when 

accepting new accounts for collection.

The Bureau expects that creditors would generally be willing to make the proposed 

representations, although in some cases creditors might choose to undertake additional review 

 89 The FTC’s Debt Buyer Report says that, for the debt buyer files reviewed by the FTC, 98 percent of 

accounts included a Social Security number and 65 percent included a birth date. In the Operations 

Study, of 56 respondents, 53 said that they “often” or “always” receive a Social Security number and 53 

said they “often” or “always” receive a birth date. Id.

90 Fair Debt Buying Practices Act, CAL. CIV. CODE § 1788.50 et seq.
56

and analysis before doing so.91 To the extent that such review is costly, it could reduce the rate 

collection agencies can charge or increase the price at which creditors are willing to sell debt, 

which could impose ongoing costs on debt collectors. However, the Bureau expects that the 

requirement would have no more than a small effect on creditors’ willingness to engage 

collection agencies or sell debt to debt buyers.

Reviewing accounts for “warning signs”

Under the proposal under consideration, collectors would need to design and implement 

procedures to review information about debts, at the account and portfolio level, including 

responding to warning signs that undermine the collector’s reasonable basis to make claims of

indebtedness.

The Bureau understands that most debt collectors review new accounts before they begin 

collecting. However, this review is generally not aimed at determining the adequacy of the 

information on which collectors would rely for claims of indebtedness. Instead, it is used to 

obtain and standardize contact information and to determine whether consumers have certain 

characteristics, including whether they have died, filed for bankruptcy, changed addresses, are 

service members, or have sued debt collectors in the past. Most debt collectors that the Bureau 

has spoken with indicate that collection activity on new accounts begins as soon as these initial 

scrubs are performed, without any further attempt to ascertain the reliability of the data. A 

minority of collection agencies manually review data files to determine data reliability. Debt 

buyers generally review purchased accounts to determine whether they accord with information 

about the portfolio provided before purchase, which may include a review of data quality.92

The Bureau anticipates that collectors would comply with the proposal under consideration to 

review accounts for warning signs by implementing automated processes that are supplemented 

with manual review when warning signs are identified. The Bureau expects that vendors of 

collection management systems would make updates to facilitate this review. However, the 

review would need to be tailored to the specifics of each collector’s client base and therefore 

some custom programming would likely be needed. A useful analog might be system 

adjustments that collection agencies currently make to accommodate client demands to report 

data in a certain way. In interviews, some collectors estimated that customization to 

accommodate client requirements costs between $1,200 and $2,800.

Even if most reviews were automated, there would be some ongoing costs associated with 

reviewing accounts for reliability. When a collection agency begins work for a new creditor or a 

debt buyer purchases debt from a new source, it would need to determine the standards and 

processes for identifying warning signs specific to that creditor’s accounts. For all accounts, 

staff would need to investigate and respond to warning signs identified as part of either the 

initial or the ongoing review process. Some accounts or portfolios may not be able to be 

collected upon if the warning signs reveal underlying problems with the account or portfolio.

 91 The Bureau intends to consider in the future whether to propose requirements that creditors make such 

representations when placing or selling debt.

92 DBA’s certification standards include the requirement that debt buyers “maintain adequate time to 

evaluate and review portfolio information for accuracy, completeness, and reasonableness and to discuss 

and resolve with the seller any questions prior to purchasing the portfolio.” DBA International, 

Receivables Management Certification Program: Program Overview (Nov. 2015), available at

http://www.dbainternational.org/certification/. 
57

The Bureau does not have data that could be used to evaluate how often warning signs are likely 

to arise. For account-level warning signs, responding to the warning sign could be similar to 

processing a dispute related to a particular account, which the Bureau estimates to take 15 to 30 

minutes. For portfolio-level warning signs, another process would be required; for example, a 

collector might identify a random sample of accounts from a portfolio and perform a manual 

review akin to processing a dispute for each account in the sample.

b. Collection law firms

As with other debt collectors, collection law firms would need to ensure that their systems are 

capable of tracking the fundamental information, which might involve one-time costs for some 

collection law firms. Collection law firms would also need to take extra steps to substantiate the 

debt in those cases where the owner of the debt is unable to provide all of the fundamental 

information.

Based on what the Bureau has learned in outreach, collection law firms may be more likely than 

other debt collectors to review new account information to identify potential problems. 

Nonetheless, collection law firms would also need to review their processes to determine 

whether they comply with the rule and would need to identify warning signs and establish 

procedures for responding to warning signs they identify. This would likely involve changing 

their collection management systems to provide reports or other output that could identify 

warning signs. The Bureau understands that it may be more costly for collection law firms to 

adjust their systems than it is for other collectors to make similar changes. Some collection law 

firms reported that system changes to accommodate client requirements cost between $3,000 

and $7,000.

c. Loan servicers subject to the FDCPA

Loan servicers subject to the FDCPA would need to ensure that their procedures comply with 

the proposals under consideration. The Bureau anticipates that, at least with respect to 

mortgage servicing, many servicers would not need to change their procedures.

93 Servicers 

generally receive full documentation for every loan when transferred, and transferee mortgage 

servicers typically perform checks of the data received for accuracy and integrity, often including 

examining a sample of loans to confirm that data in the computer system matches underlying 

documentation. As a result, the Bureau anticipates that the substantiation requirements under 

consideration would impose minimal one-time and ongoing compliance costs on the mortgage 

servicers likely to be covered.

2. Substantiation of debt before litigation filing, such as by review of documentation

The Bureau is considering a requirement that, before filing a claim in court to collect a debt, 

collectors must have reasonable support for claims in litigation complaints that a consumer

owes a debt. The proposal under consideration would identify documentation that a debt 

collector could review to establish this reasonable basis.

 93 As noted above, the Bureau does not expect that servicers of other types of loans, such as student loans, 

would be small entities affected by the proposals under consideration.
58

a. Collection agencies and debt buyers

The Bureau expects that collection agencies and debt buyers would generally rely on collection 

law firms to comply with the proposal under consideration. However, these collectors might 

take steps to obtain appropriate documentation before referring accounts to law firms. They 

might also need to establish systems for ensuring that their law firms comply with the 

requirement and standards or procedures for cases in which the documentation specified in the 

proposal under consideration is unavailable.

b. Collection law firms

Based on industry outreach, the Bureau understands that most collection law firms review 

account documentation prior to filing a lawsuit, though some firms review documents only if the 

consumer contests the suit. The Bureau is also aware of evidence, including findings from 

enforcement actions brought by the Bureau, indicating that many lawsuits are brought by 

attorneys without any account documentation.

The Bureau expects that debt collectors engaging in litigation would seek to review the 

documents identified in a Bureau rule before filing suit. Collection law firms that currently 

review documentation before filing a lawsuit might incur one-time costs to review their policies 

and procedures to ensure their review satisfies the approach specified in the proposal under 

consideration and, if necessary, to make any necessary changes. The Bureau does not anticipate 

an increase in ongoing costs for these firms.

For debt collectors that do not already review original documentation prior to filing, the 

proposal under consideration generally would require them to acquire and review 

documentation prior to each suit. The Bureau expects that the time required to review the 

documentation should be comparable to the time required to respond to a dispute, although 

somewhat longer given that the information that must be assessed is generally more extensive. 

The Bureau estimates that for these debt collectors, pre-litigation review might require 30 to 45 

minutes for each account. 

All collection law firms may encounter cases in which the creditor cannot provide all of the 

documentation that the Bureau specifies. In such cases, the debt collector would need to find an 

alternative means to establish that the identity of the defendant is supported by a reasonable 

basis. This might require additional staff time to conduct research or review other 

documentation, require using outside vendors to assess account information, or cause the firm 

to choose not to pursue litigation on the account.

c. Loan servicers subject to the FDCPA

The Bureau understands that mortgage servicers receive full documentation when servicing is 

transferred. The Bureau anticipates that mortgage servicers’ current litigation practices are 

generally sufficient to comply with the requirements under consideration to support claims of 

indebtedness, so they would impose relatively small one-time and ongoing compliance costs. 

Given that the documentation required to obtain a mortgage loan is more extensive than for 

other credit products, the Bureau expects that servicers already would have or have access to the 

data fields specified in the proposal under consideration.
59

3. Transfer of information at and after subsequent debt placement 

The proposals under consideration would require that subsequent collectors have (and prior 

collectors transfer) certain information that prior collectors obtain in the course of collecting a 

debt, including, for example, information about times or communication channels that are 

inconvenient for the consumer and details about dispute status.

a. Collection agencies and debt buyers

The Bureau understands that collection agencies and debt buyers currently capture the required 

information when provided by consumers, but not necessarily in a format that is easily 

transferred to other systems. For example, information may be captured as text in collector 

notes that often do not transfer to creditors or subsequent debt collectors with the accounts. 

Even when they do, the information may not be captured in a usable way on the recipient’s 

system. Transferring this information would require collectors to update their systems to add 

new data fields and to train their staff to use them. As discussed above, the Bureau expects that 

vendors would update their software to include the specified fields. While collectors using 

proprietary systems would bear any upgrade costs, the Bureau understands that these costs 

would be relatively low.

The Bureau expects that these requirements would have minimal impact on collectors that 

receive accounts directly from creditors and do not transfer accounts for further collections. 

Many collection agencies that work for small, local creditors may fall into this category.

Creditors placing accounts with multiple debt collectors would have to update their systems to 

enable them to receive the required information from some debt collectors and pass it on to 

others.94 If some creditors are unwilling to make these changes, then debt collectors may not be 

able to accept accounts from them.

The Bureau is also considering requirements that debt collectors forward payments, bankruptcy 

notices, identity theft reports, certain information about exempt income and assets, and 

disputes to the entity to which they transferred the debt, such as the creditor or debt buyer. The 

Bureau understands that this is already common practice with respect to payments, bankruptcy 

notices, and identity theft reports. The Bureau is not aware of practices regarding consumer 

disputes directed to debt collectors that no longer have the account, but expects that this is a 

rare occurrence.

b. Collection law firms

Collection law firms would need to ensure that their systems are capable of capturing the 

required information when accounts are transferred from other debt collectors, and that they 

review the required information. Compliance costs from the proposal under consideration 

would likely be lower for collection law firms because they generally do not transfer accounts 

once received and, therefore, might not need to capture information from the consumer in a way 

that ensures it can be passed on to a subsequent collector.

 94 The Bureau intends to consider in the future proposals that would apply to creditors and that might 

directly require creditors to receive and pass on such information.
60

c. Loan servicers subject to the FDCPA

The Bureau does not expect that loan servicers would have to change their procedures as a result 

of the proposal under consideration, because the specified information is generally already 

provided when transferring accounts.

4. Validation notice 

The requirements under consideration would expand the information provided on validation 

notices. This would require that collectors track certain data fields and incorporate them into 

the new notices. The Bureau expects that any one-time costs to collectors of reformatting the 

validation notice would be minimal, particularly for collectors that rely on vendors, because the 

Bureau expects that vendors would provide an updated notice at no additional cost.95 The 

Bureau expects that most costs would arise from ensuring that the data required to be in the 

validation notice is available and from any changes in consumer behavior resulting from the new 

notice.

As discussed in subsection 1 above, the Bureau believes that the large majority of collectors are 

already tracking most data fields included in the proposed validation notice. However, some 

respondents to the Operations Study reported that they do not receive information on postdefault interest and fees from the creditor.96 These collectors would have to update their 

systems to track these fields. As discussed previously, the Bureau understands that such 

updates are relatively inexpensive, generally costing less than $1,000.

Once collectors adjust their systems to produce the new validation notices, the Bureau does not 

expect there would be an increase in the ongoing costs of printing and sending validation 

notices.

However, there could be ongoing effects if the required data is not always available. The Bureau 

understands that some creditors do not currently track post-default charges and credits in a way 

that can be readily transferred to debt collectors. Under the proposal under consideration, debt 

collectors would be unable to send validation notices—and therefore unable to collect—when 

creditors do not provide this information.97 Some debt collectors might lose revenue as a result 

of not being able to collect accounts from creditors that do not adjust their systems.

Changes to the validation notice could affect how consumers respond, particularly whether they 

dispute the debt. Because the proposed validation notice would include more detail, consumers 

might be more likely to recognize the debt and less likely to mistakenly dispute debts that they 

owe. On the other hand, the new tear-off form would likely make it easier to dispute debts or 

request the name of the original creditor. Together with the additional information about 

consumer rights that would be provided, this could increase the number of consumers who 

dispute or request original creditor information. The overall impact on dispute rates is unclear. 

 95 The Bureau understands that currently letter vendors generally do not charge clients to change the 

format of the validation notice. 

96 Fifty-two of 58 respondents reported receiving itemization of post-charge-off fees on at least some of 

their accounts. Operations Study, supra note 15, at Table 8.

97 For example, the Bureau understands that, sometime after New York began requiring itemization of 

post-charge-off fees and credits, some creditors continue to be unable to provide this information and are 

therefore not placing New York accounts for collection.
61

The Bureau does not believe that changes in dispute rates would affect revenue, because 

consumers who are inclined to dispute the debt are unlikely to otherwise pay. However, if the 

form were to cause some consumers to take advantage of FDCPA rights that they would 

otherwise have not exercised, debt collectors could bear additional costs to respond to these 

consumers.

5. Statement of Rights 

The Bureau is considering a requirement that debt collectors provide consumers with a 

Statement of Rights that discloses certain legal protections relevant to debt collection. 

The Bureau anticipates that debt collectors would generally include a Statement of Rights in the 

same mailing as the validation notice, which generally is sent once for each new account that a 

debt collector obtains. Collectors would need to update their policies and procedures to include 

a Statement of Rights when the validation notice is sent. Since the Bureau would provide the 

language and format for the model Statement of Rights, debt collectors would not incur costs to 

design the disclosure, but they would need to print and deliver it. For collectors that use a letter 

vendor, the Bureau anticipates that vendors would include the Statement of Rights as part of 

their standard offering to debt collectors, and that the one-time cost to collectors of ensuring 

compliance with this requirement would be minimal. Collectors that do not use a letter vendor 

would need to revise procedures to ensure that the Statement of Rights is printed and included 

with each validation notice; the Bureau anticipates that the cost of making these changes would 

be small.

The Bureau understands that the cost of printing a one-page insert and mailing it with a 

validation notice is approximately $0.05 t0 $0.10 per mailing for debt collectors using thirdparty vendors and anticipates similar costs for collectors that mail their own validation notices.

The Bureau is also considering a requirement to offer to send an additional Statement of Rights 

in the first communication that takes place at least 180 days after the validation notice. To 

comply, debt collectors would need to establish procedures to ensure that the first 

communication after 180 days includes such an offer, and would bear additional printing and 

mailing costs when consumers request additional disclosures.

The disclosures in a Statement of Rights could change how consumers respond to collection 

attempts in ways that affect debt collector costs. For example, consumers might be more likely 

to exercise cease communication rights or to identify times that are inconvenient for them to 

speak. The Bureau does not have information that would permit it to estimate these impacts.

6. Non-English languages

The Bureau is considering two alternative proposals related to the use of translated validation 

notices and Statements of Rights.

Option 1—trigger-based approach

The first alternative would require debt collectors to send translated versions of the validation 

notice and Statement of Rights if two conditions are satisfied: (1) the debt collector’s initial 

communication with the consumer took place predominantly in a language other than English,

or the debt collector has received information from the creditor or a prior collector indicating 

that the consumer prefers to communicate in a language other than English; and (2) the Bureau 

has published in the Federal Register versions of the validation notice template and Statement 
62

of Rights in the language of the initial communication. The Bureau is also considering whether 

Statements of Rights should inform consumers that they can obtain Spanish-language copies of 

the Statement of Rights and the validation notice template from the Bureau’s website or the debt 

collector.

The Bureau understands that for most debt collectors, the initial communication with the 

consumer is the validation notice. Such debt collectors would not be required to send additional 

notices unless the consumer requests a Spanish-language notice. The Bureau believes that few 

debt collectors communicate initially in languages other than English. Those that do, and those 

that receive information from the creditor or a prior collector indicating that the consumer 

prefers to communicate in a language other than English, would be required to ensure that 

consumers receive the required disclosures in the same language, if the relevant translation has 

been published by the Bureau. The Bureau expects that providing Bureau-translated versions of 

these disclosures would cost no more than providing the disclosures in English. Any increase in 

ongoing costs is likely to arise from printing and mailing a second notice in Spanish to 

consumers upon request.

Option 2—Spanish-language backer 

The second alternative would require debt collectors to include a Spanish translation on the 

back of every validation notice and Statement of Rights.

The Bureau anticipates that including a Spanish-language translation would require many 

collectors to include a second additional page with every validation notice, because many debt 

collectors currently use the back of the validation notice to comply with state disclosure 

requirements. These collectors would have to make state disclosures on a separate page if 

Spanish translations are required on the back of the validation notice and Statement of Rights, 

respectively. The Bureau understands that including an extra page in a validation notice costs 

$0.05 to $0.10 per notice.

7. Communication with consumers before credit reporting

The Bureau is considering a requirement that debt collectors not furnish information to credit 

reporting agencies without first communicating with consumers.

The Bureau understands that most debt collectors mail validation notices to consumers shortly 

after they receive the accounts for collections, and so they already would be in compliance with 

such a requirement.98 These collectors would likely need to review their policies to ensure that 

validation notices are always mailed prior to reporting on the account, which the Bureau expects 

would involve a small one-time cost. 

Debt collectors that furnish information to credit reporting agencies but only provide validation 

notices after they have been in contact with the consumer could face increased costs as a result 

of the proposal under consideration. Because these collectors are required to provide validation 

notices to consumers they communicate with, the Bureau expects that they already have systems 

in place for mailing notices and would not face one-time compliance costs greater than those of 

other collectors. However, these collectors would face on-going costs from mailing validation 

 98 In the Operations Study, 53 of 58 respondents said that they send a validation notice shortly after 

account placement. Operations Study, supra note 15, at Table 8.
63

notices to more consumers than they would otherwise, at an estimated cost of $0.50 to $0.80 

per account. Alternatively, collectors could cease furnishing information to credit reporting 

agencies, which could impact the effectiveness of their collection efforts.

Because collection law firms generally do not report to consumer reporting agencies, the Bureau 

expects that the proposal under consideration would not impact collection law firms. 

The Bureau understands that loan servicers generally send validation notices shortly after 

obtaining an account that is covered by the FDCPA. In addition, mortgage servicers generally 

may not furnish negative account information until 60 days after the transfer date. For these 

reasons, the Bureau does not expect that loan servicers would face new costs to comply with the 

proposal under consideration. 

8. Litigation disclosure

The Bureau is considering a proposal to require that debt collectors provide, in all 

communications in which they represent their intent to sue, a “litigation disclosure” that 

includes certain defined statements. 

Collection agencies and debt buyers that litigate generally tell consumers that they intend to sue 

before referring the account to a law firm. For collection law firms, a large fraction of 

communications with consumers likely conveys the threat of litigation. Such debt collectors 

would bear one-time costs of establishing policies and procedures to ensure that the required 

disclosures are made whenever an intent to litigate is represented, and ongoing costs from 

including the disclosure with each communication. For written disclosures, the Bureau 

anticipates that the ongoing costs would be minimal, as the disclosure can be automatically 

added to any letter that threatens suit. For oral disclosures, the Bureau anticipates each call in 

which litigation is discussed might be lengthened by 15 to 20 seconds on average, which, 

assuming fully loaded collector wages of $22 per hour, would cost approximately $0.09 to $0.12

per call.99

With the additional information, consumers might be more likely to respond to a complaint and 

defend themselves in debt collection litigation. This could increase the cost to debt collectors of 

litigation, as it generally costs more to pursue a case that is actively defended and such cases are 

less likely to be successful. The Bureau does not have data with which to estimate how many 

additional consumers would defend against debt collection lawsuits as a result of the disclosure 

that the Bureau is considering. 

9. Time-barred debt requirements

The Bureau is considering a requirement that debt collectors collecting time-barred debt 

provide a disclosure in the validation notice and in the first oral communication seeking 

payment. The Bureau is also considering prohibiting lawsuits or threats of lawsuits to collect 

time-barred debt and requiring that collectors waive their right to sue when attempting to 

collect time-barred debt that can be revived through partial payment or acknowledgment under 

state law.

 99 This estimate assumes a collector wage of $15 per hour, divided by 67.5% to obtain fully-loaded rates. 

In the Operations Study, interview respondents described collector wages ranging from $10 to $20 per 

hour. Id. at sec. 3.4.
64

a. Collection agencies and debt buyers

The Bureau understands that many debt collectors do not collect time-barred accounts. Among 

those debt collectors that do, the Bureau understands that some currently disclose to consumers 

that they cannot sue to collect the debt. Moreover, in certain jurisdictions, such as California 

and New York, all debt collectors must make such disclosures in at least some circumstances. 

To comply with the proposal under consideration, collectors that collect time-barred debt would 

need to determine which accounts are time-barred and, for those that are, provide written 

disclosures in validation notices and oral disclosures when requesting payment by phone. 

The Bureau understands that determining whether an account is time-barred is not always 

straightforward. Different states have different statutes of limitations for different types of debt. 

Which statute applies depends on questions such as where the consumer resides and the nature 

of the credit contract, as well as which state’s law a court applies to a given case. Many 

collectors already must make this determination to determine whether a lawsuit is permissible 

or, in certain states, whether particular disclosures are required. Even for these debt collectors, 

however, the requirements under consideration would increase the importance of making the 

correct determination. Collectors may be able to reduce the costs of determining whether a debt 

is time-barred by erring on the side of treating a debt as time-barred when the question is close. 

A collector who errs on the side of treating debts as time-barred in close cases, however, would 

be required to provide the time-barred debt disclosure in the next collection attempt for those 

accounts. The collector’s determination of the debt’s time-barred status and the provision of the 

disclosure, in turn, would effectively bind all subsequent collectors. The proposal under 

consideration thus creates certain incentives for collectors not to be over-inclusive in treating 

debts as time-barred. The Bureau anticipates that some collection agencies and debt buyers 

would incur legal and programming costs to develop a system to identify time-barred accounts 

and incorporate the determination into the collection management system. The Bureau does 

not anticipate that meaningful ongoing costs would be incurred to provide the proposed timebarred debt disclosure, because required disclosures could be automatically included on written 

materials.

For oral communications, the Bureau anticipates collection management systems would be 

adjusted to identify disclosures that must be made. The required disclosure would increase the 

length of each conversation about a time-barred debt by perhaps 5 to 10 seconds, though if 

consumers have questions about the disclosure, this could lengthen some calls considerably. If 

the disclosure lengthens calls to collect a time-barred debt by 15 seconds on average, given an 

assumed average fully loaded collector wage of $22 per hour, this would cost approximately 

$0.09 per call.

Costs may also increase if debt collectors and creditors increase monitoring of calls regarding 

time-barred debt to ensure compliance.

Consumers who receive the required disclosure may be less likely to repay debts that they owe. 

The Bureau believes that many consumers are unaware of the statute of limitations or may not 

know whether it has expired for their debt. Some consumers might not repay a debt if they 

know they cannot be sued, although others may repay regardless. As noted above, however, 

some collectors already provide time-barred debt disclosures; some do so voluntarily, while 

others are required by state law or a consent order to do so. Their experiences have been varied 

and thus, while the disclosure under consideration may reduce the amount of time-barred debt 

that is collected, the Bureau does not have the data needed to estimate the magnitude of this 

effect.
65

Most courts that have decided the issue have held suits and threats of suit on time-barred debt 

to be violations of the FDCPA. The Bureau understands that collection agencies and debt buyers 

generally do not sue or threaten to sue consumers for accounts that are time-barred. Likewise, 

they do not treat time-barred debts as “revived” as a result of a partial payment or 

acknowledgement. Therefore, the Bureau anticipates that these aspects of the proposal under 

consideration would not impose costs on most collection agencies and debt buyers.

b. Collection law firms

The Bureau understands that debt collectors generally do not sue or threaten to sue consumers 

for accounts that are time-barred. This implies that collection law firms may be less likely to be 

involved in collecting time-barred debt. Collection law firms that do collect time-barred debt 

would likely face costs similar to those of collection agencies.

c. Loan servicers subject to the FDCPA

The Bureau understands that mortgage servicers typically initiate foreclosure proceedings 

within the first year of delinquency and well before the applicable statute of limitations has run. 

Therefore, the Bureau does not anticipate that the proposal under consideration would impose 

new costs on loan mortgage servicers.

10. Consumer acknowledgment for debt that is time-barred and obsolete

For debt that is both time-barred and obsolete, the Bureau is considering a requirement that 

consumers acknowledge in writing that they have received disclosures describing its status 

before a debt collector can accept payment on the debt.

The Bureau understands that some collection agencies and debt buyers attempt to collect debt 

that is both time-barred and obsolete. Such collection agencies would incur one-time costs to 

ensure that their systems identify accounts for which a consumer acknowledgement is required. 

The Bureau anticipates that such adjustments would be made by software vendors and, for debt 

collectors that use proprietary systems, that this would be a relatively straightforward system 

adjustment. Such collection agencies would also need to print and mail acknowledgement forms 

to consumers, likely to be included with validation notices. As discussed elsewhere, the Bureau 

estimates that adding an additional page to the validation notice mailing would add costs of 

approximately $0.05 to $0.10 per affected account.

Some consumers who would otherwise pay a time-barred and obsolete debt might not return the 

signed acknowledgement. While the Bureau has no data to indicate how frequently this might 

happen, this could reduce the revenue earned from collecting time-barred and obsolete debt. 

Debt collectors might be able to mitigate this cost by increasing collections efforts before an 

account becomes both time-barred and obsolete. 100

11. Contact frequency

The Bureau is considering proposals that would clarify that contacts and contact attempts above 

certain limits are prohibited, with stricter limits for contacts and contact attempts made after 

 100 Note, however, that the proposals under consideration to limit contact frequency could limit collectors’ 

ability to increase collections efforts.
66

confirmed consumer contact (CCC). Although the Bureau has suggested above that the cap may 

be a presumption and not a complete prohibition on more frequent contacts, the Bureau expects 

that in most cases debt collectors would restrict contacts to within the specified limits. 

a. Collection agencies and debt buyers

One-time costs

Collection agencies and debt buyers would incur one-time costs to revise their systems to 

incorporate the contact frequency caps under consideration. For larger debt collectors, which 

generally already implement system limits on call frequency, this might mean revising existing 

calling restrictions to ensure that they comply with the caps and adjusting systems to implement 

these revised restrictions. Larger collection agencies might also need to respond to creditor 

requests for additional reports and audit items to verify that they comply with the caps, which 

could require these agencies to make systems changes to alter the reports and data they produce 

for their clients to review (although the Bureau does not expect that the overall number of audits 

conducted would increase as a result of a cap).

Smaller debt collectors would also incur one-time costs to establish policies and procedures to 

implement contact frequency caps. In some cases, these costs might be larger given that smaller 

debt collectors are less likely to have formal systems in place to restrict call frequency. On the 

other hand, many smaller debt collectors report attempting one or two calls per week and 

generally not speaking to a consumer more than one time per week, suggesting that their 

practices are already within the limits under consideration. For such debt collectors, existing 

policies may be sufficient to ensure compliance with this aspect of the proposal under 

consideration.

Ongoing costs 

Of the three types of contact frequency caps the Bureau is considering—pre-CCC, post-CCC, and 

location contacts—the Bureau expects that the pre-CCC caps would have the largest impact. The 

Bureau would not expect post-CCC limits to affect debt collectors’ ability to communicate with 

consumers in most cases.101 Similarly, the Bureau expects that collection agencies would be 

largely unaffected by proposed limits on location contacts with third parties, because the Bureau 

understands that while location calls may be made to several numbers, they do not generally 

involve frequently calling each number.

The pre-CCC contact frequency caps under consideration would cause many debt collectors to 

attempt contact less frequently than they currently do. This could impose ongoing costs on such 

debt collectors by increasing the time it takes to establish contact with consumers. Most 

collectors rely heavily on phone calls as a means of establishing contact with consumers. While 

collection agencies and debt buyers generally send letters in addition to calling, they report that 

response rates to letters are generally quite low. In some cases, contact caps might prevent CCC 

entirely, if collectors are unable to reach the consumer with the permitted number of contacts

during the time they are permitted to work the account.

 101 The impact might be greater if consumers could not consent to more frequent contact. For example, if 

a collector reached a consumer on the phone and the consumer said it was not a good time to speak, then 

the proposal under consideration would permit the collector and consumer to agree to speak again at a 

specified time within less than one week.
67

Some debt collectors do not call frequently enough to be affected by the caps under 

consideration. While many collectors regularly call consumers two to three times per day or 

more, others have told the Bureau that they seldom attempt to call more than once or twice per 

week. These differences may reflect different account types and collection strategies. For 

example, smaller debt collectors frequently retain accounts indefinitely, and they may face less 

pressure to reach consumers quickly than collectors that collect accounts for a limited period. 

Debt collectors that focus on litigation may also place less emphasis on making phone contact 

with consumers.

For debt collectors that currently attempt to contact consumers more frequently, the caps under 

consideration could impact the rate at which they establish contact with consumers. The Bureau 

does not have representative data that would permit it to estimate how particular contact caps 

might impact how long it takes to establish CCC or if contact is established at all.

However, the Bureau has reviewed data obtained from a few large collection agencies that help 

illustrate the potential impact of the proposed caps. The data indicate that 50 percent or more 

of consumers that ultimately are reached by some large collection agencies are reached within 

the first seven calls, though other collection agencies have indicated that it takes 15 to 21 calls to 

reach 50 percent of such consumers. The data also indicate that reaching 95 percent of those 

consumers may take between 50 and 60 calls, meaning that five percent of consumers reached 

are only contacted after more than 50 or 60 calls. These numbers do not speak directly to how 

contact caps would affect collectors’ ability to reach consumers, in part because establishing 

contact depends on factors other than the number of calls made and in part because collectors 

subject to caps might change their contact behavior in ways that permit them to reach a given 

number of consumers with fewer calls, as discussed further below. In addition, the proposal

under consideration that would reduce the cost to collectors of leaving messages for consumers 

could make it easier to reach consumers with a smaller number of calls. However, the numbers 

may be helpful in assessing the potential impact of particular contact caps.

The impact of the caps under consideration depends in part on the number of phone numbers 

available to the debt collector. If a consumer can be reached at only one phone number, the 

proposal under consideration would permit at most three calls per week to that number; if a 

debt collector has two numbers, it could make up to six attempts per week.102 With one phone 

number available and a limit of three calls per week, the numbers above suggest that, even if the 

number of calls was the only driver of consumer contact, most consumers could be reached 

within two to five weeks, and 95 percent of consumers could be reached within approximately 17 

to 20 weeks. With two or more phone numbers, the numbers suggest that most consumers 

could be reached within one to three weeks, and 95 percent of consumers could be reached 

within eight to ten weeks. Of course, other factors beyond call frequency are likely to affect the 

time it takes for collectors to reach consumers.

The data discussed above may not be representative, meaning that some debt collectors might 

experience larger or smaller impacts. Overall, however, the available data suggest that the caps 

under consideration could reduce somewhat the ability of collection agencies to reach 

consumers within a few months, but that the reduction is likely to be limited to a relatively small 

 102 Data made available to the Bureau from a few large collectors indicates that, on average, collectors 

have access to between two and three phone numbers, but there is substantial variation across accounts. 

In these data, a small percentage of accounts do not have a phone number, as many as 24 percent have 

only one phone number, and more than 10 percent of accounts have five or more numbers.
68

fraction of accounts. This could affect debt collectors that receive placements of accounts for 

four to six months and do not engage in litigation. Such collectors could lose revenue if the caps 

prevent them from establishing contact with consumers or if collections based on phone calls 

become less effective and, as a result, creditors place accounts with debt collectors specializing 

in litigation.

Debt collectors could take steps to reduce the number of calls necessary to establish CCC. The 

Bureau understands that this can be facilitated by purchasing higher-quality contact 

information from data vendors. Similarly, when multiple phone numbers are available, debt 

collectors might reduce their calls to numbers that they can identify as being less likely to yield a 

successful contact. The Bureau is also considering proposals that could reduce the legal risks 

associated with other means of communication, such as voicemail or email, that may enable 

collectors to reach consumers more effectively with fewer contact attempts, potentially 

mitigating the impact of contact caps. In addition, collectors that are unable to reach consumers 

as a result of contact caps might still pursue such accounts through litigation.

b. Collection law firms

Collection law firms would also incur some one-time costs to revise their systems or procedures 

to incorporate the contact frequency caps under consideration. However, the Bureau 

understands that collection law firms generally call consumers less frequently, meaning that 

they may not need sophisticated systems or incur other new costs to ensure compliance with the 

caps under consideration. Moreover, if placing accounts with collection agencies becomes less 

effective because of the contact caps, collection law firms may benefit from an increase in the 

number of accounts referred for litigation.

c. Loan servicers covered by the FDCPA

Because loan servicers typically have ongoing contact with the consumer to provide periodic 

statements and other correspondence related to the loan, they would generally have established 

confirmed consumer contact when attempting to contact consumers about delinquent accounts.

The limits under consideration when there is confirmed consumer contact could prove 

restrictive to many mortgage servicers. In addition to the servicer’s own incentives, servicing 

guidelines and federal regulation require servicers to engage in “early intervention” efforts to 

inform consumers about loss mitigation options. Servicers may also be required by investors or 

guarantors to engage in specific amounts of outreach to delinquent borrowers. The Bureau 

understands that some servicers may currently attempt to contact delinquent borrowers more 

than three times per week, or more than twice per week at a particular number. The Bureau 

does not have the data needed to estimate how the caps under consideration would affect 

servicers’ efforts to contact delinquent borrowers whose loans are covered by the FDCPA. 

However, the caps could delay loss mitigation efforts. The Bureau is considering whether 

presumptive contact restrictions should apply to mortgage servicers engaging in early 

intervention.

12. Leaving messages

The Bureau is considering clarifying that no information regarding a debt is conveyed—and no 

FDCPA “communication” occurs—when collectors convey only: (1) the individual debt 

collector’s name, (2) the consumer’s name, and (3) a toll-free method that the consumer can use 

to reply to the collector. This could reduce legal risks borne by collectors when leaving a 

message by eliminating ambiguity regarding whether the initial debt collection disclosure 
69

required by FDCPA section 807(11) (sometimes referred to as the “mini-Miranda”) must be 

made in connection with such messages.

a. Collection agencies and debt buyers

Most debt collectors sometimes leave messages for consumers when consumers do not answer 

the phone; however, others leave messages only under limited circumstances or not at all 

because of the legal risk associated with leaving a message that omits the mini-Miranda 

language or that risks disclosing the existence of a debt to a third party hearing the message.103 

The proposal under consideration would reduce both direct and indirect costs to small entities 

subject to the FDCPA by reducing legal risks associated with messages. Because the proposal 

under consideration would not require any collectors to change their policies regarding 

messages, it would impose no new costs on collectors.

Clarifying when messages may be left may benefit collection agencies indirectly by making it 

easier to establish contact with consumers. Currently, many debt collectors limit or avoid 

leaving messages for fear of FDCPA liability. Leaving messages may be a more efficient way of 

reaching consumers than repeating call attempts without leaving messages. For example, 

consumers who do not answer calls from callers they do not recognize might return a voicemail

message. If so, the proposal under consideration could permit collectors to reach such 

consumers more efficiently, particularly smaller collectors that may be less likely to use 

sophisticated dialing systems. 

The proposal under consideration would also reduce the direct costs of voicemail-related 

litigation, which can be large.

104 While the Bureau does not have data on the costs of defending 

such suits, anecdotal evidence suggests that resolving an individual suit typically costs $5,000 to 

$10,000, and resolving a class action could cost much more. Moreover, the large majority of 

threatened lawsuits are settled before the suit is filed, so the frequency of filed lawsuits 

substantially understates how often debt collectors bear costs from claimed FDCPA violations.105 

The Bureau anticipates that the clarification of “communication” under consideration would 

remove any legal risk to collectors of leaving limited-content messages that conform to the 

parameters and other restrictions.

b. Collection law firms

The proposal under consideration would have some of the same benefits for collection law firms 

as for collection agencies and debt buyers. However, collection law firms are less dependent on 

phones to reach consumers, suggesting that the benefits from reduced legal risk and expanded 

use of limited-content messages would be smaller for collection law firms.

 103 In the Bureau’s Operations Study, 42 of 58 respondents reported leaving voicemails. Of those that do 

leave voicemails, many reported leaving them only under certain specific circumstances. Operations 

Study, supra note 15, at sec. 5.2.

104 WebRecon data show that there were at least 162 voicemail-related lawsuits filed in 2015 under section 

805(b) of the FDCPA, which prohibits third-party disclosures, of which 11 cases were class actions. In 

addition, at least 125 voicemail-related lawsuits were pursued under section 807(11), which prohibits 

communicating with a consumer without providing the mini-Miranda disclosure, of which 49 cases were 

class actions. 

105 Some collectors have reported that they receive approximately ten demand letters for every lawsuit 

filed, and that FDCPA claims are typically settled for $1,000 to $3,000.
70

c. Loan servicers covered by the FDCPA

The Bureau understands that legal risks related to leaving messages have not generally posed a 

concern for loan servicers. As with other debt collectors, the proposal under consideration 

would not require any change to policies regarding messages but would clarify legal obligations 

in particular circumstances. 

13. Consumer disputes

The Bureau is considering clarifying debt collectors’ obligations when responding to a consumer 

dispute, including reviewing certain documentation relevant to the basis for the consumer’s 

dispute and clarifying the limits of collectors’ responsibilities when they receive duplicative 

disputes from the same consumer.

a. Collection agencies and debt buyers

Collection agencies and debt buyers would need to revise their dispute policies and procedures 

to account for the proposed rules. Some collectors, particularly those using proprietary 

collection management systems, would bear costs to adjust their systems for tracking dispute 

information and for demonstrating compliance to their clients.

The FDCPA has specific requirements for responding to timely written disputes by verifying the 

debt. 106 The Bureau understands that collection agencies and debt buyers generally obtain 

documentation from the creditor in response to timely written disputes. The requirement under 

consideration for account review after receiving a dispute would not appear to be more 

burdensome in general than the reviews most collectors currently undertake for timely written 

disputes. The proposal under consideration would clarify the level of investigation that is 

necessary to meet the collector’s responsibilities. In some cases this may require reviewing 

more or different documentation than collectors currently review before being able to resume 

collection. But, based on the Bureau’s understanding of current practice, the proposal under 

consideration would not impose large new burdens with respect to timely written disputes.

Most disputes are made orally or more than 30 days after receipt of the validation notice. The 

Bureau understands that many collection agencies and debt buyers follow the same process 

when responding to timely written disputes and other disputes, but that others use different 

procedures for non-timely or oral disputes. Under the proposal under consideration, debt 

collectors might be required to conduct a more thorough investigation into each non-timely or 

oral dispute than they currently do. This includes ensuring that all non-timely or oral disputes 

are identified as such and that they are addressed in compliance with the proposed 

requirements. The Bureau’s current estimate of the cost of investigating a dispute by reviewing 

the specified information is 15 to 30 minutes of staff time. This would represent an upper bound 

on the additional burden of investigating non-timely or oral disputes under the proposal being 

considered, since it would be incremental to the cost of procedures that debt collectors are 

currently following. Additionally, collectors would not be able to collect while a dispute is 

pending.

The proposal under consideration would also clarify that duplicative disputes to the same 

collector do not require further investigation. This clarification would benefit some collectors 

 106 See 15 U.S.C. 1692g.
71

that currently follow a policy of investigating and responding to repeat disputes because they are 

uncertain about their legal obligations.

The Bureau understands that some creditors require collection agencies to refer all disputes 

back to the creditor for investigation and resolution and to cease activity on disputed accounts. 

Some debt buyers may also return certain categories of disputed accounts to the seller of the 

debt. In such cases, collectors would not bear additional costs as a result of the dispute 

requirements under consideration.

b. Collection law firms

For collection law firms, the Bureau understands based on its industry outreach to date that 

current practice for responding to disputes is at least as rigorous as what would be required by 

the proposal under consideration. A firm that is litigating or preparing to litigate a case would 

have incentives to obtain documents and determine whether a dispute is valid in order to 

determine whether to proceed with litigation. The Bureau does not expect that the proposal 

under consideration would impose new costs on collection law firms beyond reviewing policies 

and procedures to ensure compliance.

c. Loan servicers subject to the FDCPA

Loan servicers generally maintain all documentation that would need to be reviewed in response 

to a dispute. Servicers also may be subject to rules (such as those in RESPA) requiring them to 

investigate and respond to written disputes and to maintain accurate records. Servicers would 

incur one-time costs to ensure that their dispute procedures comply with the proposal under 

consideration; however, the Bureau anticipates that the proposal under consideration would not 

require loan servicers to follow more costly dispute procedures than they already employ.

VIII. Cost of Credit to Small Entities

Section 603(d) of the Regulatory Flexibility Act (RFA) requires the Bureau to consult with small 

entities regarding the potential impact of the proposals under consideration on the cost of credit 

for small entities and related matters. The proposals under consideration would apply to 

collection of debts that are incurred primarily for personal, family, or household purposes. They 

would not apply to debts incurred primarily for business purposes.

In principle, the proposals under consideration could have some limited impact on the 

availability of credit to small entities. Since some small entities use consumer credit products as 

a source of credit, they may be affected if consumer credit became more expensive or less 

available as a result of the proposals under consideration. However, the Bureau does not 

anticipate that the proposals under consideration would impose large enough costs on the 

collections process to have a measureable impact on the cost of consumer credit and, therefore, 

does not anticipate a measurable impact on the cost or availability of credit products for small 

entities.
THE FAIR DEBT COLLECTION PRACTICES ACT

As amended by Pub. L. 111-203, title X, 124 Stat. 2092 (2010)

Table of ConTenTs

§ 801 Short title

§ 802 Congressional findings and declaration of purpose

§ 803 Definitions

§ 804 Acquisition of location information

§ 805 Communication in connection with debt collection

§ 806 Harassment or abuse

§ 807 False or misleading representations

§ 808 Unfair practices

§ 809 Validation of debts

§ 810 Multiple debts

§ 811 Legal actions by debt collectors

§ 812 Furnishing certain deceptive forms

§ 813 Civil liability

§ 814 Administrative enforcement

§ 815 Reports to Congress by the Bureau; views of other Federal

agencies

§ 816 Relation to State laws

§ 817 Exemption for State regulation

§ 818 Exception for certain bad check enforcement programs

operated by private entities

§ 819 Effective date

Appendix A
2

§ 801 15 USC 1601 note

§ 801. Short Title

This subchapter may be cited as the “Fair Debt Collection

Practices Act.”

§ 802. Congressional findings and declaration of purpose

(a) Abusive practices

There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt

collectors. Abusive debt collection practices contribute to

the number of personal bankruptcies, to marital instability,

to the loss of jobs, and to invasions of individual privacy.

(b) Inadequacy of laws

Existing laws and procedures for redressing these injuries

are inadequate to protect consumers.

(c) Available non-abusive collection methods

Means other than misrepresentation or other abusive debt

collection practices are available for the effective collection of debts.

(d) Interstate commerce

Abusive debt collection practices are carried on to a substantial extent in interstate commerce and through means

and instrumentalities of such commerce. Even where

abusive debt collection practices are purely intrastate in

character, they nevertheless directly affect interstate commerce.

(e) Purposes

It is the purpose of this subchapter to eliminate abusive

debt collection practices by debt collectors, to insure that

those debt collectors who refrain from using abusive debt

collection practices are not competitively disadvantaged,

and to promote consistent State action to protect consumers against debt collection abuses.

15 USC 1601 note

15 USC 1692
3

§ 803 15 USC 1692a

§ 803. Definitions

As used in this subchapter—

(1) The term “Bureau” means the Bureau of Consumer

Financial Protection.

(2) The term “communication” means the conveying of

information regarding a debt directly or indirectly to

any person through any medium.

(3) The term “consumer” means any natural person obligated or allegedly obligated to pay any debt.

(4) The term “creditor” means any person who offers or

extends credit creating a debt or to whom a debt is

owed, but such term does not include any person to the

extent that he receives an assignment or transfer of a

debt in default solely for the purpose of facilitating collection of such debt for another.

(5) The term “debt” means any obligation or alleged

obligation of a consumer to pay money arising out of

a transaction in which the money, property, insurance

or services which are the subject of the transaction are

primarily for personal, family, or household purposes,

whether or not such obligation has been reduced to

judgment.

(6) The term “debt collector” means any person who uses

any instrumentality of interstate commerce or the mails

in any business the principal purpose of which is the

collection of any debts, or who regularly collects or

attempts to collect, directly or indirectly, debts owed

or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of

the last sentence of this paragraph, the term includes

any creditor who, in the process of collecting his own

debts, uses any name other than his own which would

indicate that a third person is collecting or attempting to collect such debts. For the purpose of section

1692f(6) of this title, such term also includes any

person who uses any instrumentality of interstate commerce or the mails in any business the principal pur15 USC 1692a
4

§ 803 15 USC 1692a

pose of which is the enforcement of security interests. 

The term does not include—

(A) any officer or employee of a creditor while, in

the name of the creditor, collecting debts for such

creditor;

(B) any person while acting as a debt collector for

another person, both of whom are related by common ownership or affiliated by corporate control,

if the person acting as a debt collector does so only

for persons to whom it is so related or affiliated and

if the principal business of such person is not the

collection of debts;

(C) any officer or employee of the United States or any 

State to the extent that collecting or attempting to collect any debt is in the performance of his official duties; 

(D) any person while serving or attempting to serve legal process on any other person in connection with

the judicial enforcement of any debt;

(E) any nonprofit organization which, at the request

of consumers, performs bona fide consumer credit

counseling and assists consumers in the liquidation of their debts by receiving payments from such

consumers and distributing such amounts to creditors; and

(F) any person collecting or attempting to collect any

debt owed or due or asserted to be owed or due

another to the extent such activity

(i) is incidental to a bona fide fiduciary obligation

or a bona fide escrow arrangement;

(ii) concerns a debt which was originated by such

person;

(iii) concerns a debt which was not in default at the

time it was obtained by such person; or

(iv) concerns a debt obtained by such person as a

secured party in a commercial credit transaction involving the creditor.
5

§ 803 15 USC 1692a

(7) The term “location information” means a consumer’s

place of abode and his telephone number at such place,

or his place of employment.

(8) The term “State” means any State, territory, or possession of the United States, the District of Columbia, the

Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing.

§ 804. Acquisition of location information

Any debt collector communicating with any person other

than the consumer for the purpose of acquiring location information about the consumer shall—

(1) identify himself, state that he is confirming or correcting location information concerning the consumer, and,

only if expressly requested, identify his employer;

(2) not state that such consumer owes any debt;

(3) not communicate with any such person more than once

unless requested to do so by such person or unless

the debt collector reasonably believes that the earlier

response of such person is erroneous or incomplete and

that such person now has correct or complete location

information;

(4) not communicate by post card;

(5) not use any language or symbol on any envelope or

in the contents of any communication effected by the

mails or telegram that indicates that the debt collector

is in the debt collection business or that the communication relates to the collection of a debt; and

(6) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt

and has knowledge of, or can readily ascertain, such

attorney’s name and address, not communicate with

any person other than that attorney, unless the attorney

fails to respond within a reasonable period of time to

communication from the debt collector.

15 USC 1692b
6

§ 805 15 USC 1692c

§ 805. Communication in connection with debt collection

(a) Communication with the consumer generally

Without the prior consent of the consumer given directly to

the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with

a consumer in connection with the collection of any debt—

(1) at any unusual time or place or a time or place known

or which should be known to be inconvenient to the

consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the

convenient time for communicating with a consumer

is after 8 o’clock antemeridian and before 9 o’clock

postmeridian, local time at the consumer’s location;

(2) if the debt collector knows the consumer is represented

by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name

and address, unless the attorney fails to respond within

a reasonable period of time to a communication from

the debt collector or unless the attorney consents to

direct communication with the consumer; or

(3) at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s

employer prohibits the consumer from receiving such

communication.

(b) Communication with third parties

Except as provided in section 1692b of this title, without

the prior consent of the consumer given directly to the debt

collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate

a postjudgment judicial remedy, a debt collector may not

communicate, in connection with the collection of any

debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted

by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

(c) Ceasing communication

15 USC 1692c
7

§ 805 15 USC 1692c

If a consumer notifies a debt collector in writing that the 

consumer refuses to pay a debt or that the consumer wishes 

the debt collector to cease further communication with the 

consumer, the debt collector shall not communicate further 

with the consumer with respect to such debt, except—

(1) to advise the consumer that the debt collector’s further 

efforts are being terminated; 

(2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily 

invoked by such debt collector or creditor; or 

(3) where applicable, to notify the consumer that the debt 

collector or creditor intends to invoke a specified 

remedy. 

If such notice from the consumer is made by mail, notification shall be complete upon receipt. 

(d) “Consumer” defined

For the purpose of this section, the term “consumer” includes the consumer’s spouse, parent (if the consumer is a 

minor), guardian, executor, or administrator.

§ 806. Harassment or abuse

A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any 

person in connection with the collection of a debt. Without 

limiting the general application of the foregoing, the following 

conduct is a violation of this section: 

(1) The use or threat of use of violence or other criminal 

means to harm the physical person, reputation, or property of any person. 

(2) The use of obscene or profane language or language 

the natural consequence of which is to abuse the hearer 

or reader. 

(3) The publication of a list of consumers who allegedly 

refuse to pay debts, except to a consumer reporting 

agency or to persons meeting the requirements of sec15 USC 1692d
8

§ 806 15 USC 1692d

tion 1681a(f) or 1681b(3)1 of this title. 

(4) The advertisement for sale of any debt to coerce payment of the debt.

(5) Causing a telephone to ring or engaging any person 

in telephone conversation repeatedly or continuously 

with intent to annoy, abuse, or harass any person at the 

called number.

 (6)Except as provided in section 1692b of this title, the 

placement of telephone calls without meaningful disclosure of the caller’s identity.

§ 807. False or misleading representations

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application 

of the foregoing, the following conduct is a violation of this 

section: 

(1) The false representation or implication that the debt 

collector is vouched for, bonded by, or affiliated with 

the United States or any State, including the use of any 

badge, uniform, or facsimile thereof. 

(2) The false representation of— 

(A)the character, amount, or legal status of any debt; or 

(B) any services rendered or compensation which may 

be lawfully received by any debt collector for the 

collection of a debt. 

(3) The false representation or implication that any individual is an attorney or that any communication is from 

an attorney. 

(4) The representation or implication that nonpayment of 

any debt will result in the arrest or imprisonment of 

any person or the seizure, garnishment, attachment, 

or sale of any property or wages of any person unless 

such action is lawful and the debt collector or creditor 

intends to take such action. 

1. Section 604(3) has been renumbered as Section 604(a)(3).

15 USC 1692e
9

§ 807 15 USC 1692e

(5) The threat to take any action that cannot legally be 

taken or that is not intended to be taken. 

(6) The false representation or implication that a sale, 

referral, or other transfer of any interest in a debt shall 

cause the consumer to— 

(A) lose any claim or defense to payment of the debt; or 

(B) become subject to any practice prohibited by this 

subchapter. 

(7) The false representation or implication that the consumer committed any crime or other conduct in order 

to disgrace the consumer. 

(8) Communicating or threatening to communicate to any 

person credit information which is known or which 

should be known to be false, including the failure to 

communicate that a disputed debt is disputed. 

(9) The use or distribution of any written communication 

which simulates or is falsely represented to be a document authorized, issued, or approved by any court, 

official, or agency of the United States or any State, or 

which creates a false impression as to its source, authorization, or approval. 

(10) The use of any false representation or deceptive means 

to collect or attempt to collect any debt or to obtain 

information concerning a consumer. 

(11) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial 

communication with the consumer is oral, in that initial 

oral communication, that the debt collector is attempting to collect a debt and that any information obtained 

will be used for that purpose, and the failure to disclose 

in subsequent communications that the communication 

is from a debt collector, except that this paragraph shall 

not apply to a formal pleading made in connection with 

a legal action.

(12) The false representation or implication that accounts 

have been turned over to innocent purchasers for value. 
10

§ 807 15 USC 1692e

(13) The false representation or implication that documents 

are legal process.

(14) The use of any business, company, or organization 

name other than the true name of the debt collector’s 

business, company, or organization. 

(15) The false representation or implication that documents 

are not legal process forms or do not require action by 

the consumer. 

(16) The false representation or implication that a debt collector operates or is employed by a consumer reporting 

agency as defined by section 1681a(f) of this title.

§ 808. Unfair practices

A debt collector may not use unfair or unconscionable 

means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following 

conduct is a violation of this section: 

(1) The collection of any amount (including any interest, 

fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by 

the agreement creating the debt or permitted by law. 

(2) The acceptance by a debt collector from any person of 

a check or other payment instrument postdated by more 

than five days unless such person is notified in writing 

of the debt collector’s intent to deposit such check or 

instrument not more than ten nor less than three business days prior to such deposit. 

(3) The solicitation by a debt collector of any postdated

check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution. 

(4) Depositing or threatening to deposit any postdated 

check or other postdated payment instrument prior to 

the date on such check or instrument. 

(5) Causing charges to be made to any person for communications by concealment of the true propose of 

the communication. Such charges include, but are not 

limited to, collect telephone calls and telegram fees. 

15 USC 1692f
11

§ 808 15 USC 1692f

(6) Taking or threatening to take any nonjudicial action to 

effect dispossession or disablement of property if— 

(A)there is no present right to possession of the property claimed as collateral through an enforceable 

security interest; 

(B) there is no present intention to take possession of 

the property; or

(C) the property is exempt by law from such dispossession or disablement. 

(7) Communicating with a consumer regarding a debt by 

post card. 

(8) Using any language or symbol, other than the debt collector’s address, on any envelope when communicating 

with a consumer by use of the mails or by telegram, 

except that a debt collector may use his business name 

if such name does not indicate that he is in the debt collection business.

§ 809. Validation of debts

(a) Notice of debt; contents

Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt 

collector shall, unless the following information is contained 

in the initial communication or the consumer has paid the 

debt, send the consumer a written notice containing—

(1) the amount of the debt; 

(2) the name of the creditor to whom the debt is owed; 

(3) a statement that unless the consumer, within thirty days 

after receipt of the notice, disputes the validity of the 

debt, or any portion thereof, the debt will be assumed 

to be valid by the debt collector; 

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the 

debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of 

a judgment against the consumer and a copy of such 

15 USC 1692g
12

§ 809 15 USC 1692g

verification or judgment will be mailed to the consumer 

by the debt collector; and 

(5) 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. 

(b) Disputed debts

If the consumer notifies the debt collector in writing within 

the thirty-day period described in subsection (a) of this 

section that the debt, or any portion thereof, is disputed, 

or that the consumer requests the name and address of the 

original creditor, the debt collector shall cease collection 

of the debt, or any disputed portion thereof, until the debt 

collector obtains verification of the debt or a copy of a 

judgment, or the name and address of the original creditor, 

and a copy of such verification or judgment, or name and 

address of the original creditor, is mailed to the consumer 

by the debt collector. Collection activities and communications that do not otherwise violate this subchapter may 

continue during the 30-day period referred to in subsection 

(a) unless the consumer has notified the debt collector in 

writing that the debt, or any portion of the debt, is disputed 

or that the consumer requests the name and address of the 

original creditor. Any collection activities and communication during the 30-day period may not overshadow or be 

inconsistent with the disclosure of the consumer’s right 

to dispute the debt or request the name and address of the 

original creditor.

(c) Admission of liability

The failure of a consumer to dispute the validity of a debt 

under this section may not be construed by any court as an 

admission of liability by the consumer.

(d) Legal pleadings

A communication in the form of a formal pleading in a 

civil action shall not be treated as an initial communication 

for purposes of subsection (a).
13

§ 809 15 USC 1692g

(e) Notice provisions

The sending or delivery of any form or notice which does 

not relate to the collection of a debt and is expressly required by title 26, title V of Gramm-Leach-Bliley Act [15 

U.S.C. 6801 et seq.], or any provision of Federal or State 

law relating to notice of data security breach or privacy, or 

any regulation prescribed under any such provision of law, 

shall not be treated as an initial communication in connection with debt collection for purposes of this section.

§ 810. Multiple debts

If any consumer owes multiple debts and makes any single 

payment to any debt collector with respect to such debts, such 

debt collector may not apply such payment to any debt which 

is disputed by the consumer and, where applicable, shall apply 

such payment in accordance with the consumer’s directions.

§ 811. Legal actions by debt collectors

(a) Venue

Any debt collector who brings any legal action on a debt 

against any consumer shall—

(1) in the case of an action to enforce an interest in real 

property securing the consumer’s obligation, bring 

such action only in a judicial district or similar legal 

entity in which such real property is located; or 

(2) in the case of an action not described in paragraph (1), 

bring such action only in the judicial district or similar 

legal entity—

(A)in which such consumer signed the contract sued 

upon; or 

(B) in which such consumer resides at the commencement of the action. 

(b) Authorization of actions

Nothing in this subchapter shall be construed to authorize 

the bringing of legal actions by debt collectors.

15 USC 1692i

15 USC 1692h
14

§ 812 15 USC 1692j

§ 812. Furnishing certain deceptive forms

(a) It is unlawful to design, compile, and furnish any form

knowing that such form would be used to create the false

belief in a consumer that a person other than the creditor

of such consumer is participating in the collection of or

in an attempt to collect a debt such consumer allegedly

owes such creditor, when in fact such person is not so

participating.

(b) Any person who violates this section shall be liable to the

same extent and in the same manner as a debt collector is

liable under section 1692k of this title for failure to comply

with a provision of this subchapter.

§ 813. Civil liability

(a) Amount of damages

Except as otherwise provided by this section, any debt

collector who fails to comply with any provision of this

subchapter with respect to any person is liable to such

person in an amount equal to the sum of—

(1) any actual damage sustained by such person as a result

of such failure;

(2) (A) in the case of any action by an individual, such

additional damages as the court may allow, but not

exceeding $1,000; or

(B) in the case of a class action,

(i) such amount for each named plaintiff as could

be recovered under subparagraph (A), and

(ii) such amount as the court may allow for all

other class members, without regard to a minimum individual recovery, not to exceed the

lesser of $500,000 or 1 per centum of the net

worth of the debt collector; and

(3) in the case of any successful action to enforce the

foregoing liability, the costs of the action, together with

a reasonable attorney’s fee as determined by the court.

On a finding by the court that an action under this sec15 USC 1692k

15 USC 1692j
15

§ 813 15 USC 1692k

tion was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work expended 

and costs. 

(b) Factors considered by court

In determining the amount of liability in any action under subsection (a) of this section, the court shall consider, 

among other relevant factors—

(1) in any individual action under subsection (a)(2)(A) of 

this section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or 

(2) in any class action under subsection (a)(2)(B) of this 

section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number 

of persons adversely affected, and the extent to which 

the debt collector’s noncompliance was intentional. 

(c) Intent

A debt collector may not be held liable in any action 

brought under this subchapter if the debt collector shows 

by a preponderance of evidence that the violation was not 

intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. 

(d) Jurisdiction

An action to enforce any liability created by this subchapter may be brought in any appropriate United States district 

court without regard to the amount in controversy, or in 

any other court of competent jurisdiction, within one year 

from the date on which the violation occurs. 

(e) Advisory opinions of Bureau

No provision of this section imposing any liability shall 

apply to any act done or omitted in good faith in conformity with any advisory opinion of the Bureau, notwith-
16

§ 813 15 USC 1692k

standing that after such act or omission has occurred, such 

opinion is amended, rescinded, or determined by judicial 

or other authority to be invalid for any reason.

§ 814. Administrative enforcement

(a) Federal Trade Commission

The Federal Trade Commission shall be authorized to

enforce compliance with this subchapter, except to the

extent that enforcement of the requirements imposed under

this subchapter is specifically committed to another Government agency under any of paragraphs (1) through (5)

of subsection (b), subject to subtitle B of the Consumer

Financial Protection Act of 2010 [12 U.S.C. 5511 et seq.].

For purpose of the exercise by the Federal Trade Commission of its functions and powers under the Federal Trade

Commission Act (15 U.S.C. 41 et seq.), a violation of this

subchapter shall be deemed an unfair or deceptive act or

practice in violation of that Act. All of the functions and

powers of the Federal Trade Commission under the Federal

Trade Commission Act are available to the Federal Trade

Commission to enforce compliance by any person with this

subchapter, irrespective of whether that person is engaged

in commerce or meets any other jurisdictional tests under

the Federal Trade Commission Act, including the power

to enforce the provisions of this subchapter, in the same

manner as if the violation had been a violation of a Federal

Trade Commission trade regulation rule.

(b) Applicable provisions of law

Subject to subtitle B of the Consumer Financial Protection

Act of 2010, compliance with any requirements imposed

under this subchapter shall be enforced under—

(1) section 8 of the Federal Deposit Insurance Act [12

U.S.C. 1818], by the appropriate Federal banking

agency, as defined in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with respect

to—

15 USC 1692l
17

(A)national banks, Federal savings associations, and 

Federal branches and Federal agencies of foreign 

banks;

(B) member banks of the Federal Reserve System (other 

than national banks), branches and agencies of 

foreign banks (other than Federal branches, Federal 

agencies, and insured State branches of foreign 

banks), commercial lending companies owned or 

controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act [12 U.S.C. 601 et seq., 611 et seq.]; and

(C) banks and State savings associations insured by 

the Federal Deposit Insurance Corporation (other 

than members of the Federal Reserve System), and 

insured State branches of foreign banks;

(2) the Federal Credit Union Act [12 U.S.C. 1751 et seq.], 

by the Administrator of the National Credit Union Administration with respect to any Federal credit union;

(3) subtitle IV of title 49, by the Secretary of Transportation, with respect to all carriers subject to the jurisdiction of the Surface Transportation Board;

(4) part A of subtitle VII of title 49, by the Secretary of 

Transportation with respect to any air carrier or any 

foreign air carrier subject to that part;

(5) the Packers and Stockyards Act, 1921 [7 U.S.C. 181 et 

seq.] (except as provided in section 406 of that Act [7 

U.S.C. 226, 227]), by the Secretary of Agriculture with 

respect to any activities subject to that Act; and

(6) subtitle E of the Consumer Financial Protection Act 

of 2010 [12 U.S.C. 5561 et seq.], by the Bureau, with 

respect to any person subject to this subchapter.

The terms used in paragraph (1) that are not defined in this 

subchapter or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have 

the meaning given to them in section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101).

§ 814 15 USC 1692l
18

(c) Agency powers

For the purpose of the exercise by any agency referred to

in subsection (b) of this section of its powers under any

Act referred to in that subsection, a violation of any requirement imposed under this subchapter shall be deemed

to be a violation of a requirement imposed under that Act.

In addition to its powers under any provision of law specifically referred to in subsection (b) of this section, each

of the agencies referred to in that subsection may exercise,

for the purpose of enforcing compliance with any requirement imposed under this subchapter any other authority

conferred on it by law, except as provided in subsection (d)

of this section.

(d) Rules and regulations

Except as provided in section 1029(a) of the Consumer

Financial Protection Act of 2010 [12 U.S.C. 5519(a)], the

Bureau may prescribe rules with respect to the collection

of debts by debt collectors, as defined in this subchapter.

§ 815. Reports to Congress by the Bureau; views of other

Federal agencies 

(a) Not later than one year after the effective date of this

subchapter and at one-year intervals thereafter, the Bureau

shall make reports to the Congress concerning the administration of its functions under this subchapter, including

such recommendations as the Bureau deems necessary or

appropriate. In addition, each report of the Bureau shall

include its assessment of the extent to which compliance

with this subchapter is being achieved and a summary of

the enforcement actions taken by the Bureau under section

1692l of this title.

(b) In the exercise of its functions under this subchapter, the

Bureau may obtain upon request the views of any other

Federal agency which exercises enforcement functions

under section 1692l of this title.

15 USC 1692m

§ 814 15 USC 1692l
19

§ 816 15 USC 1692n

§ 816. Relation to State laws

This subchapter does not annul, alter, or affect, or exempt 

any person subject to the provisions of this subchapter from 

complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this subchapter, and then only to 

the extent of the inconsistency. For purposes of this section, a 

State law is not inconsistent with this subchapter if the protection such law affords any consumer is greater than the protection provided by this subchapter.

§ 817. Exemption for State regulation

The Bureau shall by regulation exempt from the requirements of this subchapter any class of debt collection practices 

within any State if the Bureau determines that under the law 

of that State that class of debt collection practices is subject 

to requirements substantially similar to those imposed by this 

subchapter, and that there is adequate provision for enforcement.

§ 818. Exception for certain bad check enforcement programs

operated by private entities

(a) In general

(1) Treatment of certain private entities

Subject to paragraph (2), a private entity shall be excluded from the definition of a debt collector, pursuant 

to the exception provided in section 1692a(6) of this 

title, with respect to the operation by the entity of a 

program described in paragraph (2)(A) under a contract 

described in paragraph (2)(B).

(2) Conditions of applicability

Paragraph (1) shall apply if—

(A) a State or district attorney establishes, within the 

jurisdiction of such State or district attorney and 

with respect to alleged bad check violations that do 

not involve a check described in subsection (b), a 

pretrial diversion program for alleged bad check 

15 USC 1692p

15 USC 1692o

15 USC 1692n
20

§ 818 15 USC 1692p

offenders who agree to participate voluntarily in 

such program to avoid criminal prosecution;

(B) a private entity, that is subject to an administrative 

support services contract with a State or district 

attorney and operates under the direction, supervision, and control of such State or district attorney, 

operates the pretrial diversion program described in 

subparagraph (A); and

(C) in the course of performing duties delegated to it by 

a State or district attorney under the contract, the 

private entity referred to in subparagraph (B)—

(i) complies with the penal laws of the State;

(ii) conforms with the terms of the contract and 

directives of the State or district attorney;

(iii) does not exercise independent prosecutorial 

discretion;

(iv) contacts any alleged offender referred to in 

subparagraph (A) for purposes of participating 

in a program referred to in such paragraph—

(I) only as a result of any determination by 

the State or district attorney that probable 

cause of a bad check violation under State 

penal law exists, and that contact with the 

alleged offender for purposes of participation in the program is appropriate; and

(II) the alleged offender has failed to pay the 

bad check after demand for payment, pursuant to State law, is made for payment of 

the check amount;

(v) includes as part of an initial written communication with an alleged offender a clear and 

conspicuous statement that—

(I) the alleged offender may dispute the validity of any alleged bad check violation;

(II) where the alleged offender knows, or has 

reasonable cause to believe, that the al-
21

§ 818 15 USC 1692p

leged bad check violation is the result of 

theft or forgery of the check, identity theft, 

or other fraud that is not the result of the 

conduct of the alleged offender, the alleged 

offender may file a crime report with the 

appropriate law enforcement agency; and

(III)if the alleged offender notifies the private 

entity or the district attorney in writing, not 

later than 30 days after being contacted for 

the first time pursuant to clause (iv), that 

there is a dispute pursuant to this subsection, before further restitution efforts are 

pursued, the district attorney or an employee 

of the district attorney authorized to make 

such a determination makes a determination 

that there is probable cause to believe that a 

crime has been committed; and

(vi) charges only fees in connection with services 

under the contract that have been authorized by 

the contract with the State or district attorney.

(b) Certain checks excluded

A check is described in this subsection if the check involves, or is subsequently found to involve—

(1) a postdated check presented in connection with a payday loan, or other similar transaction, where the payee 

of the check knew that the issuer had insufficient funds 

at the time the check was made, drawn, or delivered;

(2) a stop payment order where the issuer acted in good 

faith and with reasonable cause in stopping payment on 

the check;

(3) a check dishonored because of an adjustment to the issuer’s account by the financial institution holding such 

account without providing notice to the person at the 

time the check was made, drawn, or delivered;

(4) a check for partial payment of a debt where the payee 

had previously accepted partial payment for such debt;
22

§ 818 15 USC 1692p

(5) a check issued by a person who was not competent, or 

was not of legal age, to enter into a legal contractual 

obligation at the time the check was made, drawn, or 

delivered; or

(6) a check issued to pay an obligation arising from a 

transaction that was illegal in the jurisdiction of the 

State or district attorney at the time the check was 

made, drawn, or delivered.

(c) Definitions

For purposes of this section, the following definitions shall 

apply:

(1) State or district attorney

The term “State or district attorney” means the chief 

elected or appointed prosecuting attorney in a district, 

county (as defined in section 2 of title 1), municipality, 

or comparable jurisdiction, including State attorneys 

general who act as chief elected or appointed prosecuting attorneys in a district, county (as so defined), municipality or comparable jurisdiction, who may be referred to by a variety of titles such as district attorneys, 

prosecuting attorneys, commonwealth’s attorneys, 

solicitors, county attorneys, and state’s attorneys, and 

who are responsible for the prosecution of State crimes 

and violations of jurisdiction-specific local ordinances.

(2) Check

The term “check” has the same meaning as in section 

5002(6) of title 12.

(3) Bad check violation

The term “bad check violation” means a violation of 

the applicable State criminal law relating to the writing 

of dishonored checks.

§ 819. Effective date

This title takes effect upon the expiration of six months 

after the date of its enactment, but section 809 shall apply only 

with respect to debts for which the initial attempt to collect occurs after such effective date.

15 USC 1692 note
23

Printed May 2013

Legislative Hist

House Report: No. 95-131 (Comm. on Banking, Finance, and Urban Affairs)

Senate Report: No. 95-382 (Comm. on Banking, Housing and Urban Affairs)

Congressional Record, Vol. 123 (1977)

April 4, House considered and passed H.R. 5294.

Aug. 5, Senate considered and passed amended version of 

H.R. 5294.

Sept. 8, House considered and passed Senate version.

Enactment: Public Law 95-109 (September 20, 1977)

Amendments: Public Law Nos.

99-361 (July 9, 1986)

101-73 (August 9, 1989)

102-242 (December 19, 1991)

102-550 (October 28, 1992)

104-88 (December 29, 1995)

104-208 (September 30, 1996)

109-351 (October 13, 2006)

111-203 (July 21, 2010)
Dodd-Frank Wall Street Reform and Consumer Protection Act,

Pub. L. 111-2013, 124 Stat. 1376 (approved July 21, 2010)

Sec. 1031. Prohibiting Unfair, Deceptive, or Abusive Acts or Practices. 

(a) In General.—The Bureau may take any action authorized under subtitle E to prevent a 

covered person or service provider from committing or engaging in an unfair, deceptive, 

or abusive act or practice under Federal law in connection with any transaction with a 

consumer for a consumer financial product or service, or the offering of a consumer 

financial product or service. 

(b) Rulemaking.—The Bureau may prescribe rules applicable to a covered person or service 

provider identifying as unlawful unfair, deceptive or abusive acts or practices in 

connection with any transaction with a consumer for a consumer financial product or

service, or the offering of a consumer financial product or service. Rules under this 

section may include requirements for the purpose of preventing such acts or practices. 

(c) Unfairness.—

(1) In general.—The Bureau shall have no authority under this section to declare an 

act or practice in connection with a transaction with a consumer for a consumer 

financial products or service, or the offering of a consumer financial product or 

service, to be unlawful on the grounds that such act or practice is unfair, unless 

the Bureau has a reasonable basis to conclude that—

(A) the act or practice causes or is likely to cause substantial injury to 

consumers which is not reasonable avoidable by consumers; and 

(B) such substantial injury is not outweighed by countervailing benefits to 

consumers or to competition. 

(d) Abusive.—The Bureau shall have no authority under this section to declare an act or 

practice abusive in connection with the provision of a consumer financial product or 

service, unless the act or practice—

(1) materially interferes with the ability of a consumer to understand a term or 

condition of a consumer financial product or service; or

(2) takes unreasonable advantage of—

(A) a lack of understanding on the part of the consumer of the material risks, 

costs, or conditions of the product or service; 

(B) the inability of the consumer to protect the interests of the consumer in 

selecting or using a consumer financial products or service; or

(C) the reasonable reliance by the consumer on a covered person to act in the 

interests of the consumer.

(e) Consultation.—In prescribing rules under this section, the Bureau shall consult with the 

Federal banking agencies, or other Federal agencies, as appropriate concerning the 

consistency of the proposal rule with prudential, market, or systemic objectives 

administered by such agencies. 

(f) Consideration of Seasonal Income.—The rules of the Bureau under this section shall 

provide, with respect to an extension of credit secured by residential real estate or a 

dwelling, if documented income by the borrower, including income from a small 

business, is a repayment source for an extension of credit secured by residential real 

estate or a dwelling, the creditor may consider the seasonality and irregularity of such 

income in the underwriting of and scheduling of payments for such credit. 
Sec. 1032. Disclosures. 

(a) In General.—The Bureau may prescribe rules to ensure that the features of any consumer 

financial product or service, both initially and over the term of the product or service, are 

fully, accurately, and effectively disclosed to consumers in a manner that permits 

consumers to understand the costs, benefits, and risks associated with the product or 

service, in light of the facts and circumstances. 

(b) Model Disclosures.—

(1) In General.—Any final rule prescribed by the Bureau under this section requiring 

disclosures may include a model form that may be used at the option of the 

covered person for provision of the required disclosures. 

(2) Format.—A model form issued pursuant to paragraph (1) shall contain a clear 

and conspicuous disclosure that, at a minimum—

(A) uses plain language comprehensible to consumers;

(B) contains a clear format and design, such as an easily readable type font; 

and 

(C) succinctly explains the information that must be communicated to the 

consumer. 

(3) Consumer Testing.—Any model form issued pursuant to this subsection shall be 

validated through consumer testing. 

(c) Basis for Rulemaking.—In prescribing rules under this section, the Bureau shall consider 

available evidence about consumer awareness, understanding of, and responses to 

disclosures or communications about the risks, costs, and benefits of consumer financial 

products or services. 

(d) Safe Harbor.—Any covered person that uses a model form included with a rule issued 

under this section shall be deemed to be in compliance with the disclosure requirements 

of this section with respect to such model form. 

(e) Trial Disclosure Programs.—

(1) In General.—The Bureau may permit a covered person to conduct a trial program 

that is limited in time and scope, subject to specified standards and procedures, 

for the purpose of providing trial disclosures to consumer that are designed to 

improve upon any model form issued pursuant to subsection (b)(1), or any other 

model form issued to implement an enumerated statute, as applicable. 

(2) Safe Harbor.—The standards and procedures issued by the Bureau shall be 

designed to encourage covered persons to conduct trial disclosure programs. For 

the purposes of administering this subsection, the Bureau may establish a limited 

period during which a covered person conducting a trial disclosure program shall 

be deemed to be in compliance with, or may be exempted from, a requirement of 

a rule or an enumerated consumer law. 

(3) Public Disclosure.—The rules of the Bureau shall provide for public disclosure of 

trial disclosure programs, which public disclosure may be limited, to the extent 

necessary to encourage covered persons to conduct effective trials.

(f) Combined Mortgage Loan Disclosure.—Not later than 1 year after the designated transfer 

date, the Bureau shall propose for public comment rules and model disclosures that 

combine the disclosures required under the Truth in Lending Act and sections 4 and 5 of 

the Real Estate Settlement Procedures Act of 1974, into a single, integrated disclosure for 

mortgage loan transactions covered by those laws, unless the Bureau determines that 

any proposal issued by the Board of Governors and the Secretary of Housing and Urban 

Development carries out the same purpose. 
1

Appendix B

Survey of Consumer Views on Debt: 

Overview and Preliminary Results

I. Introduction

The Consumer Financial Protection Bureau (Bureau) conducted the Survey of Consumer Views 

on Debt between December 2014 and March 2015 to examine the debt collection experiences 

and preferences of a nationally representative sample of consumers with credit records. The 

survey was designed to provide the first comprehensive and representative information on 

consumers’ experiences with debt collection in the United States. Data from consumer 

complaints regarding debt collection and from debt collection firms inform the Bureau’s work, 

but these data sources may provide an incomplete view of consumers’ debt collection 

experiences. Consumer complaint data, for example, reflect only the experiences of those 

consumers who contacted the Bureau or other governmental agencies and therefore may not be 

representative of consumers’ experiences generally. Information and aggregated statistics from 

debt collection firms may be based on large samples and can provide detail that is helpful for 

understanding collection processes and practices. Information from firms, however, generally 

cannot capture the consumer’s perspective. Thus, the Survey of Consumer Views on Debt 

expands the Bureau’s basis for understanding the process of debt collection in the United States 

and, in turn, how the proposals that the Bureau is considering for regulations regarding 

collection might affect consumers and firms.

The next section briefly summarizes the survey’s design and implementation, and the third 

section presents some initial findings. The Bureau continues to review and process survey 

responses, so these findings are preliminary and subject to revision; however, the Bureau 

expects any such changes to be small and unlikely to alter broad conclusions. The final section 

summarizes the Bureau’s plans for preparing and distributing further documentation and 

analysis of the survey results.

II. Survey overview

A. Sample and data collection process

The Bureau’s survey proceeded in two phases and was sent to 10,876 consumers in total. First, 

to gauge the potential success of the survey, the Bureau conducted a pilot survey of 997 

consumers in December 2014. Responses from the pilot indicated that consumers could follow 

the question sequences and were willing to complete the survey. With the success of the pilot, 

the main survey of 9,879 consumers began in mid-January 2015, and data collection continued 

into March 2015. For both the pilot and main phases, the survey invitation and reminder letters 

were in both English and Spanish, and consumers were given the option to complete the survey 

in English either on paper or online. The main survey additionally included an online Spanish 

option. The survey questionnaires for the pilot and main phases were identical, so the 

preliminary results presented in the next section combine responses from both surveys.

The Bureau selected the sample from the Bureau’s Consumer Credit Panel (CCP), a 1-in-48 

random sample of credit records stripped of direct identifiers1 from one of the three nationwide 

 1 For more information on the privacy protections associated with this survey, see the governing 

Consumer Experience Research Privacy Impact Assessment, available at
2

credit reporting agencies.2 One advantage of this approach is that it made it possible to mail a 

larger fraction of surveys to consumers who were more likely to have had experience with debt 

collection. Most consumers in a simple random sample of credit records would not have had a 

recent debt collection. To ensure that the survey included a sufficient number of responses from 

consumers who had experienced debt collection, credit records with a recent 60-day 

delinquency on a loan, a reported collection, or both as of September 2014 were sampled at a 

higher rate than other records. A greater proportion of not only records with collections but also 

records with a 60-day delinquency were sampled because many consumers who are delinquent 

in paying a debt may experience collection activity either by the creditor or a third-party 

collector without a collections tradeline being reported to credit reporting agencies. The survey 

weights account for the different sampling rates, so the survey results are representative of all 

consumers with a credit record.

The information included in the CCP such as credit score, age, and recent delinquencies 

strengthens the survey in two additional ways. First, this information is captured for consumers 

who did not respond to the survey as well as for those who responded. Statistical bias in 

estimates due to nonresponse is a concern for almost all surveys. The information contained in 

credit records provides a stronger basis to examine and to adjust for potential nonresponse bias 

than is generally available in most surveys, which typically do not have similarly extensive 

information for both respondents and non-respondents. Second, in some cases, information 

from credit records can be brought to bear in reviewing, editing, and statistical processing of 

incomplete or ambiguous survey responses.

B. Survey topics

The survey questionnaire comprised 67 questions covering seven topic areas. All respondents 

were asked to complete sections A, F, and G. Section A asked about consumers’ general 

financial situation and credit-market experiences. Section F assessed preferences for ways that 

creditors or collectors could contact the consumer (for example, home phone, cell phone, letter, 

or email). Section G collected data on demographic characteristics, household income, and 

demographic or economic events that the household had experienced in the prior year.

Questions in sections B through E pertained only to consumers who indicated that a creditor or 

debt collector had contacted them in the prior year about a debt in collection.3 Section B asked 

about all such collection attempts in the past year, including the types of debt in collection, 

whether the consumer paid a debt after being contacted, and whether the consumer felt any of 

the collections were in error.

The questions in Section C focused on details of the most recent collection attempt, including 

the ways in which the consumer was contacted, the frequency of contacts, and whether the 

creditor or a collector was pursuing payment. Section C also solicited consumers’ views on, for 

 

http://files.consumerfinance.gov/f/201406_cfpb_consumer-experience-research_pia.pdf and System of 

Records Notice CFPB.022, Market and Consumer Research Records, available at

http://www.consumerfinance.gov/privacy/system-records-notices/market-and-consumer-researchrecords-2/.

2 This document uses the term “consumer” for brevity, but because the sample was drawn from the CCP, 

the sample and population are, more precisely, consumers with a credit record.

3 The questions in these sections and elsewhere about consumers’ experiences asked, specifically, about 

the period since January 2014, roughly one year before the survey was conducted.
3

example, whether the creditor or debt collector had been polite, provided accurate information, 

or had contacted the consumer too often. 

Section D focused on disputed debts.4 The section examined, for example, how and why 

consumers disputed debts as well as the creditor’s or collector’s response to the dispute. Section 

E collected information on the prevalence of collections-related lawsuits and whether 

consumers who were sued attended the court hearing.

C. Response rates

About 20 percent of consumers invited to complete the survey did so, yielding a sample of 2,133 

survey responses. The response rate for the main survey (21 percent) was about twice the rate 

for the pilot (10 percent). Two facets of data collection likely explain a large part of the lower 

response rate for the pilot. First, the data-collection period for the pilot coincided with 

December holidays, when mail may have been slowed and when consumers may have been 

traveling, busier than normal, or getting more mail than usual. Second, data collection for the 

pilot spanned about two-and-a-half weeks, compared with roughly seven-and-a-half-weeks for 

the main survey.5

The response rate for consumers whose credit record contained a new 60-day past-due loan or a 

newly reported collection in the prior year was about 15 percent. By comparison, 30 percent of 

sampled consumers whose credit record did not include a new delinquency or collection 

responded to the survey. This difference in response rates might be expected because finances—

and likely debt and debt collection in particular—are sensitive topics. Finally, the response rate 

for consumers who appear to have moved from one census tract to another between September 

2014 and March 2015 was 13 percent, which was about eight percentage points lower than the 

response rate for other consumers.6

III.Selected Preliminary Results

A. Prevalence of collections and lawsuits

As outlined above, the Survey of Consumer Views on Debt provides some of the first estimates 

about debt collection in the United States that draw on a nationally representative sample of 

consumers.7 The survey responses suggest, for example, that about one in three consumers with 

a credit record were contacted by a creditor or collector trying to collect a debt in the year prior 

 4 The survey did not explicitly define disputes, so the consumers’ perspectives on whether they had 

disputed a debt may differ from the definition of dispute used by a given creditor or collector or what may 

constitute disputes pursuant to the FCRA and FDCPA.

5 The pilot phase included a single reminder letter sent about one week after the initial survey invitation 

letter. The main survey included three follow-up letters, the second of which included another copy of the 

paper questionnaire in case consumers had misplaced the first one.

6 The CCP data do not contain address or other identifying information.

7 All estimates in this part are based on survey weights that account for: (i) the different sampling rates for 

different sets of credit records; and (ii) differences in response rates across types of consumers. The 

estimates also reflect initial processing and data editing (based, for example, on written explanations 

respondents may have provided), and they are subject to change due to further processing and editing.
4

to the survey.8 Further, based on the survey, five percent of all consumers with a credit record, 

or 15 percent of consumers who had experienced a collection attempt in the prior year, said that 

they had been sued in the prior year by someone seeking repayment of a debt.

B. The consumer’s perspective

1. Collections 

The survey results indicate that consumers who had been contacted about repaying a debt in the 

prior year generally had been contacted about more than one debt. Most consumers who had 

been contacted in the prior year, 57 percent, reported attempts to collect payment on between 

two and four debts in the prior year, and about 15 percent were reportedly contacted about at 

least five different debts.

In many cases, however, consumers believed that attempts to collect a debt may be in error. 

More specifically, 28 percent of consumers who had been contacted about a debt in the prior 

year indicated that these contacts included attempts to collect a debt that the consumer did not 

owe. A slightly greater fraction, 33 percent, reported attempts to collect a debt in the wrong 

amount. An estimated 12 percent of consumers who had been contacted about a debt indicated 

these contacts included attempts to collect a debt owed by a family member for whom the 

consumer had not co-signed, and six percent reported that they had experienced attempts to 

collect debt owed by a deceased family member.

The survey results indicate that nine percent of all consumers with a credit record had disputed 

a debt, either with a creditor or with a collector, in the year prior to the survey. This estimate 

implies that 27 percent of consumers who had experienced a collection attempt in the prior year 

had disputed a debt. The survey did not explicitly define disputes, so consumers’ perspectives 

on whether they had disputed a debt may vary and may differ from a creditor’s or collector’s 

determination that the consumer disputed a debt.9 The disputes captured by the survey 

included verbal (e.g., by phone or in person) and written (e.g., by letter or email) disputes with 

either the creditor or the collector.

2. Contacts

The survey collected details about the most recent debt that consumers had been contacted 

about, including information about whom the consumer interacted with and how frequently the 

consumer was contacted regarding that debt. Among consumers who had been contacted about 

a debt in the prior year, 22 percent were reportedly last contacted about the debt by a creditor, 

and 64 percent were reportedly last contacted by a debt collector.10 This survey question was 

one of a few that included “Don’t know” as a response option, to measure how well consumers 

can discern whom they are interacting with in the context of collections. About one in seven 

 8 Recall that the pilot was completed in December 2014 and the main survey began in January 2015, so for 

most respondents the reference period for the survey questions about experiences since January 2014 was 

roughly one year.

9 Creditors and collectors may, but do not always, have obligations to respond to disputes under the FCRA 

and the FDCPA.

10 The survey contained a definition of debt collector as follows: “A debt collector is a person or company 

other than the creditor that tries to collect on a debt, such as an attorney, a debt collection firm, or other 

third party.”
5

consumers contacted about a collection in the prior year were uncertain whether the most recent 

contact was from a creditor or debt collector.

The reported frequency of contacts, including both successful and attempted contacts, varies 

considerably. In particular, 34 percent of consumers who were contacted about a collection in 

the prior year were usually contacted less than once per week, whereas 16 percent were usually 

contacted 8 or more times per week, i.e., more than once per day on average. This question 

captured the frequency of contacts for the debt that the consumer had most recently been 

contacted about.11

The survey asked about other aspects of the most recent collection experience including 

consumers’ agreement or disagreement with descriptions of interactions with the creditor or 

collector.12 Most consumers who had been contacted about a debt in collection (85 percent) said 

the creditor or collector stated that the reason for contacting the consumer was to collect a 

debt.13

For several of these questions, the responses included substantial shares both of consumers that 

agreed as well as of consumers that disagreed, which suggests that consumers’ experiences can 

vary considerably. For example, 57 percent of consumers who had been contacted about a debt 

in collection said that the creditor or collector that most recently contacted them provided 

accurate information. Similarly, about half of consumers who had been contacted about a debt 

in collection reported that the creditor or collector provided options to pay the debt or addressed 

their questions clearly and accurately. The survey responses indicate that 62 percent of 

consumers who had been contacted about a debt in collection felt that they were contacted too 

often. Smaller but nonetheless sizable fractions of consumers who had been contacted about a 

debt in collection said the creditor or collector threatened them (27 percent) or reported that the 

creditor or collector called before 8:00 a.m. or after 9:00 p.m. (35 percent).

IV. Future Survey Results and Information

The Survey of Consumer Views on Debt complements data available, for example, from debt 

collectors or from government agencies to understand consumers’ experiences with debt 

collection. To date, the Bureau has completed much of the data processing necessary to fully 

analyze the survey results, but this work is ongoing. This report provides preliminary results for 

 11 Consumers’ estimates of the frequency of contacts may be subject to uncertainty, particularly for 

attempted phone contacts before a creditor or debt collector had initially reached a consumer, when a 

consumer may not have known who was attempting contact. Once a creditor or collector had reached a 

consumer, however, consumers may be reporting on attempted, as well as successful, contacts if they 

identified the caller. The survey does not purport to distinguish between these varying scenarios in its 

questions or analysis.

12 It seems likely that consumers’ responses to many of these questions about interactions with the 

creditor or debt collector are implicitly based on successful contacts. In contrast, the question about the 

usual frequency of contacts, for example, explicitly asked consumers to consider both successful and 

attempted contacts.

13 Most consumers who had been contacted about a debt in collection also indicated that the creditor or 

collector communicated in the consumer’s preferred language, but this proportion, 77 percent, is lower 

than expected. Analysis of responses to this question suggests that the question may have been 

interpreted by some consumers as referring to the tone and tenor of the communications, rather than, for 

example, a consumer’s preference for Spanish rather than English.
6

several of the survey questions as context for the August 2016 meeting of small-business 

representatives about the potential effects of proposals that the Bureau is considering for 

regulations regarding debt collection. After processing of the survey data is completed, the 

Bureau intends to report additional technical documentation of the survey methodology and 

tabulations from the survey. The Bureau also expects that the survey will form the basis for indepth studies of consumer finances and financial decisionmaking.
1

Appendix C

This Appendix lists the specific items of fundamental information that a collector may obtain 

and review for warning signs, in addition to the debt owner’s representation of accuracy, to 

support initial claims of indebtedness. A collector who has each of these specific elements (plus 

a representation of accuracy and no warning signs of problems) would have a reasonable basis 

for claims of indebtedness. A collector nevertheless may be able to acquire a reasonable basis 

without each specific element. However, the collector would bear the burden of justifying its 

alternative approach. For each debt, the Bureau is considering identifying the following 

fundamental information:

• The full name, last known address, and last known telephone number of the consumer; 

• The account number of the consumer with the debt owner at the time the account went into 

default;

• The date of default, the amount owed at default, and the date and amount of any payment or 

credit applied after default; 

• Each charge for interest or fees imposed after default and the contractual or statutory source 

for such interest or fees; and

• The complete chain of title from the debt owner at the time of default to the collector.
1

Appendix D

This Appendix provides additional detail on the proposals under consideration regarding 

collector obligations for responding to consumer disputes. As discussed in more detail above, 

for timely, written disputes, the Bureau is considering proposing that collectors provide 

documentation to the consumer establishing the information specified in the relevant category 

of dispute. For oral or non-timely disputes, the Bureau is considering proposing that the types 

of documentation specified below may be reviewed to establish reasonable support for claims of 

indebtedness in certain categories of consumer disputes. Collectors could also support claims of 

indebtedness in other ways, such as by reviewing other documentation, but would bear the 

burden of justifying any alternative approach.

Some disputes are generic in nature, such as the statement by a consumer that “I dispute the 

debt” with no additional information as to the basis of the dispute. Other disputes are specific in 

nature, such as statements by the consumer that explain the basis for the dispute (e.g., “the 

amount is wrong,” “already paid,” or “I am not the person who owes this debt”). The proposal 

under consideration would establish four general categories of dispute: (1) generic disputes; 

(2) wrong amount disputes; (3) wrong consumer disputes; (4) wrong collector disputes. Each of 

these dispute categories would correspond to a box consumers could check on the tear-off part 

of the validation notice, which is discussed above in part III.C. Additionally, the proposal under 

consideration would require that collectors have documentation (not just information) to verify 

disputes in each of these categories. The documentation requirement could be satisfied through 

collector review of copies of account-level documents establishing the required information. In 

the case of a timely written dispute, the proposal under consideration would require collectors to 

mail that documentation to consumers.

• Generic disputes. For generic disputes, i.e., disputes that do not provide a reason or basis 

for the dispute, verification would consist of documentation establishing the following basic 

facts about the debt:

o the first and last name, address, and account number (with the creditor at the time of 

default) of the debtor;

o the date of default and date of last payment; 

o the name and address of the creditor at default; and 

o the amount of the debt balance at default and any post-default interest and fees, and a 

description of the amount owed.

This documentation would establish information that is substantially similar to the 

fundamental information that satisfies part of a collector’s obligation to possess reasonable 

support for initial claims of indebtedness. However, verification for generic disputes would 

omit documentation establishing the chain of title, phone number, and the contract’s terms 

and conditions related to any post-default amount. Such documentation may be more 

relevant to specific disputes about the identity of the collector, the identity of the consumer, 

or the amount of the debt, respectively. Because the proposal under consideration tailors 

the debt collector’s obligations to the basis for the dispute, such information has been 

included in the appropriate category, as described below.

Documentation evidencing such information would depend on the type of debt but may 

include a combination of the following: (1) a charge-off statement; (2) the most recent billing 
2

or periodic statement; or (3) a contract, note, application, or service agreement.

• Specific Disputes. For each of the three types of specific disputes discussed below, 

verification would consist of documentation establishing basic facts about the debt

responsive to a generic dispute, combined with documentation establishing additional 

information responsive to the basis of the dispute.1

Dispute as to amount of debt. For disputes in which the consumer challenges the amount 

that the debt collector seeks to collect, verification would consist of documentation 

establishing the following facts:

o the amount of principal, interest, or fees disputed; 

o the basis for seeking to collect any such disputed amount (e.g., late fee or a charge for 

purchase on a credit card and the date the charge was made), including the terms and 

conditions relevant to collecting any post-default interest or fees, if applicable; 

o the date and amount of each payment (or other credit) after default; and

o any additional information required to respond to the specific dispute.

Documentation evidencing such facts would depend on the type of debt and the nature of the 

dispute but may include the following: a copy of a billing or periodic statement(s) covering 

the relevant time period, and/or the underlying agreement describing the applicable interest 

rate or fees.

Dispute as to wrong consumer. For disputes in which the consumer asserts that the debt 

collector is attempting to collect the debt from the wrong person or the consumer asserts 

that she or he did not incur the debt, verification would consist of documentation containing 

the following information:

o either:

§ information that the consumer provided to the creditor with respect to the 

consumer’s date of birth and information obtained with respect to the consumer’s 

addresses throughout the life of the account; or

§ a number that uniquely identifies the consumer, such as a taxpayer ID number, as 

defined in 26 CFR 301.6109–1 (e.g., SSN, EIN, ITIN);

o the consumer’s original agreement or original consent to the debt; and

o any additional information required to respond to the specific dispute. 

Documentation evidencing such facts would depend on the type of debt but may include the 

following: a copy of the credit application, new patient form, or document reflecting 

 1 In the rare circumstances where documentation establishing one of the required items of information 

does not exist, the Bureau is considering allowing collectors to provide an affidavit based on personal 

knowledge, setting out facts that would be admissible in court and showing that the affiant is competent 

to testify to the facts stated.
3

information gathered from the creditor’s Customer Identification Program, and a copy of the 

contract, note, application, or service agreement.

Dispute as to wrong collector. Finally, for disputes in which the consumer asserts that the 

debt collector is not the owner of the debt or is not entitled to collect on the debt, verification

would consist of documentation establishing the following facts:

o the names and addresses of all persons that obtained the debt after default (as debt 

owners or third-party collectors), and the date of and parties to each purchase, 

assignment, or transfer; and 

o any additional information required to respond to the specific dispute. 

Documentation evidencing such information would depend on the type of debt but may 

include a copy of the bill of sale or assignment of the debt.
1

Appendix E

• Information affecting collector obligations to comply with the FDCPA or rules to implement 

the FDCPA. The proposal under consideration would require subsequent debt collectors to 

obtain (and prior collectors to provide) certain information consumers provided to prior 

collectors that obligates collectors to take or refrain from taking certain action relating to 

rights arising under certain substantive provisions of the FDCPA and the proposals under 

consideration. Such information might include the following:

o Whether the debt was disputed in writing within 30 days of receipt of the validation 

notice and either (1) a statement that the debt was verified; or (2) the details of the 

dispute, including information the consumer submitted or the prior collector provided; 

o Whether the debt was disputed orally or more than 30 days after receipt of the validation 

notice, and either (1) a statement that the claims were substantiated; or (2) the details of 

the dispute, including information the consumer submitted or the prior collector 

provided;

o Any time, place, or method of communication that the consumer stated is inconvenient;

o The name and address of any attorney who is representing the consumer in connection 

with the debt;

o Whether the consumer’s employer prohibits the consumer from receiving collection 

communications at the place of employment;

o Whether the collector has made confirmed consumer contact, and the contact 

information used to establish such contact; 

o Whether the collector has provided the time-barred debt disclosure; and

o Whether the consumer is deceased and, if so, the date of death.

• Information affecting collector obligations to comply with other federal laws. The Bureau 

also is considering a proposal to require that subsequent collectors have (and prior collectors 

provide) certain information consumers provided to prior collectors connected to other legal 

rights granted to consumers. Other federal consumer protection laws directly require 

collectors to take or refrain from taking certain actions depending on what they know about 

the consumer. For example, the Servicemembers Civil Relief Act (SCRA) gives active duty 

servicemembers certain protections relevant to the collection of certain debts. Similarly, 

under Federal student loan programs, consumers also have the right to apply for and, if 

qualified, enter into a rehabilitation program for defaulted loans. This information might 

include the following: 

o Whether the consumer is an active duty service member and whether the consumer has 

secured an interest rate reduction pursuant to the SCRA;

o For defaulted student loans, whether the consumer has applied for discharge of the debt 

on a basis that imposes a collections pause, and the date of the application; 

o For defaulted student loans eligible for rehabilitation, the terms of any rehabilitation 

agreement, the number of payments made, and any requested adjustment to the amount 
2

of the monthly payment; and

o Whether the consumer’s income and assets are exempt under federal or state laws from a 

judgment-creditor seeking garnishment related to debt collection litigation. 

• Certain other information that may be beneficial to consumers. The Bureau is considering 

requiring subsequent collectors to obtain (and prior collectors to transfer) certain other 

information that does not affect the legal obligations of subsequent collectors but may 

facilitate collector conduct that may be beneficial to consumers. At this time, the Bureau is 

considering including the language preference of the consumer, and whether the consumer 

has submitted an oral or written cease communication request. The Bureau is interested in 

feedback regarding the costs and benefits of transferring this information.
1

Appendix F

The proposals under consideration would require validation notices to contain enhanced and 

clarified information about the debt and the consumer’s rights, along with an action-item “tearoff” to facilitate the exercise of dispute and original-creditor-information rights. The 

requirements under consideration are described below.

• Information about the debt on the validation notice. The Bureau is considering a proposal to 

require that validation notices contain the following information: 

o the consumer’s full name and address;

o the debt collector’s name and address;1

o a description of the debt type (e.g., “credit card”); 

o the merchant brand associated with the debt (e.g., the name of the retailer that appears 

on a branded card), if applicable;

o the name of the creditor at the time of default (the “default creditor”);2

o the account number with the default creditor; 

o the amount owed on the default date;3

o the creditor to which the debt is currently owed;

o an itemization of interest, fees, payments, and credits since the default date; and

o the amount owed currently.

• Information about consumer rights on the validation notice. Section 809(a) expressly 

requires that the validation notice state that (1) the debt collector will assume the debt is 

valid unless the consumer disputes it (or a portion of it) within 30 days of receiving the 

notice; (2) if the consumer timely disputes the debt (or a portion of it), the debt collector will 

obtain and mail verification or a copy of a judgment to the consumer; and (3) the consumer 

may request and receive the name and address of the original creditor, if different from the 

current creditor. The Bureau is considering a proposal to require that validation notices 

contain the following additional statements:

o A statement describing the effect of submitting either an oral dispute or any dispute 

outside of the 30-day period—i.e., that before the debt collector may continue making 

collection communications it must confirm that it has a reasonable basis for its claims of 

 1 The proposals under consideration would also permit a debt collector to include its website address.

2 The proposals under consideration would permit a debt collector to omit the name of the creditor at the 

time of default from the validation notice as long as it discloses this information elsewhere when it 

provides the validation notice. The Bureau’s model notice would include the name of the creditor at the 

time of default.

3 The default date would appear in the validation notice as a calendar date—e.g., “January 1, 2016.”
2

indebtedness;4

o A statement explaining the “collections pause”—i.e., the requirement that a debt collector 

in receipt of a timely written dispute or an original-creditor-information request cease 

collection until it verifies the debt or provides the name and address of the original 

creditor, as appropriate; and

o A statement that, for additional information, the consumer should refer to the 

accompanying Statement of Rights and visit the Bureau’s website. 

• Action-item “tear-off” on the validation notice. The Bureau is considering a proposal to 

require that the validation notice contain a “tear-off” with choices to facilitate the exercise of 

consumer rights. The tear-off would appear on the bottom of the validation notice. Once 

detached, it would allow consumers to dispute the debt by checking a box next to one or 

more pre-written statements—for example, “This is not my debt” or “The amount is 

wrong”—and returning it to the debt collector. Because the tear-off would contain 

consumers’ selection of identified types of reasons for disputes, the Bureau believes that debt 

collectors would experience less uncertainty about the basis for many disputes, allowing 

collectors to respond more efficiently to them. The tear-off would also include an option 

allowing consumers to request the name and address of the original creditor.

The proposals under consideration would also permit debt collectors to include an optional 

statement in the body of the validation notice informing consumers that they may contact 

the debt collector to discuss payment options, along with a check-off box within the tear-off 

that allows a consumer to indicate that he or she is submitting a payment.

The following page contains an example of what a model validation notice might look like.5

 4 The proposals under consideration would permit a debt collector to omit such a statement from the 

validation notice if the collector discloses it elsewhere when providing the validation notice. The Bureau’s 

model notice would include such a statement.

5 The example model validation notice provided consumers 30 days from the date they received the 

example notice during a consumer testing session (i.e., December 12, 2015) to dispute the debt (i.e., 

January 11, 2016).
North South Group To: Ms. Mary Smith

P.O. Box 121212 2323 Park Street

Pasadena, CA 91111-2222 Apartment 342

(800) 123-4567 from 8am to 8pm EST, Monday to Saturday Arlington, VA 22201

www.nsgrp.com

December 12, 2015 Reference: 564-345

Mail this form to:

North South Group

P.O. Box 121212

Pasadena, CA 91111-2222

Ms. Mary Smith

2323 Park Street

Apartment 342

Arlington, VA 22201



North South Group is a debt collector. We are trying to collect a debt that you owe to ABC Credit. 

We will use any information you give us to help collect the debt. 

Our information shows:

You had a Main Street Store credit card from Bank of Rockville with account number 

123-456-789. ABC Credit now owns that account, so now you owe ABC Credit.

As of January 2, 2013, you owed: $ 1,234.56

Between January 2, 2013 and today:

You were charged this amount in interest: + $ 75.00

You were charged this amount in fees: + $ 25.00

You paid this amount toward the debt: – $ 50.00

Total amount of the debt now: $ 1,284.56

How can you dispute the debt?

 Write to us by January 11, 2016 to dispute all or part of the debt. We must stop collection on any amount you dispute 

until we send you information that shows you owe the debt. If you write AFTER January 11, we are not required to send that 

information to you, but we must stop collection until we confirm that our information is correct. For ease, you may use the form 

below or you may write to us without the form. You may also include supporting documents.

 Call us to dispute. But if you do call, we are not required to send you information that shows you owe the debt. We 

must stop collection on any amount you dispute until we confirm that our information is correct.

If we do not hear from you, we will assume that our information is correct.

 Ask us to send you the name and address of the original creditor. Write by January 11, 2016 and we will stop collection until 

we send you that information. For ease, you may use the form below or you may write to us without the form.

 Learn more about your rights under federal law. For more information, see the enclosed Know your debt collection rights 

document or go to the Consumer Financial Protection Bureau’s website at www.consumerfinance.gov. 

 Contact us about your payment options.

What else can you do?

How do you want to respond to this notice?

Check all that apply:

 I want to dispute the debt because I think:

 This is not my debt. 

 The amount is wrong. 

 I already paid this debt in full or I settled it.

 You are not the right person to pay.

 Other or more detail: ____________________

 I want you to send me the name and 

address of the original creditor.

 I enclosed this amount: $

Make your check payable to North South Group.

Include the reference number 564-345.
1

Appendix G

The proposals under consideration would require debt collectors to provide consumers with a 

one-page Statement of Rights. The proposed document would include plain-language 

explanations of the following information:

• The consumer’s right under the FDCPA to preclude a collector from contacting him or her at 

a time or place that the collector knows or should know (including based on information 

from the consumer) is inconvenient for the consumer;

• the consumer’s right under the FDCPA to have the debt collector cease communications 

upon written request;

• the consumer’s right under the FDCPA to dispute the debt;

• the restrictions under the FDCPA on a debt collector communicating with third parties 

about a debt;

• the prohibition under the FDCPA on harassment, oppression, or abuse by debt collectors;

• the prohibition under the FDCPA on false or misleading representations by debt collectors; 

• the consumer’s right under the Fair Credit Reporting Act to obtain a copy of the consumer’s 

credit report from consumer reporting agencies and dispute any inaccurate or incomplete 

information that appears in it; and

• the existence of restrictions and prohibitions under various federal and state laws on 

collectors garnishing certain assets and income.

The document also would include a Spanish-language statement that the consumer may obtain a 

translated version of the Statement of Rights and validation notice template from the Bureau’s 

website or the debt collector.

The following page contains an example of what a Statement of Rights might look like.
What you can do

§ You can decide how and when debt 

collectors can contact you.

A debt collector cannot contact you before 8 am 

or after 9 pm except in limited circumstances. 

Also, if you tell a debt collector verbally or in 

writing that a certain time or place is inconvenient, 

such as while you are at work, the collector 

cannot contact you at that time or place.

§ You can stop communications.

If you write the debt collector and instruct them to 

stop all contact with you, the collector must stop. 

This does not make the debt go away, and in limited 

circumstances the collector may follow up with you.

§ You can dispute the debt at any time.

You can find further details about how to dispute 

your debt on the notice describing your debt.

§ You can obtain a credit report and dispute 

any item on it.

Under the Fair Credit Reporting Act, you may 

obtain a free copy of your credit report at 

annualcreditreport.com. If a debt appears on your 

credit report, you can dispute it if you believe the 

information is inaccurate.

What debt collectors cannot do

§ They cannot harass or be abusive to you.

For example, a debt collector cannot threaten 

you with violence or harass you with obscene 

language. A collector also cannot claim that you 

have committed a crime by not paying a debt. A 

collector cannot contact you more than a certain 

number of times each week.

§ They cannot deceive you.

A debt collector cannot make a false or 

misleading statement about what you owe.

§ They cannot discuss your debt with others.

A debt collector generally cannot communicate 

about your debt with other people (such as your 

neighbors, friends, and relatives) unless you give the 

collector permission. However, a collector is allowed 

to contact others to find out how to reach you.

§ They cannot garnish certain types of assets 

or income.

Federal and state laws may prevent a debt 

collector from taking certain assets and income to 

pay the debt. For example, collectors may not be 

able to take SSI, Social Security, public assistance, 

veterans’, disability, unemployment, and workers’ 

compensation benefits.

This form explains some of your rights under the Fair Debt Collection 

Practices Act and other laws. You may want to keep this form for reference.

Know your debt collection rights

Need help?

The Consumer Financial Protection Bureau (CFPB) is a federal government agency built to protect 

consumers. Visit our website at consumerfinance.gov/debtcollection or call 855-411-CFPB (2372) to 

learn more about your rights and what you can do next. 

Para obtener una copia de este documento en español, visite consumerfinance.gov/es or comuníquese 

con el cobrador de deudas.

Consumer Financial

Protection Bureau
1

Appendix H

This appendix describes certain specific practices that the Bureau is considering clarifying 

should be deemed to be violations of the FDCPA. Specifically, the Bureau believes that this 

rulemaking presents an opportunity to identify practices that violate sections 806 through 808 

of the FDCPA, thereby providing clarity as to what is and is not (or shall or shall not be) a law 

violation. The proposals under consideration are described below.

1. Collector contact information

FDCPA section 806(6) provides that, in general, debt collectors violate the FDCPA if they place 

telephone calls without meaningfully disclosing their identity. Section 807 of the FDCPA 

separately prohibits debt collectors from using false, deceptive, or misleading representations or 

means in connection with the collection of any debt.

With the prevalence of caller identification technology (caller ID), many consumers rely on 

incoming call information when deciding whether to answer a call. Collectors, on the other 

hand, have increasing options to use caller ID information to obscure their identities. For 

example, collectors can block their contact information altogether, or they can use meaningless 

or non-working phone numbers or use false names, such as a generic company name, to “spoof” 

or conceal the collector’s identity. When caller ID information is blocked or falsified, consumers 

cannot make an informed decision about whether to pick up the call. They also cannot call back 

the person who was calling them—whether to engage in a communication or to tell the person to 

stop calling—which can result in consumer annoyance or harassment.

To address these concerns, the Bureau is considering a proposal that would require debt 

collectors to display working, in-bound, toll-free telephone numbers to appear on caller ID 

screens of consumers. The Bureau believes that maintaining and displaying such numbers 

would be only minimally burdensome for collectors. The Bureau is considering applying 

comparable requirements to newer technologies, for example, requiring collectors to display in 

the body of their email messages a working, in-bound, toll-free method to reach the collector.

2. Unavoidable charges for communications

The Bureau is considering a proposal that would prohibit a debt collector from contacting any 

person (i.e., a consumer or a third party in a location communication) using a communication 

method that would cause the person to incur an unavoidable charge. Recipients of such 

communications, however, could consent to being contacted through that communication 

method and incurring such charges. The proposal under consideration would be technologyneutral (i.e., it would apply to all technologies, even those not yet in existence).

For example, the cost of a text message sometimes is charged to the message recipient upon 

delivery and thus cannot be avoided. The proposals under consideration would require debt 

collectors, absent consent, to use Free-to-End-User text messaging so that the debt collector, 

rather than the recipient, would incur the charge for the message. On the other hand, recipients 

of phone calls and emails can avoid being charged for those communications by, for example, 

not picking up the phone, or by reading emails only when connected to WiFi. Debt collectors 

thus could call mobile phones and send emails without taking special precautions regarding the 

charges associated with those communications.
2

3. Certain false, misleading, or unsubstantiated claims

The Bureau is considering a proposal to clarify that prohibited false, misleading, or 

unsubstantiated claims include claims: (1) that a person (e.g., a surviving spouse of a decedent

in many circumstances) is responsible for a consumer’s debts; (2) about the consequences for 

consumers of paying or not paying debts (e.g., a military servicemember having his or her 

security clearance revoked); and (3) relating to the debt collector’s location or identity (e.g., a 

debt collector pretending to be located in the same city or town as the consumer).

4. Identifying information about the debt collector

Several provisions of FDCPA section 808 generally provide that it is unfair for a debt collector to 

communicate with a consumer in a way that would reveal to others that the communication 

relates to the collection of a consumer’s debt. Specifically, section 808(7) prohibits 

communications with a consumer regarding a debt by post card, and section 808(8) provides 

that, when a debt collector communicates with a consumer by mail or by telegram, the debt 

collector may not use any language or symbol on the envelope other than the collector’s address. 

The debt collector also may include his business name on the envelope, but only if the name 

does not indicate that he is in the debt collection business.

The proposals under consideration would adapt these standards to newer technologies such as 

email by specifying that a debt collector cannot send an email message to a consumer if the 

message’s “from” or “subject” lines contain information that would reveal that the email is about 

a debt.

5. Incidental fees

The Bureau is considering clarifying that incidental fees, including payment method 

convenience fees, that are collected either directly or indirectly1 by the collector are permissible 

only if: (1) state law expressly permits them; or (2) the consumer expressly agreed to them in the 

contract that created the underlying debt and state law neither expressly permits nor prohibits 

such fees. Incidental fees expressly permitted by contract would be impermissible if prohibited 

under state law.

 1 The proposals under consideration would specify that a debt collector charges convenience fees 

indirectly when, for example, a third party charges the fee but the collector receives a portion through a 

fee-splitting arrangement. Fees charged in full by, and paid in full directly to a third-party payment 

processor, would not be collected directly or indirectly by the collector and would not be covered under 

the regulation. (Whether such fees could be charged also could depend, however, on the contract 

establishing the debt or other laws.)