Debt Collection Practices (Regulation F)

CourtConsumer Financial Protection Bureau
Citation86 FR 5766
Record Number2020-28422
Publication Date19 Jan 2021
Federal Register, Volume 86 Issue 11 (Tuesday, January 19, 2021)
[Federal Register Volume 86, Number 11 (Tuesday, January 19, 2021)]
                [Rules and Regulations]
                [Pages 5766-5862]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-28422]
                [[Page 5765]]
                Vol. 86
                Tuesday,
                No. 11
                January 19, 2021
                Part VIIIBureau of Consumer Financial Protection-----------------------------------------------------------------------12 CFR Part 1006Debt Collection Practices (Regulation F); Final Rule
                Federal Register / Vol. 86 , No. 11 / Tuesday, January 19, 2021 /
                Rules and Regulations
                [[Page 5766]]
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                BUREAU OF CONSUMER FINANCIAL PROTECTION
                12 CFR Part 1006
                [Docket No. CFPB-2019-0022]
                RIN 3170-AA41
                Debt Collection Practices (Regulation F)
                AGENCY: Bureau of Consumer Financial Protection.
                ACTION: Final rule; official interpretation.
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                SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
                issuing this final rule to revise Regulation F, which implements the
                Fair Debt Collection Practices Act (FDCPA). The final rule governs
                certain activities by debt collectors, as that term is defined in the
                FDCPA. Among other things, the final rule clarifies the information
                that a debt collector must provide to a consumer at the outset of debt
                collection communications, prohibits debt collectors from bringing or
                threatening to bring a legal action against a consumer to collect a
                time-barred debt, and requires debt collectors to take certain actions
                before furnishing information about a consumer's debt to a consumer
                reporting agency.
                DATES: This rule is effective on November 30, 2021.
                FOR FURTHER INFORMATION CONTACT: Joel Singerman, Counsel, or Dania
                Ayoubi, Joseph Baressi, Seth Caffrey, Brandy Hood, David Jacobs,
                Courtney Jean, Adam Mayle, Kristin McPartland, Michael Silver, Senior
                Counsels, Office of Regulations, at 202-435-7700. If you require this
                document in an alternative electronic format, please contact
                [email protected].
                SUPPLEMENTARY INFORMATION:
                I. Summary of the Final Rule
                 The Bureau is finalizing amendments to Regulation F, 12 CFR part
                1006, which implements the FDCPA.\1\ The amendments prescribe Federal
                rules governing the activities of debt collectors, as that term is
                defined in the FDCPA (debt collectors or FDCPA debt collectors). The
                final rule clarifies the information that a debt collector must provide
                to a consumer at the outset of debt collection communications and
                provides a model validation notice containing such information. The
                final rule also addresses consumer protection concerns related to
                passive collections (i.e., the practice of furnishing information about
                a debt to a consumer reporting agency before communicating with the
                consumer about the debt) and the collection of debt that is beyond the
                statute of limitations (i.e., time-barred debt). On November 30, 2020,
                the Bureau published a final rule in the Federal Register that focused
                on debt collection communications and related practices by debt
                collectors (November 2020 Final Rule). The November 2020 Final Rule
                reserved certain sections of Regulation F in anticipation of this final
                rule.
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                 \1\ 15 U.S.C. 1692 et seq.
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                 As discussed in the November 2020 Final Rule, in 1977, Congress
                passed the FDCPA to eliminate abusive debt collection practices by debt
                collectors, to ensure 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.\2\ The statute was a response to ``abundant
                evidence of the use of abusive, deceptive, and unfair debt collection
                practices by many debt collectors.'' \3\ According to Congress, these
                practices ``contribute to the number of personal bankruptcies, to
                marital instability, to the loss of jobs, and to invasions of
                individual privacy.'' \4\
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                 \2\ 15 U.S.C. 1692(e).
                 \3\ 15 U.S.C. 1692(a).
                 \4\ Id.
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                 The FDCPA established specific consumer protections, enabling
                consumers to establish controls on when and how debt collectors contact
                them, establishing privacy protections surrounding the collection of
                debts, and protecting consumers from certain collection practices. The
                FDCPA also established broad consumer protections, prohibiting
                harassment or abuse, false or misleading representations, and unfair
                practices. In the Dodd-Frank Wall Street Reform and Consumer Protection
                Act (Dodd-Frank Act), Congress provided the Bureau with authority under
                the FDCPA to prescribe substantive rules with respect to the collection
                of debts by debt collectors. The Bureau issues this final rule, like
                the November 2020 Final Rule, to implement and interpret the FDCPA.
                A. Coverage and Organization of the Final Rule
                 The final rule is based primarily on the Bureau's authority to
                issue rules to implement the FDCPA and, consequently, covers debt
                collectors, as that term is defined in the FDCPA.
                 As revised in the November 2020 Final Rule, Regulation F contains
                four subparts. Subpart A contains generally applicable provisions, such
                as definitions that apply throughout the regulation. Subpart B contains
                rules for FDCPA debt collectors. Subpart C is reserved for any future
                debt collection rulemakings. Subpart D contains certain miscellaneous
                provisions. This final rule adds additional provisions in subparts A,
                B, and D.
                B. Scope of the Final Rule
                 FDCPA section 809(a) requires that a debt collector send a written
                notice containing certain information about the debt and actions the
                consumer may take in response (the validation notice) to a consumer
                within five days of the initial communication, unless such validation
                information was provided in the initial communication or the consumer
                has paid the debt.\5\ The final rule clarifies the information about
                the debt and the consumer's rights with respect to the debt that a debt
                collector must provide to a consumer at the outset of debt collection
                communications, including (if applicable) on a validation notice. The
                final rule also requires a debt collector to provide prompts that a
                consumer can use to dispute the debt, request information about the
                original creditor, or take certain other actions. The final rule
                provides a safe harbor for compliance with these disclosure
                requirements for debt collectors who use the model validation notice or
                certain variations of the notice.
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                 \5\ 15 U.S.C. 1692g(a).
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                 The final rule also prohibits a debt collector from suing or
                threatening to sue a consumer to collect time-barred debt. In addition,
                the final rule prohibits a debt collector from furnishing information
                about a debt to a consumer reporting agency before engaging in specific
                outreach to the consumer about the debt. The final rule also addresses
                certain other disclosure-focused provisions, such as clarifying how a
                debt collector may respond to a consumer's request for original-
                creditor information if the original creditor is the same as the
                current creditor. Additionally, the final rule interprets the
                definition of consumer under the FDCPA to include deceased natural
                persons and, relatedly, provides that, if a debt collector knows or
                should know that the a consumer is deceased, and the debt collector has
                not previously provided the validation information to the deceased
                consumer, the debt collector must provide that information to a person
                who is authorized to act on behalf of the deceased consumer's estate.
                [[Page 5767]]
                II. Background
                A. Debt Collection Market Background
                 A consumer debt is commonly understood to be a consumer's
                obligation to pay money to another person or entity. Sometimes a debt
                arises out of a closed-end loan. Other times, a debt arises from a
                consumer's use of an open-end line of credit, commonly a credit card.
                And in other cases, a debt arises from a consumer's purchase of goods
                or services with payment due thereafter. Often there is an agreed-upon
                payment schedule or date by which the consumer must repay the debt.
                 For a variety of reasons, consumers sometimes are unable or
                unwilling to make payments when they are due. Collection efforts may
                directly recover some or all of the overdue amounts owed to debt owners
                and thereby may indirectly help to keep consumer credit available and
                more affordable to consumers.\6\ Collection activities also can lead to
                repayment plans or debt restructuring that may provide consumers with
                additional time to make payments or resolve their debts on more
                manageable terms.\7\
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                 \6\ See Bureau of Consumer Fin. Prot., Fair Debt Collection
                Practices Act: CFPB Annual Report 2013, at 9 (Mar. 20, 2013),
                https://www.consumerfinance.gov/data-research/research-reports/annual-report-on-the-fair-debt-collection-practices-act/ (2013 FDCPA
                Annual Report).
                 \7\ See id.
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                 The November 2020 Final Rule provides an extensive overview of the
                debt collection market (including the roles of creditors, third-party
                debt collectors, debt buyers, and a variety of service providers in the
                market), methods of debt collection, and consumer protection concerns
                in debt collection.\8\ Below the Bureau summarizes information
                regarding debt collection methods and consumer protection concerns
                specifically related to the topics addressed in this final rule.
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                 \8\ See 85 FR 76734, 76735-37 (Nov. 30, 2020).
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                B. Debt Collection Methods
                 If a consumer's payment obligations remain unmet, a creditor may
                send the account to a third-party debt collector to recover on the debt
                in the third-party debt collector's name. A creditor typically stops
                communicating with a consumer once responsibility for an account has
                moved to a third-party debt collector. Active debt collection efforts
                typically begin with the debt collector attempting to locate the
                consumer, usually by identifying a valid telephone number or mailing
                address, so that the debt collector can establish contact with the
                consumer. Once a debt collector has obtained contact information for a
                consumer, the debt collector typically will seek to communicate with
                the consumer to obtain payment on some or all of the debt.
                 As already noted, FDCPA section 809(a) generally requires a debt
                collector to provide certain information to a consumer either at the
                time that, or shortly after, the debt collector first communicates with
                the consumer in connection with the collection of a debt. The required
                information includes: (1) Certain details about the debt, such as the
                amount of the debt and the name of the creditor to whom the debt is
                owed; and (2) a description of consumer protections, such as the
                consumer's rights to dispute the debt and to request information about
                the original creditor. A debt collector may send a validation notice
                containing the required information as the initial communication to the
                consumer or send the required information in a validation notice within
                five days after the initial communication. Currently, validation
                notices include little or no information about the debt beyond the
                information specifically listed in FDCPA section 809(a). This
                information may not be sufficient for the consumer to recognize the
                debt, particularly if, for example, the amount owed has changed over
                time due to interest, fees, payment, or credits, or if the debt
                collector has changed since an original collection attempt.
                 A debt collector may tailor the collection strategy depending on a
                variety of factors, including the size and age of the debt and the debt
                collector's assessment of the likelihood of obtaining money from the
                consumer. For example, rather than engage in active debt collection
                efforts by affirmatively locating and contacting consumers, some debt
                collectors collecting relatively small debts--such as many medical,
                utility, and telecommunications debts--report the debts to consumer
                reporting agencies and then wait for consumers to contact them after
                discovering the debts on their consumer reports.\9\
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                 \9\ Bureau of Consumer Fin. Prot., Consumer Credit Reports: A
                Study of Medical and Non-Medical Collections, at 35-36 (Dec. 2014),
                http://files.consumerfinance.gov/f/201412_cfpb_reports_consumer-credit-medical-and-non-medical-collections.pdf (CFPB Medical Debt
                Report).
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                 As discussed in the November 2020 Final Rule, a debt owner may also
                try to recover on a debt through litigation.\10\ And debt collectors
                sometimes attempt to collect debt for which the applicable statute of
                limitations has expired. The length of the limitations period for debt
                collection claims usually varies by State and debt type; most
                limitations periods are between three and six years, although some are
                as long as 15 years. Currently, in most States, expiration of the
                statute of limitations, if raised by the consumer as an affirmative
                defense, precludes the debt collector from recovering on the debt
                through litigation, but it does not extinguish the debt itself. If the
                debt is not extinguished, a debt collector may use non-litigation
                means, such as letters and telephone calls, to collect a time-barred
                debt, as long as those means do not violate the FDCPA or other
                laws.\11\
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                 \10\ See 85 FR 76735, 76736 (Nov. 30, 2020).
                 \11\ See 85 FR 12672, 12672-73 (Mar. 3, 2020).
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                C. Consumer Protection Concerns
                 As discussed in the November 2020 Final Rule, each year consumers
                submit tens of thousands of complaints about debt collection to Federal
                regulators.\12\ A significant proportion of those complaints involve
                debts that consumers believe they do not owe, which may be because the
                debt is being collected in error or because the consumer does not
                recognize the debt. Consumers also file thousands of private actions
                each year against debt collectors who allegedly have violated the
                FDCPA, including many cases alleging violations related to the
                validation notice. Since the Bureau began operations in 2011, it has
                brought numerous debt collection
                [[Page 5768]]
                cases against third-party debt collectors, alleging both FDCPA
                violations and unfair, deceptive, or abusive debt collection acts or
                practices in violation of the Dodd-Frank Act.\13\ In many of these
                cases, the Bureau has obtained civil penalties, monetary compensation
                for consumers, and other relief. In its supervisory work, the Bureau
                similarly has identified many FDCPA violations during examinations of
                debt collectors. Over the past decade, the Federal Trade Commission
                (FTC) and State regulators also have brought numerous additional
                actions against debt collectors for violating Federal and State debt
                collection and consumer protection laws.
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                 \12\ See, e.g., Bureau of Consumer Fin. Prot., Fair Debt
                Collection Practices Act: CFPB Annual Report 2020, at 13 (Mar.
                2020), https://files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report-congress_03-2020.pdf (2020 FDCPA Annual
                Report); Fed. Trade Comm'n, 2019 Consumer Sentinel Network Databook,
                at 7 (Jan. 2020), https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2019/consumer_sentinel_network_data_book_2019.pdf; Bureau of Consumer
                Fin. Prot., Fair Debt Collection Practices Act: CFPB Annual Report
                2019, at 15-16 (Mar. 2019), https://files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report-congress_03-2019.pdf (2019 FDCPA
                Annual Report); Fed. Trade Comm'n, 2018 Consumer Sentinel Network
                Databook, at 4, 7 (Feb. 2019), https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2018/consumer_sentinel_network_data_book_2018_0.pdf; Bureau of Consumer
                Fin. Prot., Fair Debt Collection Practices Act: CFPB Annual Report
                2018, at 14-15 (Mar. 2018), https://files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report-congress_03-2018.pdf (2018 FDCPA
                Annual Report); Fed. Trade Comm'n, 2017 Consumer Sentinel Network
                Databook, at 3, 6 (Mar. 2018), https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2017/consumer_sentinel_data_book_2017.pdf; Bureau of Consumer Fin. Prot.,
                2017 Fair Debt Collection Practices Act: CFPB Annual Report 2017, at
                15-16 (Mar. 2017), https://files.consumerfinance.gov/f/documents/201703_cfpb_Fair-Debt-Collection-Practices-Act-Annual-Report.pdf
                (2017 FDCPA Annual Report); Fed. Trade Comm'n, Consumer Sentinel
                Network Data Book for January-December 2016, at 3, 6 (Mar. 2017),
                https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-january-december-2016/csn_cy-2016_data_book.pdf.
                 \13\ See, e.g., Stipulated Final Judgment and Consent Order,
                Consumer Fin. Prot. Bureau v. Encore Capital Grp., Inc., 3:20-cv-
                01750 (S.D. Cal. Oct. 15, 2020), https://www.courtlistener.com/recap/gov.uscourts.casd.686719/gov.uscourts.casd.686719.5.1.pdf;
                Consent Order, In re Asset Recovery Assocs., 2019-BCFP-0009 (Aug.
                28, 2019), https://www.consumerfinance.gov/documents/7938/cfpb_asset-recovery-associates_consent-order_2019-08.pdf; Consent
                Order, In re Encore Capital Grp., Inc., 2015-CFPB-0022 (Sept. 9,
                2015), http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf; Consent Order, In re Portfolio Recovery
                Assocs., LLC, 2015-CFPB-0023 (Sept. 9, 2015), http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf; Complaint, Consumer Fin. Prot. Bureau
                v. Nat'l Corrective Grp., Inc., 1:15-cv-00899-RDB (D. Md. Mar. 30,
                2015), http://files.consumerfinance.gov/f/201503_cfpb_complaint-national-corrective-group.pdf.
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                D. FDCPA and Dodd-Frank Act Protections for Consumers
                 Federal and State governments historically have sought to protect
                consumers from harmful debt collection practices. From 1938 to 1977,
                the Federal government primarily protected consumers through FTC
                enforcement actions against debt collectors who engaged in unfair or
                deceptive acts or practices in violation of section 5 of the FTC
                Act.\14\ When Congress enacted the FDCPA in 1977, it found that
                ``[e]xisting laws and procedures for redressing . . . injuries [were]
                inadequate to protect consumers.'' \15\ Congress found that ``[t]here
                [was] abundant evidence of the use of abusive, deceptive, and unfair
                debt collection practices by many debt collectors'' and that these
                practices ``contribute to the number of personal bankruptcies, to
                marital instability, to the loss of jobs, and to invasions of
                individual privacy.'' \16\
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                 \14\ 15 U.S.C. 45.
                 \15\ 15 U.S.C. 1692(b).
                 \16\ 15 U.S.C. 1692(a).
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                 The FDCPA was enacted, in part, ``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.'' \17\ Among other
                things, the FDCPA: (1) Prohibits debt collectors from engaging in
                harassment or abuse, making false or misleading representations, and
                engaging in unfair practices in debt collection; (2) restricts debt
                collectors' communications with consumers and others; and (3) requires
                debt collectors to provide consumers with disclosures concerning the
                debts they owe or allegedly owe.
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                 \17\ 15 U.S.C. 1692(e).
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                 The FDCPA, in general, applies to debt collectors as that term is
                defined under the statute. As discussed further in the section-by-
                section analysis of Sec. 1006.2(i) of the November 2020 Final Rule,
                the FDCPA generally provides that a debt collector is any person: (1)
                Who uses any instrumentality of interstate commerce or the mails in any
                business the principal purpose of which is the collection of any debts
                (i.e., the ``principal purpose'' prong), or (2) who regularly collects,
                or attempts to collect, directly or indirectly, debts owed or due or
                asserted to be owed or due to another (i.e., the ``regularly collects''
                prong). FDCPA section 803(6) also sets forth several exclusions from
                the general definition.
                 Until the creation of the Bureau, no Federal agency was authorized
                to issue regulations to implement the substantive provisions of the
                FDCPA. Courts have issued opinions providing differing interpretations
                of various FDCPA provisions, and there is considerable uncertainty with
                respect to how the FDCPA applies to communication technologies that
                have developed since 1977. The Dodd-Frank Act amended the FDCPA to
                provide the Bureau with authority to ``prescribe rules with respect to
                the collection of debts by debt collectors.'' \18\
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                 \18\ FDCPA section 814(d), 15 U.S.C. 1692l(d).
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                III. Summary of the Rulemaking Process
                A. The November 2020 Final Rule
                 The Bureau issued the November 2020 Final Rule to finalize certain
                provisions of the proposed rule that the Bureau published in the
                Federal Register on May 21, 2019, to amend Regulation F.\19\
                Specifically, the November 2020 Final Rule primarily addressed debt
                collection communications and related practices by debt collectors. The
                November 2020 Final Rule reserved certain sections of Regulation F in
                anticipation of this final rule.
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                 \19\ See 84 FR 23274 (May 21, 2019).
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                B. The 2019 Proposal and 2020 Supplemental Proposal
                 As noted, on May 21, 2019, the Bureau published a proposed rule
                (the May 2019 proposal or proposal) in the Federal Register to amend
                Regulation F.\20\ The proposal provided a 90-day comment period that
                would have closed on August 19, 2019. To allow interested persons more
                time to consider and submit their comments, the Bureau issued an
                extension of the comment period until September 18, 2019.\21\ In
                response to the May 2019 proposal, the Bureau received more than 14,000
                comments from consumers, consumer groups, members of Congress, other
                government agencies, creditors, debt collectors, industry trade
                associations, and others. As discussed below, the Bureau has considered
                those comments in deciding to issue this final rule.
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                 \20\ Id.
                 \21\ 84 FR 37806 (Aug. 2, 2019).
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                 As relevant to this final rule, in the May 2019 proposal, the
                Bureau proposed to implement and interpret FDCPA section 809(a) and (b)
                regarding the information that debt collectors must provide to
                consumers at the outset of debt collection communications and debt
                collectors' obligations to respond to consumers' disputes and requests
                for original-creditor information, including if the consumer obligated
                or allegedly obligated to pay the debt has died. The Bureau also
                proposed to prohibit debt collectors from bringing or threatening to
                bring a legal action against a consumer to collect a debt that the debt
                collector knows or should know is a time-barred debt. And the Bureau
                proposed to prohibit debt collectors from furnishing information
                regarding a debt to a consumer reporting agency before communicating
                with the consumer about the debt.
                 On February 21, 2020, the Bureau released a supplemental notice of
                proposed rulemaking to amend Regulation F to require debt collectors to
                make certain disclosures when collecting time-barred debts (the
                February 2020 proposal).\22\ The February 2020 proposal provided a 60-
                day comment period that would have closed on May 4, 2020. To allow
                interested persons more time to consider and submit their comments, the
                Bureau issued two extensions of the comment period, the first until
                June 5, 2020, and the second until August 4,
                [[Page 5769]]
                2020.\23\ In response to the February 2020 proposal, the Bureau
                received approximately 90 comments from consumers, consumer groups,
                members of Congress, other government agencies, creditors, debt
                collectors, industry trade associations, and others. As discussed
                below, the Bureau has considered those comments in adopting this final
                rule.
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                 \22\ See 85 FR 12672 (Mar. 3, 2020).
                 \23\ See 85 FR 17299 (Mar. 27, 2020) (first extension); 85 FR
                30890 (May 21, 2020) (second extension).
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                C. Consumer Testing
                 The Bureau has undertaken two rounds of qualitative disclosure
                testing and one round of quantitative disclosure testing, all of which
                have informed this final rule.
                 First, as discussed in more detail in the May 2019 proposal, the
                Bureau in 2014 contracted with a third-party vendor, Fors Marsh Group
                (FMG), to assist with developing, and to conduct qualitative consumer
                testing of the model validation notice.\24\ This initial qualitative
                testing included focus group testing, cognitive testing, and usability
                testing conducted by FMG.\25\ Through the testing, the Bureau sought
                insight into consumers' understanding of debt collection protections
                and how consumers would interact with the forms if the forms were
                incorporated into a final rule. Specific findings from the consumer
                testing are discussed in more detail in part V where relevant. In
                conjunction with the release of the May 2019 proposal, the Bureau made
                available a report prepared by FMG regarding the focus group
                testing,\26\ the cognitive testing,\27\ the usability testing,\28\ and
                a report prepared by FMG summarizing the focus group testing, cognitive
                testing, and usability testing.\29\
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                 \24\ The Bureau also tested a statement of consumer rights
                disclosure, but the Bureau decided not to propose to require debt
                collectors to provide such a disclosure to consumers. Instead, the
                Bureau proposed in the May 2019 proposal to require certain debt
                collectors to provide with the validation information a statement
                referring consumers to a Bureau-provided website that would describe
                certain consumer protections in debt collection. See the section-by-
                section analysis of Sec. 1006.34(c)(3)(iv). Because the Bureau did
                not propose to require debt collectors to provide consumers with a
                statement of consumer rights disclosure, the Bureau did not
                summarize testing related to that disclosure in the May 2019
                proposal.
                 \25\ See 84 FR 23274, 23279 (May 21, 2019).
                 \26\ See generally Fors Marsh Grp., Debt Collection Focus Groups
                (Aug. 2014), https://files.consumerfinance.gov/f/documents/cfpb_debt-collection_fmg-focus-group-report.pdf (FMG Focus Group
                Report). The focus group testing was conducted in accordance with
                OMB control number 3170-0022, Generic Information Collection Plan
                for the Development and/or Testing of Model Forms, Disclosures,
                Tools, and Other Similar Related Materials.
                 \27\ See generally Fors Marsh Grp., Debt Collection Cognitive
                Interviews (n.d.), https://files.consumerfinance.gov/f/documents/cfpb_debt-collection_fmg-cognitive-report.pdf (FMG Cognitive
                Report). The cognitive testing was conducted in accordance with OMB
                control number 3170-0022, Generic Information Collection Plan for
                the Development and/or Testing of Model Forms, Disclosures, Tools,
                and Other Similar Related Materials.
                 \28\ See generally Fors Marsh Grp., Debt Collection User
                Experience Study (Feb. 2016), https://files.consumerfinance.gov/f/documents/cfpb_debt-collection_fmg-usability-report.pdf (FMG
                Usability Report). Like the other testing, the usability testing was
                conducted in accordance with OMB control number 3170-0022, Generic
                Information Collection Plan for the Development and/or Testing of
                Model Forms, Disclosures, Tools, and Other Similar Related
                Materials.
                 \29\ See generally Fors Marsh Grp., Debt Collection Validation
                Notice Research: Summary of Focus Groups, Cognitive Interviews, and
                User Experience Testing (Feb. 2016), https://files.consumerfinance.gov/f/documents/cfpb_debt-collection_fmg-summary-report.pdf (FMG Summary Report).
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                 Second, to obtain additional information about consumer
                comprehension and decision-making in response to sample debt collection
                disclosures relating to time-barred debt, in 2017 the Bureau contracted
                with ICF International, Inc. (ICF) to conduct a web survey of
                approximately 8,000 individuals possessing a broad range of demographic
                characteristics.\30\ This quantitative testing concluded in late
                September 2019, and, in conjunction with the release of the February
                2020 proposal, the Bureau \31\ and ICF \32\ published detailed reports
                summarizing the testing methodology and results. The February 2020
                proposal provides an extensive overview of the quantitative
                testing.\33\
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                 \30\ OMB approved the Bureau's request to conduct the survey on
                May 7, 2019. See Office of Information & Regulatory Affairs, Office
                of Mgmt. & Budget, ICR--OIRA Conclusion, https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201902-3170-001# (last visited Feb. 18,
                2020).
                 \31\ See Bureau of Consumer Fin. Prot., Disclosure of Time-
                Barred Debt and Revival: Findings from the CFPB's Quantitative
                Disclosure Testing (Feb. 2020), https://files.consumerfinance.gov/f/documents/cfpb_debt-collection-quantitative-disclosure-testing_report.pdf (CFPB Quantitative Testing Report).
                 \32\ See ICF Int'l, Inc., Quantitative Survey Testing of Model
                Disclosure Clauses and Forms for Debt Collection: Methodology Report
                (Jan. 21, 2020), https://files.consumerfinance.gov/f/documents/cfpb_icf_debt-survey_methodology-report.pdf.
                 \33\ See 85 FR 12672, 12676-77 (Mar. 3, 2020).
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                 Third, to further evaluate the effectiveness of the model
                validation notice, the Bureau contracted with FMG again in 2019 to
                conduct an additional round of qualitative testing. Because of the
                COVID-19 pandemic, FMG conducted this consumer testing by telephone,
                completing 51 one-on-one usability interviews between October 5 and
                October 15, 2020. The qualitative testing showed, among other things,
                that 80 percent of participants shared positive initial reactions to
                the model validation notice and indicated that the information in the
                notice was clear and available actions were obvious. In addition, 88
                percent of participants rated the overall model validation notice as
                ``very easy'' or ``easy'' to understand, and no participants rated the
                notice as ``difficult'' or ``very difficult'' to understand. Finally,
                77 percent of participants answered correctly over 90 percent of the
                time when, after reviewing the notice, they were asked to answer
                certain questions about information included on the notice. In
                conjunction with release of this final rule, the Bureau is making
                available a report prepared by FMG regarding the qualitative
                testing.\34\
                ---------------------------------------------------------------------------
                 \34\ See generally Fors Marsh Grp., Consumer Financial
                Protection Bureau (CFPB) Usability Testing Report: Model Validation
                Notice (Nov. 20, 2020), https://files.consumerfinance.gov/f/documents/cfpb_model-validation-notice_report_2020-12.pdf (November
                2020 Qualitative Testing Report).
                ---------------------------------------------------------------------------
                D. Other Outreach \35\
                ---------------------------------------------------------------------------
                 \35\ The preamble to the May 2019 proposal includes a more
                thorough discussion of the outreach the Bureau conducted prior to
                issuing the proposal. See 84 FR 23274, 23278-80 (May 21, 2019).
                ---------------------------------------------------------------------------
                 In November 2013, the Bureau began the rulemaking process with the
                publication of an Advance Notice of Proposed Rulemaking (ANPRM)
                regarding debt collection.\36\ As discussed in the May 2019 proposal,
                the ANPRM sought information about a wide variety of both first- and
                third-party debt collection practices. The Bureau received more than
                23,000 comments in response to the ANPRM, which the Bureau considered
                when developing the proposals.
                ---------------------------------------------------------------------------
                 \36\ 78 FR 67848 (Nov. 12, 2013).
                ---------------------------------------------------------------------------
                 To better understand the operational costs of debt collection
                firms, including law firms, the Bureau also surveyed debt collection
                firms and vendors and published a report based on that study in July
                2016 (CFPB Debt Collection Operations Study or Operations Study).\37\
                The Operations Study focused on understanding how debt collection firms
                obtain information about delinquent consumer accounts and attempt to
                collect on those accounts.
                ---------------------------------------------------------------------------
                 \37\ See generally Bureau of Consumer Fin. Prot., Study of
                Third-Party Debt Collection Operations (July 2016), https://www.consumerfinance.gov/documents/755/20160727_cfpb_Third_Party_Debt_Collection_Operations_Study.pdf (CFPB
                Debt Collection Operations Study).
                ---------------------------------------------------------------------------
                 In August 2016, the Bureau convened a Small Business Review Panel
                (Small Business Review Panel or Panel) with the Chief Counsel for
                Advocacy of the Small Business Administration (SBA) and the
                Administrator of the Office of Information and Regulatory Affairs with
                [[Page 5770]]
                the Office of Management and Budget (OMB).\38\ As part of this process,
                the Bureau prepared an outline of proposals under consideration and the
                alternatives considered (Small Business Review Panel Outline or
                Outline),\39\ which the Bureau posted on its website for review by the
                small entity representatives participating in the Panel process and by
                the general public. The Panel gathered information from the small
                entity representatives and made findings and recommendations regarding
                the potential compliance costs and other impacts on those entities of
                the proposals under consideration. Those findings and recommendations
                are set forth in the Small Business Review Panel Report, which is part
                of the administrative record in this rulemaking and is available to the
                public.\40\ The Bureau considered these findings and recommendations in
                preparing the proposals and this final rule.
                ---------------------------------------------------------------------------
                 \38\ The Small Business Regulatory Enforcement Fairness Act of
                1996 (SBREFA), as amended by section 1100G(a) of the Dodd-Frank Act,
                requires the Bureau to convene a Small Business Review Panel before
                proposing a rule that may have a substantial economic impact on a
                significant number of small entities. See Public Law 104-121, tit.
                II, 110 Stat. 857 (1996) (as amended by the Small Business and Work
                Opportunity Act of 2007, Public Law. 110-28, tit. VIII, subtit. C,
                sec. 8302, 121 Stat. 204 (2007)).
                 \39\ Bureau of Consumer Fin. Prot., Small Business Review Panel
                for Debt Collector and Debt Buyer Rulemaking: Outline of Proposals
                Under Consideration and Alternatives Considered (July 28, 2016),
                https://files.consumerfinance.gov/f/documents/20160727_cfpb_Outline_of_proposals.pdf (Small Business Review Panel
                Outline). The Bureau also gathered feedback on the Small Business
                Review Panel Outline from other stakeholders, members of the public,
                and the Bureau's Consumer Advisory Board and Community Bank Advisory
                Council.
                 \40\ Bureau of Consumer Fin. Prot., U.S. Small Bus. Admin. &
                Office of Mgmt. & Budget, Final Report of the Small Business Review
                Panel on the CFPB's Proposals Under Consideration for the Debt
                Collector and Debt Buying Rulemaking (Oct. 2016), https://files.consumerfinance.gov/f/documents/cfpb_debt-collector-debt-buyer_SBREFA-report.pdf (Small Business Review Panel Report).
                ---------------------------------------------------------------------------
                 The Bureau has also met on many occasions with various
                stakeholders, including consumer advocates, debt collection trade
                associations, industry participants, academics with expertise in debt
                collection, Federal prudential regulators, and other Federal and State
                consumer protection regulators. The Bureau also received a number of
                comments specific to the debt collection rulemaking in response to its
                Request for Information Regarding the Bureau's Adopted Regulations and
                New Rulemaking Authorities \41\ and its Request for Information
                Regarding the Bureau's Inherited Regulations and Inherited Rulemaking
                Authorities; \42\ the Bureau considered these comments in developing
                the proposals and this final rule. In addition, the Bureau has engaged
                in general outreach, speaking at consumer advocate and industry events
                and visiting consumer organizations and industry stakeholders. The
                Bureau has provided other regulators with information about the
                proposals and this final rule, has sought their input, and has received
                feedback that has helped the Bureau to prepare this final rule.
                ---------------------------------------------------------------------------
                 \41\ 83 FR 12286 (Mar. 21, 2018).
                 \42\ 83 FR 12881 (Mar. 26, 2018).
                ---------------------------------------------------------------------------
                 Under the Dodd-Frank Act, the Bureau is required to conduct an
                assessment of significant rules within five years of the rule's
                effective date. The Bureau anticipates that this final rule may be
                significant and therefore may require an assessment within five years
                of the rule's effective date. The Bureau is preparing now for this
                possible assessment. Specifically, the Bureau is considering how best
                to obtain information now to serve as a baseline for evaluation of the
                costs, benefits, and other effects of the final rule. The Bureau
                expects to collect data and other information from consumers, debt
                collectors, and other stakeholders to understand whether the rule is
                achieving its goals under the FDCPA and the Dodd-Frank Act, and to help
                the Bureau measure the costs and benefits of the rule. Topics of data
                collection could include: whether consumers are better able to identify
                a debt when receiving validation information after the rule compared to
                before the rule; whether debt collectors are receiving higher or lower
                rates of consumer disputes after the rule compared to before the rule;
                whether greater clarity about FDCPA requirements helps reduce
                litigation related to the validation notice after the rule compared to
                before the rule; and costs of the rule, both anticipated and
                unexpected, for consumers or for industry. The Bureau expects to
                conduct outreach in 2021 to explore how best to obtain such data,
                including potentially through surveying consumers or firms or by
                collecting operational data.
                IV. Legal Authority
                 The Bureau is issuing this final rule primarily pursuant to its
                authority under the FDCPA and the Dodd-Frank Act. As amended by the
                Dodd-Frank Act, FDCPA section 814(d) provides that the Bureau ``may
                prescribe rules with respect to the collection of debts by debt
                collectors,'' as defined in the FDCPA.\43\ Section 1022(a) of the Dodd-
                Frank Act provides that ``[t]he Bureau is authorized to exercise its
                authorities under Federal consumer financial law to administer,
                enforce, and otherwise implement the provisions of Federal consumer
                financial law.'' \44\ Section 1022(b)(1) of the Dodd-Frank Act provides
                that the Director may prescribe rules and issue orders and guidance, as
                may be necessary or appropriate to enable the Bureau to administer and
                carry out the purposes and objectives of the Federal consumer financial
                laws, and to prevent evasions thereof.\45\ ``Federal consumer financial
                law'' includes title X of the Dodd-Frank Act and the FDCPA.\46\ No
                provisions in this final rule are based on section 1031 of the Dodd-
                Frank Act.\47\
                ---------------------------------------------------------------------------
                 \43\ 15 U.S.C. 1692l(d). As noted, the Bureau is the first
                Federal agency with authority to prescribe substantive debt
                collection rules under the FDCPA. Prior to the Dodd-Frank Act's
                grant of rulemaking authority to the Bureau, no agency had authority
                to issue substantive rules with respect to the collection of debts
                by debt collectors under the FDCPA, but the FTC published various
                materials providing guidance on the FDCPA. The FTC's materials have
                informed the Bureau's rulemaking and, if relevant to particular
                provisions, are discussed in part V.
                 \44\ 12 U.S.C. 5512(a).
                 \45\ 12 U.S.C. 5512(b)(1).
                 \46\ 12 U.S.C. 5481(12)(H), (14).
                 \47\ The Bureau proposed to rely on its Dodd-Frank Act section
                1031 authority (relating to unfair, deceptive, or abusive acts or
                practices in connection with consumer financial products or
                services) to support two interventions in the May 2019 proposal. The
                Bureau has not finalized any provisions of this final rule (or, as
                discussed in the November 2020 Final Rule, of that final rule),
                pursuant to its authority under Dodd-Frank Act section 1031.
                ---------------------------------------------------------------------------
                 These and other authorities are discussed in greater detail in
                parts IV.A through C below. Part IV.A discusses the Bureau's authority
                under sections 806 through 808 of the FDCPA. Parts IV.B through C
                discuss the Bureau's relevant authorities under the Dodd-Frank Act.
                A. FDCPA Sections 806 Through 808
                 As discussed in part V, the Bureau is finalizing several
                provisions, in whole or in part, pursuant to its authority to interpret
                FDCPA sections 806 through 808, which set forth general prohibitions
                on, and requirements relating to, debt collectors' conduct and are
                accompanied by non-exhaustive lists of examples of unlawful conduct.
                The November 2020 Final Rule provides an overview of how the Bureau
                interprets FDCPA sections 806 through 808.
                 FDCPA section 806 generally prohibits a debt collector from
                ``engag[ing] in any conduct the natural consequence of which is to
                harass, oppress, or abuse any person in connection with the collection
                of a
                [[Page 5771]]
                debt.'' \48\ Then, ``[w]ithout limiting the general application of the
                foregoing,'' it lists six examples of conduct that violate that
                section.\49\ Similarly, FDCPA section 807 generally prohibits a debt
                collector from ``us[ing] any false, deceptive, or misleading
                representation or means in connection with the collection of any
                debt.'' \50\ Then, ``[w]ithout limiting the general application of the
                foregoing,'' section 807 lists 16 examples of conduct that violate that
                section.\51\ Finally, FDCPA section 808 prohibits a debt collector from
                ``us[ing] unfair or unconscionable means to collect or attempt to
                collect any debt.'' \52\ Then, ``[w]ithout limiting the general
                application of the foregoing,'' FDCPA section 808 lists eight examples
                of conduct that violate that section.\53\ Consistent with the approach
                in the November 2020 Final Rule \54\ and as proposed in the May 2019
                proposal,\55\ the Bureau interprets FDCPA sections 806 through 808 in
                light of: (1) The FDCPA's language and purpose; (2) the general types
                of conduct prohibited by those sections and, where relevant, the
                specific examples enumerated in those sections; and (3) judicial
                decisions.\56\
                ---------------------------------------------------------------------------
                 \48\ 15 U.S.C. 1692d.
                 \49\ 15 U.S.C. 1692d(1)-(6).
                 \50\ 15 U.S.C. 1692e.
                 \51\ 15 U.S.C. 1692e(1)-(16).
                 \52\ 15 U.S.C. 1692f.
                 \53\ 15 U.S.C. 1692f(1)-(8).
                 \54\ See 85 FR 76734, 76738 (Nov. 30, 2020).
                 \55\ 84 FR 23274, 23281-82 (May 21, 2019).
                 \56\ Where the Bureau prescribes requirements pursuant only to
                its authority to implement and interpret sections 806 through 808 of
                the FDCPA, the Bureau does not take a position on whether such
                practices also would constitute an unfair, deceptive, or abusive act
                or practice under section 1031 of the Dodd-Frank Act.
                ---------------------------------------------------------------------------
                 In particular, the Bureau notes that, by their plain terms, FDCPA
                sections 806 through 808 make clear that their examples of prohibited
                conduct do not ``limit[ ] the general application'' of those sections'
                general prohibitions. The FDCPA's legislative history is consistent
                with this understanding,\57\ as are opinions by courts that have
                addressed this issue.\58\ Accordingly, the Bureau may interpret the
                general provisions of FDCPA sections 806 to 808 to prohibit conduct
                that the specific examples in FDCPA sections 806 through 808 do not
                address if the conduct violates the general prohibitions. In addition,
                the Bureau uses the specific examples to inform its understanding of
                the general prohibitions. The Bureau also interprets FDCPA sections 806
                through 808 in light of the significant body of existing court
                decisions interpreting those sections, including, where applicable,
                cases discussing the collection of time-barred debt.\59\ Finally,
                consistent with the majority of courts, the Bureau interprets FDCPA
                sections 806 through 808 to incorporate an objective,
                ``unsophisticated'' or ``least sophisticated'' consumer standard.\60\
                ---------------------------------------------------------------------------
                 \57\ See, e.g., S. Rep. No. 382, 95th Cong., 1st Sess. 2, 4
                (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1698 (S. Rep. No. 382)
                (``[T]his bill prohibits in general terms any harassing, unfair, or
                deceptive collection practice. This will enable the courts, where
                appropriate, to proscribe other improper conduct which is not
                specifically addressed.''). Courts have also cited legislative
                history in noting that, ``in passing the FDCPA, Congress identified
                abusive collection attempts as primary motivations for the Act's
                passage.'' Hart v. FCI Lender Servs., Inc., 797 F.3d 219, 226 (2d
                Cir. 2015).
                 \58\ See, e.g., Stratton v. Portfolio Recovery Assocs., LLC, 770
                F.3d 443, 450 (6th Cir. 2014) (``[T]he listed examples of illegal
                acts are just that--examples.'').
                 \59\ Id. See, e.g., Holzman v. Malcolm S. Gerald & Assocs., 920
                F.3d 1264 (11th Cir. 2019); Tatis v. Allied Interstate, LLC, 882
                F.3d 422 (3d Cir. 2018); Pantoja v. Portfolio Recovery Assocs., LLC,
                852 F.3d 679 (7th Cir. 2017), cert. denied, 138 S. Ct. 736 (2018);
                Daugherty v. Convergent Outsourcing Inc., 836 F.3d 507 (5th Cir.
                2016); Buchanan v. Northland Grp., Inc., 776 F.3d 393 (6th Cir.
                2015); McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1020 (7th Cir.
                2014).
                 \60\ 85 FR 76734, 76740 (Nov. 30, 2020); 84 FR 23274, 23282-83
                (May 21, 2019).
                ---------------------------------------------------------------------------
                B. Dodd-Frank Act Section 1032
                 Dodd-Frank Act section 1032(a) provides that 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.'' \61\ Under Dodd-Frank Act section
                1032(a), the Bureau is empowered to prescribe rules regarding the
                disclosure of the ``features'' of consumer financial products and
                services generally. Accordingly, the Bureau may prescribe rules
                containing disclosure requirements even if other Federal consumer
                financial laws do not specifically require disclosure of such features.
                Dodd-Frank Act section 1032(c) provides that, in prescribing rules
                pursuant to Dodd-Frank Act section 1032, 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.'' \62\ The Bureau
                is finalizing Sec. Sec. 1006.34 and 1006.38 based in part on its
                authority under Dodd-Frank Act section 1032.
                ---------------------------------------------------------------------------
                 \61\ 12 U.S.C. 5532(a).
                 \62\ 12 U.S.C. 5532(c).
                ---------------------------------------------------------------------------
                C. Other Authorities Under the Dodd-Frank Act
                 Section 1022(b)(1) of the Dodd-Frank Act provides that the Bureau's
                Director ``may prescribe rules and issue orders and guidance, as may be
                necessary or appropriate to enable the Bureau to administer and carry
                out the purposes and objectives of the Federal consumer financial laws,
                and to prevent evasions thereof.'' \63\ ``Federal consumer financial
                laws'' include the FDCPA and title X of the Dodd-Frank Act.\64\ Section
                1022(b)(2) of the Dodd-Frank Act prescribes certain standards for
                rulemaking that the Bureau must follow in exercising its authority
                under Dodd-Frank Act section 1022(b)(1).\65\ See part VII for a
                discussion of the Bureau's standards for rulemaking under Dodd-Frank
                Act section 1022(b)(2).
                ---------------------------------------------------------------------------
                 \63\ 12 U.S.C. 5512(b)(1).
                 \64\ 12 U.S.C. 5481(14).
                 \65\ 12 U.S.C. 5512(b)(2).
                ---------------------------------------------------------------------------
                V. Section-by-Section Analysis
                Subpart A--General
                Section 1006.1 Authority, Purpose, and Coverage
                1(c) Coverage
                 In the November 2020 Final Rule, the Bureau adopted Sec.
                1006.1(c)(1) to specify that, except as provided in Sec. 1006.108 and
                appendix A, Regulation F applies to debt collectors, as defined in
                Sec. 1006.2(i), other than a person excluded from coverage by section
                1029(a) of the Consumer Financial Protection Act of 2010, title X of
                the Dodd-Frank Act (12 U.S.C. 5519(a)).\66\ The Bureau also noted that
                it was not finalizing, as part of the November 2020 Final Rule,
                proposed Sec. 1006.1(c)(2), which provided that certain provisions of
                Regulation F applied to debt collectors only when they were collecting
                consumer financial product or service debt, as defined in Sec.
                1006.2(f). The Bureau explained that it was not finalizing Sec.
                1006.1(c)(2) as part of the November 2020 Final Rule because all of the
                provisions of that final rule apply to debt collectors as defined in
                Sec. 1006.2(i). The Bureau nevertheless reserved Sec. 1006.1(c)(2) so
                that the Bureau could clarify which provisions of this final rule, if
                any, apply to debt collectors only if they are collecting debt related
                to a consumer financial product or service.
                ---------------------------------------------------------------------------
                 \66\ 85 FR 76734, 76742 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 For the reasons discussed in the section-by-section analysis of
                Sec. 1006.34, two provisions of that section (Sec. 1006.34(c)(2)(iii)
                and (3)(iv)) apply to debt collectors only if they are collecting debt
                related to a consumer
                [[Page 5772]]
                financial produce or service as defined in Sec. 1006.2(f). Therefore,
                the Bureau is finalizing Sec. 1006.1(c)(2) to provide that certain
                provisions of Regulation F apply to debt collectors only if they are
                collecting debt related to a consumer financial product or service as
                defined in Sec. 1006.2(f), and to specify that those provisions are
                Sec. 1006.34(c)(2)(iii) and (3)(iv).
                Section 1006.2 Definitions
                2(e) Consumer
                 FDCPA section 803(3) defines a consumer as any natural person
                obligated or allegedly obligated to pay any debt.\67\ The Bureau
                proposed Sec. 1006.2(e) to implement this definition and to interpret
                it to include a deceased natural person who is obligated or allegedly
                obligated to pay a debt.\68\ The Bureau explained that this
                interpretation would ensure that individuals trying to resolve a
                deceased consumer's debts have the same legal right to receive the
                validation notice, and to dispute the debt and request information
                about the original creditor, as the deceased consumer would have had.
                ---------------------------------------------------------------------------
                 \67\ 15 U.S.C. 1692a(3).
                 \68\ See 84 FR 23274, 23288 (May 21, 2019).
                ---------------------------------------------------------------------------
                 As the Bureau noted in the November 2020 Final Rule, the Bureau
                received a number of comments regarding its proposal to interpret the
                term consumer to include deceased natural persons. The Bureau also
                noted that it had proposed that interpretation, in large part, to
                facilitate delivery of validation notices under proposed Sec. 1006.34
                if the consumer obligated, or allegedly obligated, on the debt has
                died. Further, the Bureau noted that it planned to address comments
                received regarding that interpretation, and to determine whether to
                finalize that interpretation, as part of this final rule. Thus, as
                finalized in the November 2020 Final Rule, Sec. 1006.2(e) provides
                that the term consumer means any natural person obligated or allegedly
                obligated to pay any debt.\69\ The Bureau now addresses comments
                received regarding its proposal to interpret the definition to include
                deceased natural persons.
                ---------------------------------------------------------------------------
                 \69\ For the reasons discussed in the November 2020 Final Rule,
                Sec. 1006.2(e) as finalized in that rule also provides that, for
                purposes of Sec. 1006.6, the term consumer includes the persons
                described in Sec. 1006.6(a). To account for any revisions adopted
                in this final rule, it also specifies that the Bureau may further
                define the term in Regulation F to clarify its application when the
                consumer is deceased. See 85 FR 76734, 76744-45, 76888 (Nov. 30,
                2020).
                ---------------------------------------------------------------------------
                 Several commenters supported the Bureau's proposed interpretation.
                One industry commenter stated that, in the decedent debt context, the
                person acting on behalf of a deceased consumer's estate should have the
                same rights regarding validation notices and disputes as the consumer
                would have had if the consumer were still living. Another industry
                commenter reported that many debt collectors currently attempt to treat
                deceased consumers as ``consumers'' under the FDCPA and explained that
                the proposal would provide additional clarity that would benefit both
                consumers and debt collectors in resolving the debts of deceased
                consumers. A group of consumer advocates supported clarifying the
                rights of executors, administrators, and personal representatives
                regarding validation notices and disputes. However, as discussed below,
                these consumer advocate commenters opposed the proposed interpretation
                and suggested a different way to address the issue.
                 Other commenters opposed interpreting the term consumer to include
                deceased natural persons who are obligated or allegedly obligated to
                pay a debt. One industry commenter asserted that the proposed
                interpretation would serve no purpose because deceased consumers lacked
                privacy interests. A trade group commenter stated that no evidence of
                confusion existed in the decedent debt context, and that the Bureau's
                interpretation would expand the class of individuals entitled to sue
                debt collectors for violations of the FDCPA and the final rule.
                Finally, a group of consumer advocates suggested that the Bureau's
                interpretation was unnecessary because proposed comments 34(a)(1)-1 and
                38-1 would clarify that a person who is authorized to act on behalf of
                the deceased consumer's estate operates as the consumer for purposes of
                Sec. Sec. 1006.34(a)(1) and 1006.38.\70\ These commenters also stated
                that, if the Bureau were attempting to change the class of individuals
                who may bring civil actions against debt collectors, the FDCPA already
                allows any ``person'' to bring such claims.
                ---------------------------------------------------------------------------
                 \70\ See the section-by-section analyses of Sec. Sec. 1006.34
                and 1006.38.
                ---------------------------------------------------------------------------
                 For the reasons discussed below, the Bureau is revising Sec.
                1006.2(e), as set forth in the November 2020 Final Rule, to clarify
                that the definition of consumer includes deceased natural persons. As
                explained in the May 2019 proposal, the FDCPA does not specify whether
                a consumer, as defined in section 803(3), includes a deceased consumer
                (or whether a natural person, as that term is used in section 803(3),
                includes a deceased natural person).\71\ Because the definition of
                consumer in FDCPA section 803(3) is silent with respect to deceased
                consumers, other FDCPA provisions that refer to a debt collector's
                obligations to a consumer lack clarity in the decedent debt context.
                For example, FDCPA provisions requiring debt collectors to provide
                validation information, and to respond to disputes and requests for
                original-creditor information, do not address situations in which the
                person obligated or allegedly obligated to pay the debt is deceased.
                Uncertainty surrounding these provisions increases the risk of consumer
                harm in the decedent debt context. Specifically, without validation
                information and an opportunity to dispute the debt, individuals trying
                to resolve debts in a deceased consumer's estate will lack information
                needed to determine whether they are being asked to pay the right debt,
                in the right amount, and to the right debt collector, and,
                consequently, whether they should assert dispute rights.
                ---------------------------------------------------------------------------
                 \71\ See 84 FR 23274, 23288 (May 21, 2019).
                ---------------------------------------------------------------------------
                 Accordingly, to increase clarity and to decrease the risk of
                consumer harm, the Bureau is revising Sec. 1006.2(e) to provide that
                the term consumer means any natural person, whether living or deceased,
                obligated or allegedly obligated to pay any debt. The Bureau also is
                revising Sec. 1006.2(e) to delete the statement that the Bureau may
                further define the term to clarify its application when the consumer is
                deceased, since this final rule contains that further definition.\72\
                Relatedly, the Bureau is finalizing the commentary to Sec. Sec.
                1006.34(a)(1) and 1006.38 that clarifies that a person who is
                authorized to act on behalf of the deceased consumer's estate, such as
                the executor, administrator, or personal representative, operates as
                the consumer for purposes of Sec. Sec. 1006.34(a)(1) and 1006.38.
                ---------------------------------------------------------------------------
                 \72\ In the proposal, the Bureau explained that its
                interpretation was ``consistent with a modern trend in the law that
                favors recognizing, as a default, the continued existence of a
                natural person after death.'' 84 FR 23274, 23288 (May 21, 2019).
                Consumer advocates pointed out that the authority cited for this
                proposition comes from contexts other than the FDCPA. But these
                commenters do not explain why this fact undermines the existence of
                the trend described by the Bureau.
                ---------------------------------------------------------------------------
                 Regarding the comment that deceased consumers have no privacy
                rights, the Bureau disagrees. In its Policy Statement on Decedent Debt,
                the FTC prohibited debt collectors from openly referring to a deceased
                consumer's debts in communications with third parties, instead adopting
                an approach that ``balance[d] the legitimate needs of the collector
                with the privacy interests of
                [[Page 5773]]
                the decedent.'' \73\ In the November 2020 Final Rule, the Bureau took a
                similar approach regarding location communications for decedent
                debt.\74\
                ---------------------------------------------------------------------------
                 \73\ Fed. Trade Comm'n, Statement of Policy Regarding
                Communications in Connection with the Collection of Decedents' Debts
                at 44921 (July 27, 2011), https://www.ftc.gov/sites/default/files/documents/federal_register_notices/statement-policy-regarding-communications-connection-collection-decedents-debts-policy-statement/110720fdcpa.pdf (FTC Policy Statement on Decedent Debt).
                 \74\ See 85 FR 76734, 76797-00, 76890, 76900 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 Moreover, interpreting the term consumer in Sec. 1006.2(e) to
                include deceased natural persons is supported by more than concern for
                a decedent's privacy; it also clarifies debt collector's obligations to
                a consumer and, in turn, to those authorized to act on the consumer's
                behalf, if the consumer has died. This includes clarifying a debt
                collector's obligations under the FDCPA's provisions, as implemented in
                this final rule and in the November 2020 Final Rule, regarding
                validation information and disputes and requests for original-creditor
                information, which help to ensure that consumers are not paying the
                wrong debt, in the wrong amount, to the wrong debt collector.
                 This interpretation also clarifies the application of Sec.
                1006.22(f)(4), which the Bureau adopted in the November 2020 Final Rule
                to prohibit debt collectors from communicating or attempting to
                communicate with a person in connection with the collection of a debt
                through a social media platform if the communication or attempt to
                communicate is viewable by the general public or the person's social
                media contacts.\75\ In adopting that provision, the Bureau discussed
                that a consumer advocate commenter had stated that the Bureau should
                broaden the prohibition to apply to deceased consumers, such that debt
                collectors would be prohibited from posting publicly about a deceased
                consumer's alleged debt on the consumer's social media page. The
                consumer advocate commenter stated that a debt collector's only reason
                for doing so would be to pressure surviving relatives to pay the debt,
                either to protect the deceased consumer's reputation or out of a sense
                of moral obligation.\76\
                ---------------------------------------------------------------------------
                 \75\ See id. at 76836-39, 76892.
                 \76\ See id. at 76836-39.
                ---------------------------------------------------------------------------
                 In finalizing Sec. 1006.22(f)(4) in the November 2020 Final Rule,
                Bureau noted that the prohibition applied to communications and
                attempts to communicate with ``a person,'' and that person, as defined
                in Sec. 1006.2(k), includes a consumer. The Bureau again noted that it
                had received a number of comments regarding its proposal to interpret
                the term consumer to include deceased natural persons and that it would
                address such comments in this final rule. In determining to revise
                Sec. 1006.2(e) to include a deceased natural person who is obligated
                or allegedly obligated to pay a debt, the Bureau thus also clarifies
                that the prohibition in Sec. 1006.22(f)(4) includes deceased
                consumers.
                 The Bureau disagrees with the industry commenter that there is no
                evidence of confusion about the definition of consumer in the decedent
                debt context. As explained above, the FDCPA's current lack of clarity
                in the decedent debt context creates uncertainty in several situations
                arising during the collection of debts belonging to deceased consumers.
                Therefore, the Bureau determines that additional clarity will improve
                the debt collection system for all parties.
                 Nor does Sec. 1006.2(e) expand the class of potential plaintiffs
                who may bring suit under the FDCPA and Regulation F, as an industry
                commenter alleged. The civil liability provision of the FDCPA already
                creates liability for violations committed against any person.\77\ As
                noted in the proposal, the trend in the law has been to recognize, as a
                default, the continued existence of a natural person after death for
                purposes of bringing civil actions, particularly for remedial statutes
                like the FDCPA.\78\ This commenter did not explain how the Bureau's
                interpretation would result in a lawsuit by someone other than a
                ``person'' under the statute.
                ---------------------------------------------------------------------------
                 \77\ 15 U.S.C. 1692k.
                 \78\ See 84 FR 23274, 23288 (May 21, 2019).
                ---------------------------------------------------------------------------
                 Finally, the Bureau disagrees, as suggested by certain commenters,
                that the commentary to Sec. Sec. 1006.34(a)(1) and 1006.38 (final
                comments 34(a)(1)-1 and 38-3) provide adequate clarity without
                interpreting the term consumer to include deceased natural persons. In
                fact, interpreting the term consumer to include deceased natural
                persons is a necessary predicate to provide that the persons identified
                in those comments operate as the consumer for purposes of the
                requirements relating to validation information, disputes, and requests
                for original-creditor information.
                 Commenters raised additional issues related to Sec. 1006.2(e). A
                few industry commenters suggested that the Bureau's proposed
                interpretation was inconsistent with the Bureau's mortgage servicing
                rules regarding successors in interest. One trade group commenter
                stated that allowing any individual authorized to act on behalf of a
                deceased consumer's estate to meet Regulation F's definition of
                consumer under Sec. 1006.2(e) will complicate and potentially impede
                the existing successor in interest process under Regulations X and Z.
                The commenter explained that, under proposed comment 34(a)(1)-1,
                mortgage servicers who are also debt collectors under Regulation F
                would have to send validation information to the person authorized to
                act on behalf of the deceased consumer's estate but would not be able
                to send foreclosure-related disclosures required under State law to the
                same person, unless that person had assumed ownership of the
                obligation. The commenter also suggested that, under proposed comment
                38-1, debt collectors would be required to focus resources on verifying
                the identify of an individual asserting to be a person authorized to
                act on behalf of the deceased consumer's estate, which would take away
                from legitimate efforts to respond to disputes and requests for
                original-creditor information.
                 Another trade group commenter stated that the clarification in
                proposed comment 34(a)(1)-1 to send the validation notice to the person
                authorized to act on behalf of the deceased consumer's estate if the
                debt collector knows or should know that the consumer is deceased
                would, unlike the Bureau's mortgage servicing rules, appear to create
                an affirmative obligation for mortgage servicers to track down
                information about potential successors in interest and cloud
                requirements for mortgage servicers under Regulation X. For this
                reason, a third trade group commenter suggested that, if a required
                notice must be sent and no individual has come forward as a potential
                or confirmed successor in interest, the Bureau should permit mortgage
                servicers to address a validation notice to the deceased consumer or
                ``the estate of'' the deceased consumer rather than require a search
                for an individual to whom to address the notice.
                 As the Bureau has previously explained, while many mortgage
                servicers are not subject to the FDCPA, mortgage servicers that
                acquired a mortgage loan at the time that it was in default may be
                subject to the FDCPA with respect to that mortgage loan.\79\ As
                discussed below, the Bureau concludes that including a deceased natural
                person who is obligated or allegedly obligated to pay a debt within the
                definition of consumer under Sec. 1006.2(e) is not inconsistent with
                the Bureau's mortgage servicing rules on successors in interest.
                [[Page 5774]]
                Although one commenter asserted that finalizing this definition as
                proposed would complicate and potentially impede the existing successor
                in interest process, the commenter failed to explain why that would be
                the case and the Bureau does not believe that to be the case.
                ---------------------------------------------------------------------------
                 \79\ See 85 FR 76734, 76758 (Nov. 30, 2020); 81 FR 71977, 71978
                (Oct. 19, 2016).
                ---------------------------------------------------------------------------
                 Regarding delivery of validation information, as discussed below,
                comment 34(a)(1)-1 clarifies that, if a debt collector knows or should
                know that a consumer is deceased, and if the debt collector has not
                previously provided the validation information to the deceased
                consumer, then in such circumstances, to comply with Sec.
                1006.34(a)(1), a debt collector must provide the validation information
                to an individual whom the debt collector identifies by name and who is
                authorized to act on behalf of the deceased consumer's estate.\80\ A
                person who is authorized to act on behalf of a deceased consumer's
                estate may include the executor, administrator, or personal
                representative. However, as discussed in the November 2020 Final Rule,
                for purposes of Regulations X and Z, a successor in interest is, in
                general, a person to whom an ownership interest either in a property
                securing a mortgage loan subject to subpart C of Regulation X, or in a
                dwelling securing a closed-end consumer credit transaction under
                Regulation Z, is transferred under specified circumstances including,
                for example, after a consumer's death or as part of a divorce.\81\
                Therefore, a person who is authorized to act on behalf of a deceased
                consumer's estate for purposes of Regulation F may or may not also be a
                successor in interest under Regulations X and Z, depending on whether
                an ownership interest in a property securing a mortgage loan or a
                dwelling securing a closed-end consumer credit transaction is
                transferred to that person under the circumstances specified in
                Regulations X and Z.\82\
                ---------------------------------------------------------------------------
                 \80\ See the section-by-section analysis of Sec. 1006.34(a)(1).
                 \81\ See 85 FR 76734, 76758-59 (Nov. 30, 2020). See also 12 CFR
                1024.31, 1026.2(a)(27)(i). A confirmed successor in interest, in
                turn, means a successor in interest once a mortgage servicer has
                confirmed the successor in interest's identity and ownership
                interest in the property that secures the mortgage loan or in the
                dwelling. See 12 CFR 1024.31, 1026.2(a)(27)(ii).
                 \82\ 12 CFR 1024.31, 1026.2(a)(27).
                ---------------------------------------------------------------------------
                 Comment 34(a)(1)-1 provides debt collectors clarity regarding to
                whom the validation information must be provided in the narrow
                circumstance in which the debt collector knows or should know that a
                consumer is deceased and the debt collector has not previously provided
                the validation information to the deceased consumer. According to the
                comment, under these circumstances, a debt collector who is collecting
                the debt of a deceased consumer must determine who is authorized to act
                on behalf of a deceased consumer's estate. These efforts, however, do
                not create an affirmative obligation under the Bureau's mortgage
                servicing rule for a mortgage servicer that is subject to the FDCPA
                with respect to a mortgage loan to seek out potential successors in
                interest within the meaning of the mortgage servicing rules. Under the
                mortgage servicing rules, a mortgage servicer is not required to
                conduct a search for potential successors in interest if the mortgage
                servicer has not received actual notice of their existence.\83\ If, in
                the course of determining who is authorized to act on behalf of a
                deceased consumer's estate for purposes of Sec. 1006.34(a)(1), a
                mortgage servicer receives actual notice of the existence of a
                potential successor in interest, the mortgage servicer must, as
                required under Regulation X, maintain policies and procedures
                reasonably designed to ensure that the servicer can retain this
                information and promptly facilitate communication with the potential
                successor in interest.\84\ However, because a mortgage servicer that is
                subject to the FDCPA with respect to a mortgage loan may comply with
                both this final rule and the applicable successor in interest
                provisions under Regulations X and Z, the Bureau concludes there is no
                conflict with the mortgage servicing rules. Additionally, nothing in
                this final rule is intended to alter the successor in interest
                provisions in Regulations X and Z or to impose additional requirements
                under Regulations X and Z.
                ---------------------------------------------------------------------------
                 \83\ 12 CFR 1024.38(b)(1)(vi); comment 38(b)(1)(vi)-1.
                 \84\ Id. The general servicing policies, procedures, and
                requirements in 12 CFR 1024.38 do not apply to a mortgage servicer
                that qualifies as a small servicer pursuant to 12 CFR 1026.41(e).
                See 12 CFR 1024.30(b)(1).
                ---------------------------------------------------------------------------
                 In response to the commenter's concern regarding the burdens under
                comment 38-1 of determining who is authorized to act on behalf of a
                deceased consumer's estate before responding to a dispute or request
                for original-creditor information, the potential burdens associated
                with responding to such incoming disputes and requests will be
                significantly reduced once a debt collector has procedures in place to
                make that threshold determination or has already made that
                determination for purposes of providing the validation information as
                described in comment 34(a)(1)-1.
                 The Bureau declines to adopt the suggestion to allow mortgage
                servicers to address a validation notice to the deceased consumer or to
                ``the estate of'' the deceased consumer. As discussed in the proposal,
                the Bureau shares the view of the FTC, which stated in its Policy
                Statement on Decedent Debt that individuals who lack the authority to
                resolve the estate but who wish to be helpful are likely to open
                communications addressed to the decedent's estate, or to an unnamed
                executor or administrator, which makes such communications
                insufficiently targeted to a consumer with whom the debt collector may
                generally discuss the debt.\85\ The Bureau, therefore, shares the view
                of the FTC that ``communication[s] addressed to the decedent's estate,
                or an unnamed executor or administrator, [are] location
                communication[s] and must not refer to the decedent's debts.'' \86\
                Accordingly, comment 34(a)(1)-1 specifies that a debt collector must
                provide the validation information to an individual that the debt
                collector identifies by name who is authorized to act on behalf of the
                deceased consumer's estate.
                ---------------------------------------------------------------------------
                 \85\ See 84 FR 23274, 23334 (May 21, 2019).
                 \86\ FTC Policy Statement on Decedent Debt, supra note 73, at
                44920.
                ---------------------------------------------------------------------------
                 A group of consumer advocates stated that certain other provisions
                of the Bureau's proposal, such as Sec. 1006.14(e)'s prohibition on
                publishing lists of consumers who allegedly refuse to pay debts and
                Sec. 1006.18(b)(1)(iv)'s prohibition on falsely representing or
                implying that the consumer committed any crime or other conduct in
                order to disgrace the consumer, should apply to deceased consumers.
                But, these commenters claimed, other provisions, like Sec.
                1006.6(b)(1)'s restrictions on communicating at inconvenient times or
                places, were nonsensical as applied to deceased consumers. Therefore,
                these commenters argued, the Bureau's interpretation in proposed Sec.
                1006.2(e) was overbroad.
                 The Bureau acknowledges that there may be certain provisions in the
                November 2020 Final Rule and in this final rule that refer to a
                consumer that simply will be inapplicable in the context of a deceased
                consumer.\87\ Nevertheless, as consumer advocates acknowledged, other
                provisions that
                [[Page 5775]]
                refer to a consumer will apply to deceased consumers. For example, as
                discussed above, interpreting the term consumer in Sec. 1006.2(e) to
                include deceased natural persons means that, as applied to Sec.
                1006.22(f)(4), debt collectors are prohibited from posting publicly
                about a deceased consumer's alleged debt on a deceased consumer's
                public-facing social media page. In situations that are currently
                unclear, such as delivery of validation information, the final rule
                adopts commentary clarifying debt collectors' obligations.
                ---------------------------------------------------------------------------
                 \87\ For example, Sec. 1006.6(b) restricts, among other things,
                the times at which debt collectors can communicate or attempt to
                communicate with consumers. See 85 FR 76734, 76889 (Nov. 30, 2020).
                To the extent that ``communicate'' includes having a conversation,
                the Bureau believes it is obvious that this prohibition is simply
                inapplicable in the case of a deceased consumer (but does apply to
                having a conversation with the executor or administrator of the
                consumer's estate).
                ---------------------------------------------------------------------------
                 This group of consumer advocates also recommended that the Bureau
                require debt collectors to provide a validation notice to the person
                authorized to act on behalf of the deceased consumer's estate even if
                validation information already was provided to the consumer. These
                commenters also asked the Bureau to provide that the validation period
                starts from the date the person authorized to act on behalf of the
                deceased consumer's estate receives the validation notice, and to
                require debt collectors to respond to disputes and requests for
                original-creditor information submitted by this person, even if a
                response already was provided to the consumer. The Bureau declines to
                adopt these suggestions because the Bureau finds that, in the scenario
                described, the debt collector has already satisfied the debt
                collector's obligations to the consumer as set forth in FDCPA section
                809 and Sec. Sec. 1006.34 and 1006.38. Depending on the facts, the
                debt collector could be required to provide a validation notice or
                dispute response to the person authorized to act on behalf of the
                deceased consumer's estate,\88\ but the Bureau declines to require debt
                collectors to do so in all cases. Nevertheless, the Bureau notes that
                debt collectors who voluntarily provide validation notices after a
                consumer dies (as some industry commenters reported is done), and who,
                in doing so, start a new validation period, do not thereby violate the
                FDCPA or Regulation F.
                ---------------------------------------------------------------------------
                 \88\ See the section-by-section analysis of Sec. 1006.34(b)(5).
                ---------------------------------------------------------------------------
                 For the reasons discussed above, and pursuant to its authority
                under FDCPA section 814(d) to prescribe rules with respect to the
                collection of debts by debt collectors, the Bureau is finalizing Sec.
                1006.2(e) as proposed to interpret the definition of consumer in FDCPA
                section 803(3) to mean any natural person, whether living or deceased,
                who is obligated or allegedly obligated to pay any debt.
                2(f) Consumer Financial Product or Service
                 As discussed in the November 2020 Final Rule, the Bureau proposed
                Sec. 1006.2(f) to define consumer financial product or service debt to
                mean any debt related to any consumer financial product or service, as
                consumer financial product or service is defined in section 1002(5) of
                the Dodd-Frank Act.\89\ As also discussed in the November 2020 Final
                Rule, the Bureau did not finalize Sec. 1006.2(f) as part of that
                rulemaking because the Bureau did not finalize in that rulemaking any
                provisions for which the definition in proposed Sec. 1006.2(f) would
                have been relevant.
                ---------------------------------------------------------------------------
                 \89\ 85 FR 76734, 76745 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 For the reasons discussed in the section-by-section analyses of
                Sec. Sec. 1006.1(c) and 1006.34, the Bureau is adopting in this final
                rule two provisions (Sec. 1006.34(c)(2)(iii) and (3)(iv)) that apply
                to debt collectors only if they are collecting debt related to a
                consumer financial product or service. This includes, for example, debt
                collectors collecting debts related to consumer mortgage loans or
                credit cards.\90\ To facilitate compliance with those provisions, the
                Bureau is adopting Sec. 1006.2(f) to provide that consumer financial
                product or service has the meaning in section 1002(5) of the Dodd-Frank
                Act (12 U.S.C. 5481(5)).
                ---------------------------------------------------------------------------
                 \90\ See 84 FR 23274, 23286 (May 21, 2019).
                ---------------------------------------------------------------------------
                 The Bureau notes that it originally proposed Sec. 1006.2(f) to
                define the term ``consumer financial product or service debt.''
                However, because the relevant defined term in the Dodd-Frank Act is
                ``consumer financial product or service,'' and because certain
                commenters observed that including two definitions of the term ``debt''
                in the rule would be confusing, the Bureau is finalizing Sec.
                1006.2(f) to provide that the defined term in the rule is ``consumer
                financial product or service'' and that the term has the same meaning
                given to it in section 1002(5) of the Dodd-Frank Act.
                Subpart B--Rules for FDCPA Debt Collectors
                Section 1006.26 Collection of Time-Barred Debts
                 The May 2019 proposal and the February 2020 proposal both addressed
                the collection of time-barred debt. In the May 2019 proposal, the
                Bureau proposed to define several terms (proposed Sec. 1006.26(a)) and
                to prohibit debt collectors from bringing or threatening to bring legal
                actions against consumers to collect certain time-barred debts
                (proposed Sec. 1006.26(b)). In the February 2020 proposal, the Bureau
                proposed to require debt collectors to provide disclosures if
                collecting certain time-barred debts (proposed Sec. 1006.26(c)). The
                February 2020 proposal also included model language and forms that debt
                collectors could use to comply with the proposed disclosure
                requirements. In the November 2020 Final Rule, the Bureau noted that it
                planned to address its proposals regarding time-barred debt in this
                final rule, and the Bureau reserved Sec. 1006.26 for that purpose.
                After considering the comments received in response to both the May
                2019 and February 2020 proposals, the Bureau is now finalizing proposed
                Sec. 1006.26(a) and (b) with modifications as described below. The
                Bureau is not finalizing proposed Sec. 1006.26(c).
                26(a) Definitions
                 Proposed Sec. 1006.26(a) defined two terms not defined in the
                FDCPA: Statute of limitations and time-barred debt. The Bureau proposed
                to define these terms to facilitate compliance with proposed Sec.
                1006.26(b) and (c). As discussed below, the Bureau is finalizing Sec.
                1006.26(a) as proposed. The Bureau is finalizing Sec. 1006.26(a)
                pursuant to its authority under FDCPA section 814(d) to prescribe rules
                with respect to the collection of debts by debt collectors.
                26(a)(1) Statute of Limitations
                 Proposed Sec. 1006.26(a)(1) defined the term statute of
                limitations to mean the period prescribed by applicable law for
                bringing a legal action against the consumer to collect a debt.\91\
                ---------------------------------------------------------------------------
                 \91\ See 84 FR 23274, 23327-28 (May 21, 2019).
                ---------------------------------------------------------------------------
                 Statutes of limitation, which typically are established by State
                law, provide time limits for bringing suit on legal claims. As the
                Bureau explained in the May 2019 proposal, statutes of limitation serve
                several purposes.\92\ First, statutes of limitations advance a
                defendant's interest in repose. That is, they reflect a legislative
                judgment that it is ``unjust to fail to put the adversary on notice to
                defend within a specified period of time.'' \93\ Second, statutes of
                limitations eliminate stale claims. That is, they protect defendants
                and the courts from having to deal with cases in which ``the search for
                truth may be seriously impaired by the loss of evidence, whether by
                death or disappearance of witnesses, fading
                [[Page 5776]]
                memories, disappearance of documents, or otherwise.'' \94\ Third,
                statutes of limitations provide ``certainty about a plaintiff's
                opportunity for recovery and a defendant's potential liabilities.''
                \95\ For debt collection claims, the length of the applicable statute
                of limitations often varies by State and, within each State, by debt
                type. Although most statutes of limitations applicable to debt
                collection claims are between three and six years, some are as long as
                15 years.
                ---------------------------------------------------------------------------
                 \92\ See generally Rotella v. Wood, 528 U.S. 549, 555 (2000)
                (identifying ``the basic policies of all limitations provisions'' as
                ``repose, elimination of stale claims, and certainty'').
                 \93\ United States v. Kubrick, 444 U.S. 111, 117 (1979).
                 \94\ Id.
                 \95\ Young v. United States, 535 U.S. 43, 47 (2002) (quoting
                Rotella, 528 U.S. at 555).
                ---------------------------------------------------------------------------
                 Several commenters addressed proposed Sec. 1006.26(a)(1). One
                industry commenter confirmed that the proposed definition of statute of
                limitations comported with debt collectors' understanding of the term.
                A number of other industry commenters requested that the Bureau modify
                the definition to account for the fact that it can be challenging to
                determine the applicable statute of limitations in certain
                circumstances. For example, two industry commenters requested that the
                Bureau clarify that, in determining the applicable statute of
                limitations, a debt collector need only conduct a reasonable
                investigation based on objectively ascertainable facts, and that a debt
                collector would only be charged with knowing that the statute of
                limitations has expired if the law is clearly established. The
                commenters also requested that the Bureau more specifically define
                certain elements of the term statute of limitations to lessen the
                burden on debt collectors of determining whether a debt is time barred.
                For example, they suggested defining ``applicable law'' as the law of
                the jurisdiction where the consumer resides or is believed to reside at
                the time collections begin, or the law of the jurisdiction in which the
                consumer signed any underlying contract. Commenters suggested that
                these changes would make it easier for a debt collector to determine
                the statute of limitations applicable to a particular debt while
                protecting a debt collector from liability when it is difficult
                determine the exact date on which a debt becomes time barred.
                 The Bureau is finalizing Sec. 1006.26(a)(1) as proposed. As
                industry commenters confirmed, the definition of statute of limitations
                in Sec. 1006.26(a)(1) is consistent with debt collectors'
                understanding of the term. The Bureau declines to modify the definition
                to identify the type of investigation a debt collector must or should
                undertake to ascertain the applicable statute of limitations. The
                Bureau also declines to define the term ``applicable law'' in the
                manner requested by commenters. The Bureau recognizes that, in some
                cases, it can be challenging and costly for a debt collector to
                determine what statute of limitations applies to a legal action against
                the consumer to collect a particular debt, and that, in some cases, the
                commenters' suggestions could reduce those challenges and costs. The
                Bureau declines, however, to address the challenges and costs
                associated with determining whether a debt is time barred by modifying
                the definition of statute of limitations, a term with a meaning widely
                understood by debt collectors, or by defining new terms. Comments
                relating to the difficulty of determining whether a debt is time barred
                are discussed further in the section-by-section analysis of Sec.
                1006.26(b).
                26(a)(2) Time-Barred Debt
                 Proposed Sec. 1006.26(a)(2) defined the term time-barred debt to
                mean a debt for which the applicable statute of limitations has
                expired.\96\
                ---------------------------------------------------------------------------
                 \96\ See 84 FR 23274, 23328 (May 21, 2019).
                ---------------------------------------------------------------------------
                 As the Bureau explained in the May 2019 proposal, many debt
                collectors already determine whether the statute of limitations
                applicable to a debt has expired. Some do so to comply with State and
                local disclosure laws that require them to inform consumers when debts
                are time barred.\97\ Others do so to assess whether they can sue to
                collect the debt, which may affect their collection strategy. In
                addition, the information that debt buyers generally receive when
                bidding on and purchasing debts, and the information that other debt
                collectors generally receive at placement, may allow them to determine
                whether the applicable statute of limitations has expired.\98\
                ---------------------------------------------------------------------------
                 \97\ See, e.g., Cal. Civ. Code sec. 1788.52(d)(3); Conn. Gen.
                Stat. sec. 36a-805(a)(14); Mass. Code Regs., tit. 940, Sec.
                7.07(24); N.M. Code. R. sec. 12.2.12.9(A); N.Y. Comp. Codes R. &
                Regs., tit. 23, sec. 1.3; New York City, N.Y., Rules, tit. 6, sec.
                2-191(a); W. Va. Code sec. 46a-2-128(f).
                 \98\ See Fed. Trade Comm'n, The Structure and Practices of the
                Debt Buying Industry, at 49 (Jan. 2013), https://www.ftc.gov/sites/default/files/documents/reports/structure-and-practices-debt-buying-industry/debtbuyingreport.pdf (FTC Debt Buying Report) (``The data
                the Commission received from debt buyers suggests that debt buyers
                usually are likely to know or be able to determine whether the debts
                on which they are collecting are beyond the statute of
                limitations.''). Similarly, the majority of respondents to the
                Bureau's Debt Collection Operations Study reported always or often
                receiving certain information and documentation that may be relevant
                to determining whether a debt is time barred, such as debt balance
                at charge off, account agreement documentation, and billing
                statements. See CFPB Debt Collection Operations Study, supra note
                37, at 23.
                ---------------------------------------------------------------------------
                 Several commenters addressed proposed Sec. 1006.26(a)(2). An
                industry commenter confirmed that the proposed definition comported
                with debt collectors' understanding of the term. Two other industry
                commenters expressed concern that the term time-barred debt may imply
                that a debt collector has no right at all to collect the debt, whereas
                in most jurisdictions a debt's time-barred status only limits the debt
                collector's right to recover on the debt through a lawsuit. Several
                industry commenters expressed concern that the proposal seemed to
                contemplate that a debt is a single amount that becomes time barred at
                a single moment in time and noted that not all debts operate in that
                manner. For example, these commenters stated that an installment loan
                could become time barred on a rolling basis depending on when each
                installment was due. In addition, according to some commenters, a legal
                action to collect a debt may be based on more than one legal theory or
                involve more than one cause of action, and each theory or cause of
                action may be subject to a different statute of limitations. Similarly,
                according to some commenters, certain secured debts may be subject to
                more than one method of suit and more than one statute of limitations.
                For example, these commenters asserted, in some States a mortgagee may
                choose whether to pursue a remedy at law on the note, a remedy in
                equity on the mortgage, or both, and the statute of limitations
                applicable to these claims may differ. Relatedly, one industry
                commenter asked the Bureau to clarify that debt collectors are not
                prohibited from taking legal action to enforce a lien even if a claim
                on the underlying obligation is time barred. Alternatively, the
                commenter asked the Bureau to clarify that the requirements of proposed
                Sec. 1006.26 would apply only when all causes of action associated
                with the underlying note and with the security instrument are time
                barred.\99\
                ---------------------------------------------------------------------------
                 \99\ Another commenter seeking clarification on the scope of
                proposed Sec. 1006.26(b) asserted that in rem enforcement of a
                security instrument is not inherently debt collection. The Bureau
                notes that Sec. 1006.26, like the rest of this final rule, applies
                only to FDCPA debt collectors. The Supreme Court recently held that
                a business engaged in no more than nonjudicial foreclosure
                proceedings is not an FDCPA debt collector, except for the limited
                purpose of FDCPA section 808(6). See Obduskey v. McCarthy & Holthus
                LLP, 139 S. Ct. 1029 (2019). FDCPA section 808(6) specifically
                prohibits taking or threatening to take any nonjudicial action in
                certain circumstances, such as where there is no present right to
                possession through an enforceable security instrument.
                ---------------------------------------------------------------------------
                 The Bureau is finalizing Sec. 1006.26(a)(2) as proposed. As
                industry commenters confirmed, the definition of time-barred debt in
                Sec. 1006.26(a)(2) is consistent with debt collectors'
                [[Page 5777]]
                understanding of the term. In response to commenters' concerns that the
                term time-barred debt might imply that a debt collector has no right to
                collect the debt, the Bureau notes that, in most jurisdictions, as
                commenters observed and as is discussed in the section-by-section
                analysis of Sec. 1006.26(b), a debt is not extinguished when the
                statute of limitations expires. Rather, in these jurisdictions, a debt
                collector still may collect the debt using non-litigation means, such
                as telephone calls and letters, and the Bureau's use of the term time-
                barred debt neither changes that fact nor is meant to imply otherwise.
                With respect to industry commenters' concern about debts for which
                multiple statutes of limitation may be relevant, the Bureau notes that
                a debt is a time-barred debt under Sec. 1006.26(a)(2) if the
                applicable statute of limitations has expired. The applicable statute
                of limitations depends on the specific legal action the debt collector
                takes or represents that it will take. For some debts, such as certain
                installment loans and secured debts, it may be the case that one claim
                associated with a debt is time barred while another claim associated
                with the debt is not. In such a case, the prohibitions in Sec.
                1006.26(b) apply to the time-barred claim only.
                26(b) Legal Actions and Threats of Legal Actions Prohibited
                 The Bureau proposed Sec. 1006.26(b) to prohibit a debt collector
                from bringing or threatening to bring a legal action against a consumer
                to collect a debt that the debt collector knows or should know is a
                time-barred debt.\100\ In response to comments, the Bureau is
                finalizing proposed Sec. 1006.26(b) with two principal changes. First,
                the Bureau is not adopting the proposed knows-or-should-know standard;
                instead, a debt collector may violate final Sec. 1006.26(b) even if
                the debt collector neither knew nor should have known that a debt was
                time barred. Second, consistent with the Supreme Court's decision in
                Midland Funding, LLC v. Johnson, the final rule clarifies that the
                prohibitions in Sec. 1006.26(b) do not apply to proofs of claim filed
                in bankruptcy proceedings.\101\
                ---------------------------------------------------------------------------
                 \100\ See 84 FR 23274, 23328-29 (May 21, 2019).
                 \101\ 137 S. Ct. 1407 (2017).
                ---------------------------------------------------------------------------
                Prohibitions
                 As the Bureau explained in the May 2019 proposal, in most States
                the expiration of the applicable statute of limitations, if raised by
                the consumer as an affirmative defense, precludes the debt collector
                from recovering on the debt using judicial processes, but it does not
                extinguish the debt itself.\102\ In other words, in most States a debt
                collector may use non-litigation means to collect a time-barred debt,
                as long as those means do not violate the FDCPA or other laws. If a
                debt collector does sue to collect a time-barred debt, and if the
                consumer proves the expiration of the statute of limitations as an
                affirmative defense, the court will dismiss the suit.
                ---------------------------------------------------------------------------
                 \102\ See generally Midland Funding, LLC v. Johnson, 137 S. Ct.
                1407, 1411-12 (2017) (noting that under ``the law of many States . .
                . a creditor has the right to payment of a debt even after the
                limitations period expires,'' and collecting State laws). In
                Mississippi and Wisconsin, however, debts are extinguished when the
                applicable statute of limitations expires. See Miss. Code Ann. sec.
                15-1-3 (``The completion of the period of limitation prescribed to
                bar any action, shall defeat and extinguish the right as well as the
                remedy.''); Wis. Stat. Ann. sec. 893.05 (``When the period within
                which an action may be commenced on a Wisconsin cause of action has
                expired, the right is extinguished as well as the remedy.'').
                ---------------------------------------------------------------------------
                 Suits and threats of suit on time-barred debts can harm consumers
                in multiple ways. A debt collector's threat to sue on a time-barred
                debt may prompt some consumers to pay or prioritize that debt over
                others in the mistaken belief that doing so is necessary to avoid
                litigation. In some jurisdictions, a consumer's payment on or
                acknowledgement of a debt can revive the debt collector's right to sue
                for the entire amount, opening the consumer to new legal
                liability.\103\ Similarly, suits on time-barred debts may lead to
                judgments against consumers on claims for which those consumers had
                meritorious defenses, including defenses based on the statute of
                limitations. Few consumers who are sued for allegedly unpaid debts--
                whether time barred or not--actually defend themselves in court, and
                those who do often are unrepresented. As a result, the vast majority of
                judgments on unpaid debts, including on time-barred debts, are default
                judgments, entered solely on the representations contained in the debt
                collector's complaint.\104\
                ---------------------------------------------------------------------------
                 \103\ Revival extinguishes the consumer's right to raise the
                expiration of the statute of limitations as an affirmative defense
                to litigation; that is, it revives the debt collector's right to sue
                to collect the debt. Although State revival laws vary, there are
                generally several circumstances in which revival occurs. First, in
                some States, a consumer's partial payment on a time-barred debt
                revives the debt collector's right to sue. Second, in some States, a
                consumer's written acknowledgement of a time-barred debt revives the
                debt collector's right to sue. Third, a consumer's oral
                acknowledgement of a time-barred debt may revive the debt
                collector's right to sue in some States. See, e.g., Lima v. Schmidt,
                595 So. 2d 624, 631 (La. 1992) (``Our courts have consistently held
                that renunciation must be clear, direct, and absolute and manifested
                by words or actions of the party in whose favor prescription has
                run.'') (citations omitted); 22 Tenn. Pract. Contract Law and
                Practice Sec. 12:88 (rev. Aug. 2020) (``[T]he defendant may revive
                a plaintiff's remedy that has been barred by the statute of
                limitations. This event can occur either when the defendant
                expressly promises to pay a debt or when the defendant acknowledges
                the debt and expresses a willingness to pay it . . . . The
                expression of a defendant's willingness to pay might be implied from
                the words or action of a debtor . . . .'') (citations and internal
                quotation marks omitted).
                 \104\ See FTC Debt Buying Report, supra note 98, at 45
                (observing that ``90 percent or more of consumers sued in [debt
                collection actions] do not appear in court to defend,'' which
                ``creates a risk that consumer will be subject to a default judgment
                on a time-barred debt''); Peter A. Holland, The One Hundred Billion
                Dollar Problem in Small Claims Court: Robo-Signing and Lack of Proof
                in Debt Buyer Cases, 6 J. Bus. & Tech. L. 259, 265 (2011) (``In the
                majority of debt buyer cases, the courts grant the debt buyer a
                default judgment because the consumer has failed to appear for trial
                . . . . Debtors who do receive notice usually appear without legal
                representation.''); CFPB Debt Collection Operations Study, supra
                note 37, at 18 (observing that respondents reported obtaining
                default judgments in 60 to 90 percent of their filed suits); cf.
                Kimber v. Fed. Fin. Corp., 668 F. Supp. 1480, 1478 (M.D. Ala. 1987)
                (``Because few unsophisticated consumers would be aware that a
                statute of limitations could be used to defend against lawsuits
                based on stale debts, such consumers would unwittingly acquiesce to
                such lawsuits. And, even if the consumer realizes that she can use
                time as a defense, she will more than likely still give in rather
                than fight the lawsuit because she must still expend energy and
                resources and subject herself to the embarrassment of going into
                court to present the defense; this is particularly true in light of
                the costs of attorneys today.'').
                ---------------------------------------------------------------------------
                 Consumer and consumer advocate commenters generally supported the
                prohibitions in proposed Sec. 1006.26(b). Many of these commenters
                also argued that, to prevent deception, the Bureau should prohibit the
                collection of time-barred debt altogether, even though the Bureau did
                not propose such a prohibition in the May 2019 proposal or the February
                2020 proposal. The Bureau certainly supports measures to prevent
                deception because of the harm it causes to consumers. However, the
                Bureau concludes that is not necessary to ban the collection of time-
                barred debt to prevent potential deception. As discussed in the
                February 2020 proposal, the Bureau's quantitative testing generally
                indicates that disclosures, in certain situations, can be effective in
                curing the potential deception associated with the collection of time-
                barred debt.\105\ The Bureau concludes that a prohibition on the
                collection of time-barred debt would impose significant burden on debt
                collectors to identify such debts and would decrease the value of time-
                barred debts to little or nothing; a debt has little or no value if the
                owner cannot collect the debt either in litigation or outside of
                litigation. The Bureau declines to impose such extraordinarily large
                costs because much less costly measures--namely, disclosures--can be
                [[Page 5778]]
                effective in preventing potential deception.
                ---------------------------------------------------------------------------
                 \105\ See 85 FR 12672, 12677-79 (Mar. 3, 2020).
                ---------------------------------------------------------------------------
                 Moreover, the Bureau emphasizes that prohibiting the collection of
                time-barred debt when doing so is unnecessary to prevent potential
                deception is inconsistent with the First Amendment limitations on the
                Bureau's authority to ban commercial speech. Courts have held that a
                debt collector who asks a consumer to pay a debt is engaging in
                commercial speech.\106\ Prohibiting the collection of time-barred debt
                therefore would restrict commercial speech. The Supreme Court has held
                that restrictions on commercial speech are permissible when they: (1)
                Are supported by a substantial government interest; (2) directly
                advance that interest; and (3) are no more extensive than necessary to
                serve that interest.\107\ If the potential deception associated with
                the collection of time-barred debt can be cured by a disclosure, then
                prohibiting the collection of time-barred debt would impose a
                restriction that is more extensive than necessary.\108\ As noted above,
                the Bureau's quantitative testing generally indicates that, in certain
                situations involving the collection of time-barred debt, disclosures
                can be effective in curing potential deception. Therefore, the Bureau
                declines to finalize a prohibition on the collection of time-barred
                debt.
                ---------------------------------------------------------------------------
                 \106\ See, e.g., ACA Int'l v. Healey, 457 F. Supp. 3d 17, 25-26
                (D. Mass. 2020); Stover v. Fingerhut Direct Mktg., 709 F. Supp. 2d
                473, 479 (S.D. W.Va. 2009).
                 \107\ See Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n,
                447 U.S. 557, 566 (1980).
                 \108\ In re R.M.J., 455 U.S. 191, 203 (1982); see also Pearson
                v. Shalala, 164 F.3d 650 (D.C. Cir. 1999).
                ---------------------------------------------------------------------------
                 In addition to consumers and consumer advocates, several industry
                commenters, Federal agency staff, and one local government commenter
                expressed support for the proposed prohibitions. Commenters who
                supported the proposed prohibitions asserted that suits and threats of
                suit on time-barred debts may induce consumers to make payments they
                otherwise would not make. Some consumer advocate commenters noted that
                these payments can revive the debt collector's right to sue in certain
                jurisdictions. Additionally, consumer advocate commenters asserted that
                consumers often assume that the mere filing of a lawsuit means that
                they owe the debt, that the amount owed is accurately stated, and that
                the debt collector has the legal right to collect the debt, whereas in
                fact the debt collector may lack support for its claims. These
                commenters also asserted that consumers generally lack the knowledge
                and resources to defend their rights in court, and, as a consequence,
                many claims result in default judgments on debts that were not legally
                enforceable. Consumer advocate commenters also provided anecdotes and
                pointed to recent enforcement actions to show that debt collectors
                continue to sue and threaten to sue on time-barred debt.\109\ One
                industry commenter who supported elements of proposed Sec. 1006.26(b)
                acknowledged that proposed Sec. 1006.26(b) is consistent with long-
                standing FDCPA case law.
                ---------------------------------------------------------------------------
                 \109\ See, e.g., Consent Order ]] 65-69, In re Encore Capital
                Grp., Inc., No. 2015-CFPB-0022 (Sept. 9, 2015), http://files.consumerfinance.gov/f/201509_cfpb_consent-order-encore-capital-group.pdf; Consent Order ]] 56-59, In re Portfolio Recovery
                Assocs. LLC, No. 2015-CFPB-0023 (Sept. 9, 2015), http://files.consumerfinance.gov/f/201509_cfpb_consent-order-portfolio-recovery-associates-llc.pdf; see also Complaint ]] 30-35, Bureau of
                Consumer Fin. Prot. v. Encore Capital Grp., Inc., No. 2020CV1750
                (S.D. Cal. Sept. 8, 2020), https://www.consumerfinance.gov/documents/9167/cfpb_encore-capital-group-et-al_complaint_2020-08.pdf.
                ---------------------------------------------------------------------------
                 Several industry commenters who opposed proposed Sec. 1006.26(b)
                argued that the Bureau should not prohibit suits and threats of suit on
                time-barred debt because, in most jurisdictions, expiration of the
                statute of limitations does not prohibit a debt collector from bringing
                suit but rather provides the consumer with an affirmative defense to
                liability. According to these commenters, proposed Sec. 1006.26(b)
                would effectively preempt State affirmative defense laws by making
                expiration of the statute of limitations a total bar to suit, thereby
                interfering with debt collectors' right to legal recourse under State
                law. Relatedly, an industry commenter argued that State courts are
                capable of addressing situations in which a debt collector sues to
                collect a time-barred debt, including by dismissing the debt
                collector's claim and awarding sanctions if appropriate. Another
                industry commenter asserted that consumers should be responsible for
                tracking the legal obligations associated with their debts, and that it
                would be unduly burdensome to require debt collectors to determine
                whether a debt is time barred, particularly for debt collectors who are
                small businesses.
                 Some industry commenters argued that the Bureau lacks the authority
                to prohibit suits and threats of suit on time-barred debts. For
                example, several industry commenters argued that proposed Sec.
                1006.26(b) exceeds the Bureau's authority because, in their view,
                nothing in the FDCPA permits the Bureau to preempt State laws relating
                to debt collection or access to courts or establishes a Federal role in
                determining State law defenses. Similarly, one industry commenter
                asserted that proposed Sec. 1006.26(b) contradicts the Federal Rules
                of Civil Procedure and State-law equivalents and abridges a debt
                collector's right to petition the courts. The commenter pointed to
                Federal Rule of Civil Procedure 11, pursuant to which an attorney's
                claims, defenses, and other legal contentions must be warranted by
                existing law or by a nonfrivolous argument for extending, modifying, or
                reversing existing law or for establishing new law. According to this
                commenter, the proposed prohibitions conflict with Rule 11 and its
                equivalents by discouraging debt collectors from filing legitimate
                lawsuits that argue in good faith for the modification or reversal of
                existing law.
                 Final Sec. 1006.26(b) prohibits a debt collector from bringing or
                threatening to bring a legal action against a consumer to collect a
                time-barred debt. A debt collector who sues or threatens to sue a
                consumer to collect a time-barred debt explicitly or implicitly
                misrepresents to the consumer that the debt is legally enforceable, and
                that misrepresentation is material to consumers because it may affect
                their conduct with regard to the collection of that debt, including
                whether to pay it.\110\ The Bureau's consumer testing suggests that
                consumers often are uncertain about their rights concerning time-barred
                debt.\111\ Consumers sued or threatened with suit on a time-barred debt
                generally do not recognize that the debt is time barred, that time-
                barred debts are unenforceable in court, or that they must raise the
                expiration of the statute of limitations as an affirmative defense.
                ---------------------------------------------------------------------------
                 \110\ See, e.g., Kimber, 668 F. Supp. at 1489 (``By threatening
                to sue Kimber on her alleged debt . . . FFC implicit[ly] represented
                that it could recover in a lawsuit, when in fact it cannot properly
                do so.'').
                 \111\ See FMG Focus Group Report, supra note 26, at 9-10; FMG
                Cognitive Report, supra note 27, at 36-37; FMG Summary Report, supra
                note 29, at 35-36; see also Fed. Trade Comm'n, Repairing a Broken
                System: Protecting Consumers in Debt Collection Litigation and
                Arbitration at iii, 26 (July 2010), https://www.ftc.gov/sites/default/files/documents/reports/federal-trade-commission-bureau-consumer-protection-staff-report-repairing-broken-system-protecting/debtcollectionreport.pdf (FTC Litigation Report).
                ---------------------------------------------------------------------------
                 The prohibitions in final Sec. 1006.26(b) generally are consistent
                with the current state of the law. Multiple courts have held that suits
                and threats of suit on time-barred debt violate the FDCPA, reasoning
                that such practices violate FDCPA section 807's prohibition on false or
                misleading representations, FDCPA section 808's prohibition on unfair
                practices, or both.\112\ The FTC
                [[Page 5779]]
                also has concluded that the FDCPA bars actual and threatened suits on
                time-barred debt.\113\ In addition, the prohibitions in final Sec.
                1006.26(b) generally are consistent with current industry practice. For
                example, a number of industry commenters stated they do not sue or
                threaten to sue on time-barred debt as a matter of policy, and one
                trade group commenter stated that it requires its members to refrain
                from suing or threatening to sue on time-barred debts.
                ---------------------------------------------------------------------------
                 \112\ See, e.g., Pantoja v. Portfolio Recovery Assocs., LLC, 852
                F.3d 679, 683-84 (7th Cir. 2017); McMahon v. LVNV Funding, LLC, 744
                F.3d 1010, 1020 (7th Cir. 2014); Phillips v. Asset Acceptance, LLC,
                736 F.3d 1076, 1079 (7th Cir. 2013); Huertas v. Galaxy Asset Mgmt.,
                641 F.3d 28, 33 (3d Cir. 2011) (per curiam); Goins v. JBC & Assocs.,
                P.C., 352 F. Supp. 2d 262, 273 (D. Conn. 2005); Kimber, 668 F. Supp.
                at 1487-89.
                 \113\ FTC Litigation Report, supra note 111, at 23.
                ---------------------------------------------------------------------------
                 The Bureau recognizes that, in most jurisdictions, expiration of
                the statute of limitations provides the consumer with an affirmative
                defense to liability, but it does not bar a debt collector from
                bringing suit. The Bureau concludes, however, that consumers are
                unlikely to know whether the applicable statute of limitations has
                expired or that the expiration of the statute of limitations provides
                an affirmative defense. Suits and threats of suit on time-barred debts
                therefore imply to the least sophisticated consumer not simply that the
                debt collector may sue or has sued the consumer but also that the debt
                collector's claim is legally enforceable. For time-barred debts, this
                is misleading because expiration of the statute of limitations provides
                the consumer with a complete defense.\114\ Accordingly, the Bureau
                concludes that bringing or threatening to bring a legal action to
                collect a time-barred debt is a deceptive practice under FDCPA section
                807 even if expiration of the statute of limitations is an affirmative
                defense rather than a categorical bar to suit.
                ---------------------------------------------------------------------------
                 \114\ See, e.g., Goins, 352 F. Supp. 2d at 272 (holding that,
                although the statute of limitations is an affirmative defense,
                threatening to bring suit on time-barred debt ``can at best be
                described as a `misleading' representation, in violation of Sec.
                1692e,'' because the statute of limitations is a complete defense to
                any suit).
                ---------------------------------------------------------------------------
                 As explained below, the Bureau is finalizing Sec. 1006.26(b) as an
                interpretation of FDCPA section 807's prohibition on deception; such an
                interpretation is squarely within the Bureau's authority under FDCPA
                section 814(d) to prescribe rules with respect to the collection of
                debts by debt collectors. Contrary to commenters' claims, Sec.
                1006.26(b) does not preempt State laws relating to when a debt
                collector may bring a lawsuit in State court. Rather, it provides that
                a debt collector who sues or threatens to sue a consumer to collect a
                time-barred debt violates the FDCPA even if applicable State law
                permits the suit. In addition, contrary to commenters' assertions,
                Sec. 1006.26(b) does not exceed the Bureau's authority by regulating
                access to the courts or litigation activities. Debt collectors have
                repeatedly argued that they cannot be held liable under the FDCPA for
                actions taken in litigation because, for example, the United States
                Constitution allows debt collectors to petition the courts, or because
                the Federal Rules of Civil Procedure (or their State equivalents) allow
                debt collectors to argue for the modification or reversal of existing
                law. Many courts have rejected such arguments, generally reasoning that
                the FDCPA unquestionably applies to litigation activities.\115\ The
                fact that expiration of a State's statute of limitations may not
                extinguish a debt under State law or bar a lawsuit in State court
                unless an affirmative defense is raised and proven does not render the
                FDCPA's prohibition on using deceptive or misleading representations or
                means in debt collection inapplicable. There is nothing unusual about
                the proposition that some behavior permitted by State law may
                nevertheless violate Federal law. Moreover, nothing in Sec. 1006.26(b)
                prohibits a debt collector from bringing a legal action against a
                consumer in which the debt collector argues for an extension,
                modification, or reversal of existing law or the establishment of new
                law--including a legal action in which the debt collector argues that a
                debt is not time barred. Debt collectors remain free to do so. But a
                debt collector who brings such an action may violate Sec. 1006.26(b)
                if a court ultimately determines that the debt was time barred.
                ---------------------------------------------------------------------------
                 \115\ See, e.g., Aguilar v. LVNV Funding LLC, No. 2:19-cv-105,
                2019 WL 3369706, at *3-4 (M.D. Fla. July 26, 2019); Tobing v. Parker
                McCay, P.A., No. 3:17-cv-00474, 2018 WL 2002799, at *9 (D.N.J. Apr.
                30, 2018); Consumer Fin. Prot. Bureau v. Frederick J. Hanna &
                Assocs., P.C., 114 F. Supp. 3d 1342, 1359-61 (N.D. Ga. 2015);
                Johnson v. Riddle, 305 F.3d 1107, 1118 (10th Cir. 2002).
                ---------------------------------------------------------------------------
                Liability Standard
                 Proposed Sec. 1006.26(b) would have prohibited a debt collector
                from bringing or threatening to bring a legal action against a consumer
                to collect a time-barred debt only if the debt collector knew or should
                have known the debt was time barred.
                 In proposing a knows-or-should-know standard, the Bureau explained
                that determining whether a debt is time barred may involve analyzing
                which State law applies, which statute of limitations applies, when the
                statute of limitations began to run, and whether the statute of
                limitations has been tolled or reset. In many cases, a debt collector
                will know, or will be able to readily determine, whether the statute of
                limitations has expired. In some instances, however, a debt collector
                may be genuinely uncertain even after undertaking a reasonable
                investigation, such as if the case law in a State is unclear as to
                which statute of limitations applies to a particular type of debt. The
                proposed knows-or-should-know standard was meant to address this
                concern by not imposing liability on a debt collector if it had no way
                of knowing that a particular debt was time barred. But the Bureau also
                acknowledged that it sometimes may be difficult to determine whether a
                knows-or-should-know standard has been met. Such uncertainty could
                increase litigation costs and make it difficult for consumers and
                government agencies to bring actions against debt collectors. To
                address this concern, the Bureau sought comment on an alternative
                strict liability standard pursuant to which a debt collector would be
                liable for suing or threatening to sue on a time-barred debt even if
                the debt collector neither knew nor should have known that the debt was
                time barred.
                 Industry commenters generally did not support a strict liability
                standard. These commenters generally agreed that it can be difficult
                for a debt collector to determine whether a debt is time barred and
                asserted that holding debt collectors strictly liable for good faith
                errors would be unduly harsh. These commenters stated, for example,
                that determining the applicable statute of limitations and whether it
                has expired may require analyzing a variety of factual and legal
                questions specific to the debt, and that, in many cases, a debt
                collector may reach the wrong conclusion even after undertaking a
                reasonable investigation and analysis. Industry commenters asserted
                that debt collectors may be unable to reliably determine the statute of
                limitations before filing suit because the law is unclear, because some
                information relevant to the analysis may be unavailable, or both. Some
                industry commenters also asserted that the analysis may change over
                time. For example, according to these commenters, a consumer's decision
                to move to a different State after signing a loan agreement could
                affect a debt collector's analysis of which State law applies and
                whether the statute of limitations has been tolled. As another example,
                an industry commenter stated that, in certain jurisdictions, the
                statute of limitations applicable to mortgage debt is in flux because
                of unprecedented access by consumers to loss mitigation and an increase
                in bankruptcy filings in
                [[Page 5780]]
                the wake of the foreclosure crisis. Several industry commenters also
                expressed concern that debt collectors who are not attorneys may have
                particular difficulty making an accurate time-barred debt
                determination. For these reasons, industry commenters asserted that a
                strict liability standard, which would leave no room for error, would
                expose debt collectors to liability even though it would be challenging
                or very costly in many circumstances to determine if a debt is time
                barred.
                 Some industry commenters supported the proposed knows-or-should-
                know standard. These commenters generally asserted that the proposed
                standard would help debt collectors avoid liability for good-faith
                mistakes in determining whether a debt is time barred--something
                industry commenters argued is important given the complexity and
                uncertainty of certain time-barred debt analyses. One industry
                commenter asserted that the proposed standard also would adequately
                protect consumers from harm. However, several industry commenters who
                expressed general support for the proposed standard also asked the
                Bureau to provide additional guidance, including examples of
                circumstances in which a debt collector neither knows nor should know
                that a debt is time barred.
                 Not all industry commenters supported the proposed knows-or-should-
                know standard. Some industry commenters argued that the proposed
                standard was vague and subjective and could increase litigation risk
                rather than mitigating it. Other industry commenters asked the Bureau
                to clarify that the knows-or-should-know standard depends on the
                specific understanding and sophistication of the particular debt
                collector. They asserted, for example, that what an attorney debt
                collector knows or should know about a debt's time-barred status may
                differ from what a non-attorney debt collector knows or should know.
                 Some industry commenters who opposed the proposed knows-or-should-
                know standard offered alternative standards. For example, several
                industry commenters recommended that the Bureau finalize a reasonable
                investigation standard such that a debt collector who sued or
                threatened to sue to collect a time-barred debt would not be liable if
                the debt collector undertook a reasonable investigation before doing
                so. Similarly, some industry commenters argued that a debt collector
                who acts in good faith should not be liable for suits and threats of
                suit on time-barred debts. Other industry commenters suggested that the
                Bureau finalize a liability standard akin to qualified immunity such
                that a debt collector who sued or threatened to sue to collect a time-
                barred debt would not be liable unless the applicable statute of
                limitations was clearly established. Other industry commenters
                suggested that the Bureau finalize an actual knowledge standard such
                that a debt collector who sued or threatened to sue on a time-barred
                debt would be liable only if the debt collector knew the debt was time
                barred.
                 Some commenters suggested that the Bureau finalize various safe
                harbors for debt collectors. For example, industry commenters
                recommended safe harbors for debt collectors collecting debts of a
                certain age and for debt collectors who rely on information provided by
                the creditor. Other industry commenters suggested that a debt collector
                who maintains and follows reasonable procedures for determining whether
                a debt is time barred should receive a safe harbor from liability in
                the event that the debt collector inadvertently sues or threatens to
                sue on a time-barred debt. One industry commenter requested that the
                Bureau specifically confirm that FDCPA section 813(c)'s bona fide error
                defense would apply to violations of Sec. 1006.26(b).
                 Other commenters, including consumers, consumer advocates,
                academics, some members of Congress, a group of State Attorneys
                General, and several local governments, urged the Bureau to adopt a
                strict liability standard. Although some of these commenters
                acknowledged that determining whether a debt is time barred can be
                complicated,\116\ others argued that determining whether a debt is time
                barred is relatively straightforward in most cases. One commenter
                suggested that, if the Bureau finalizes the proposed knows-or-should-
                know standard, the Bureau should clarify that in most cases a debt
                collector will know (or should know) whether the statute of limitations
                has run because in most cases debt collectors have the necessary
                information to make the determination.
                ---------------------------------------------------------------------------
                 \116\ A group of academic commenters challenged the Bureau's
                assertion that debt buyers generally receive enough information to
                determine whether a debt is time barred. These commenters noted that
                fewer than half of respondents to the Bureau's industry survey
                reported receiving account agreement documentation or billing
                statements, information that the commenters believed would help a
                debt collector calculate the applicable statute of limitations and
                whether it has expired.
                ---------------------------------------------------------------------------
                 Some consumer advocate commenters who argued for a strict liability
                standard stated that it would incentivize debt collectors to determine
                whether a debt is time barred before threatening or filing suit. Some
                consumer advocate commenters suggested that this would help reduce the
                consumer protection risks associated with the collection of time-barred
                debt, including the risk that consumers may be unable to adequately
                protect their rights in court and the risk that consumers may make a
                payment on the debt under the misimpression that the debt is legally
                enforceable, which could revive the debt collector's right to sue. Some
                commenters expressed concern that the proposed knows-or-should-know
                standard would not adequately incentivize debt collectors to determine
                the time-barred status of debts. Around two dozen members of Congress
                asserted that finalizing a knows-or-should-know standard without
                additional protections could encourage willful ignorance on the part of
                a debt collector about the time-barred status of a debt. A group of
                State Attorneys General and some consumer advocate commenters similarly
                argued that a knows-or-should-know standard would promote willful
                ignorance by debt collectors.
                 A number of commenters, including consumer advocate commenters and
                a group of State Attorneys General, advocated a strict liability
                standard because, in their view, debt collectors generally have more
                resources and expertise and better access to information than
                consumers. These commenters generally asserted that it would often be
                difficult for a consumer to establish that a debt was time barred and
                that the debt collector knew or should have known that fact.
                 Many of these commenters also argued that the proposed knows-or-
                should-know standard was inconsistent with the FDCPA (which some
                commenters described as a strict liability statute) and with FDCPA
                section 807's prohibition on deception (which does not include a
                knowledge element). Some commenters pointed out that, because FDCPA
                section 813(c) provides debt collectors with a bona fide error defense
                to liability in certain circumstances, a strict liability standard
                would not expose debt collectors to undue liability. Commenters also
                argued that the proposed knows-or-should-know standard was inconsistent
                with case law imposing or implying a strict liability standard when
                evaluating claims that a debt collector sued or threatened to sue to
                collect a time-barred debt. Several commenters agreed with the Bureau
                that a strict liability standard generally would reduce ambiguity and
                be easier to enforce than the proposed knows-or-should-know standard.
                Federal government agency staff encouraged the Bureau to consider
                [[Page 5781]]
                further whether a knows-or-should-know standard would place an
                unnecessary burden on law enforcement agencies.
                 The Bureau is not finalizing the proposed knows-or-should-know
                standard and is instead finalizing a strict liability standard.
                Although determining whether a debt is time barred can be challenging
                or costly in certain circumstances, the Bureau concludes that the
                proposed knows-or-should-know standard is generally inconsistent with
                FDCPA section 807, which does not include an exception or exclusion for
                debt collectors whose deceptive statements are unintentional or for
                whom ensuring that a statement is not deceptive is burdensome.\117\ The
                Bureau also concludes that a strict liability standard is more
                consistent with FDCPA section 807's prohibition on deception, as well
                as case law imposing or implying such a standard when evaluating claims
                under FDCPA section 807 generally and claims related to suits and
                threats of suit on time-barred debt specifically.\118\
                ---------------------------------------------------------------------------
                 \117\ For the same reasons, the Bureau concludes that the
                alternative standards proposed by industry commenters--including,
                for example, an actual knowledge standard, a reasonable-
                investigation standard, or a clearly-established-law standard--are
                generally inconsistent with FDCPA section 807.
                 \118\ See, e.g., Pantoja, v. Portfolio Recovery Assocs., LLC,
                852 F.3d 679, 683 (7th Cir. 2017); Buchanan v. Northland Grp., Inc.,
                776 F.3d 393, 399 (6th Cir. 2015); Phillips v. Asset Acceptance,
                LLC, 736 F.3d 1076, 1083-84 (7th Cir. 2013); Clark v. Capital Credit
                & Collection Servs., 460 F.3d 1162, 1176 (9th Cir. 2006); Gearing v.
                Check Brokerage Corp., 233 F.3d 469, 472 (7th Cir. 2000).
                ---------------------------------------------------------------------------
                 Moreover, the Bureau notes that a knows-or-should-know standard
                could, in some circumstances, shift the risk that a claim is deceptive
                from debt collectors to consumers. As explained above, suits and
                threats of suit on time-barred debt can cause consumer harm. In a case
                in which it is difficult or costly to determine whether a debt is time
                barred, a knows-or-should-know standard could allow debt collectors to
                avoid liability for causing such harm. In other consumer protection
                contexts, courts and the FTC have recognized that an advertiser who
                makes an unsubstantiated claim may be liable for deception even if the
                cost of substantiating the claim is high or prohibitively
                expensive.\119\ The Bureau's decision to finalize a strict liability
                standard is generally consistent with this principle.
                ---------------------------------------------------------------------------
                 \119\ See, e.g., POM Wonderful, LLC v. FTC, 777 F.3d 478, 497
                (D.C. Cir. 2015) (``We acknowledge that RCTs [i.e., randomized
                clinical trials] may be costly. . . . Yet if the cost of an RCT
                proves prohibitive, petitioners can choose to specify a lower level
                of substantiation for their claims. As the Commission observed, the
                need for RCTs is driven by the claims petitioners have chosen to
                make.'') (internal brackets and quotation marks omitted); In re POM
                Wonderful LLC, 2013 WL 268926, at *50 (F.T.C. Jan. 16, 2013)
                (rejecting argument that an advertiser may ``make particular claims
                that go beyond the substantiation it possesses and then ask the
                Commission to excuse the inadequacy of its support by asserting that
                [the] advertiser did the best it could because the proper
                substantiation for the actual claim would be too expensive''); In re
                Kroger Co., 98 F.T.C. 639, 737 (1981) (``Where the demands of the
                purse require such compromises, the advertiser must generally limit
                the claims it makes for its data or make appropriate disclosures to
                insure proper consumer understanding of the survey's results.'').
                ---------------------------------------------------------------------------
                 The Bureau emphasizes that, although a strict liability standard
                might create some risk for debt collectors if a debt's time-barred
                status is unclear, debt collectors have multiple ways to manage such
                risk. In particular, a debt collector can avoid liability under Sec.
                1006.26(b) by confirming that the statute of limitations has not
                expired before bringing or threatening to bring a legal action.
                Similarly, a debt collector who is ultimately unable to determine with
                certainty whether a debt is time barred can avoid liability under Sec.
                1006.26(b) by refraining from bringing or threatening to bring a legal
                action while, in most States, continuing with non-litigation collection
                activities. Moreover, a debt collector who brings or threatens to bring
                a legal action against a consumer to collect a time-barred debt may,
                depending upon the reason for the debt collector's error, have a
                defense to civil liability under FDCPA section 813 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.\120\ For these reasons, the Bureau concludes that finalizing a
                strict liability standard under Sec. 1006.26(b) does not pose an undue
                risk of liability for debt collectors, even in cases in which a debt
                collector is unable to determine with certainty whether a debt is time
                barred.
                ---------------------------------------------------------------------------
                 \120\ See Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich
                LPA, 559 U.S. 573 (2010) (holding that bona fide error defense is
                not available when FDCPA violation arises from a debt collector's
                mistaken interpretation of FDCPA's legal requirements but noting
                that bona fide error defense is available when FDCPA violation
                arises from certain other types of errors).
                ---------------------------------------------------------------------------
                Requests for Clarification
                 Several commenters asked the Bureau to clarify the scope of
                proposed Sec. 1006.26(b)'s prohibitions.\121\ Two industry commenters
                suggested that the term ``legal action'' is unclear and could be
                interpreted to encompass any action in any court of law or equity.
                These commenters suggested replacing ``legal action'' with ``lawsuit,''
                asserting that, although ``legal action'' and ``lawsuit'' have
                overlapping meanings, ``lawsuit'' has a narrower connotation that
                excludes certain legal actions, such as bankruptcy proceedings.
                Alternatively, these commenters argued that, if the Bureau declines to
                change the term legal action, the prohibitions in proposed Sec.
                1006.26(b) should be adjusted to specifically exclude certain types of
                legal actions, such as garnishment actions, probate actions, and the
                filing of proofs of claim in bankruptcy proceedings.\122\ Another
                commenter asked the Bureau to clarify that, for purposes of proposed
                Sec. 1006.26(b), the term ``legal action'' does not include ``non-
                original complaints,'' such as amended complaints, supplemental
                complaints, complaints re-filed after a prior dismissal without
                prejudice, post-judgment court filings, or post-judgment communications
                (such as executions or garnishments).
                ---------------------------------------------------------------------------
                 \121\ Commenters also asked the Bureau to adopt a number of
                interventions that the Bureau did not propose, such as a prohibition
                on revival and a prohibition on perpetual tolling, which commenters
                asserted prevents a statute of limitations from ever expiring in
                certain circumstances. The Bureau did not propose these
                interventions and it is not finalizing them.
                 \122\ A consumer advocate commenter argued that the rule should
                expressly prohibit filing a bankruptcy proof of claim to recover a
                time-barred debt.
                ---------------------------------------------------------------------------
                 Final Sec. 1006.26(b) uses the term ``legal action.'' In Midland
                Funding, LLC v. Johnson, the Supreme Court held that filing a proof of
                claim on a time-barred debt in a bankruptcy proceeding does not violate
                the FDCPA sections 807 or 808.\123\ Consistent with Midland, the final
                rule clarifies that Sec. 1006.26(b) does not prohibit the filing of
                proofs of claim in a bankruptcy proceeding. The Bureau does not see a
                basis to categorically exclude other types of legal actions, such as
                garnishment and probate actions, from the prohibitions in Sec.
                1006.26(b). No other section of the FDCPA pertaining to legal actions
                contains a similar exclusion, and the commenters did not explain why
                they believe an exclusion is merited here.
                ---------------------------------------------------------------------------
                 \123\ 137 S. Ct. 1407 (2017).
                ---------------------------------------------------------------------------
                 At least one industry commenter asked the Bureau to clarify the
                types of actions and statements that qualify as a threat of legal
                action or that could be interpreted by a consumer as a threat of legal
                action. The Bureau declines to do so at this time. Whether a particular
                action or statement constitutes a threat of legal action depends on the
                facts and circumstances of the particular case. Nevertheless, the
                Bureau notes that Sec. 1006.26(b) prohibits not only explicit
                [[Page 5782]]
                threats of legal action but also implicit ones.
                 For the reasons discussed above, the Bureau is finalizing Sec.
                1006.26(b), which provides that a debt collector must not bring or
                threaten to bring a legal action against a consumer to collect a time-
                barred debt. Section 1006.26(b) also states that these prohibitions do
                not apply to proofs of claim filed in connection with a bankruptcy
                proceeding. The Bureau is finalizing Sec. 1006.26(b) as an
                interpretation of FDCPA section 807. FDCPA section 807 generally
                prohibits debt collectors from using ``any false, deceptive, or
                misleading representation or means in connection with the collection of
                any debt,'' and FDCPA section 807(2)(A) specifically prohibits falsely
                representing ``the character, amount, or legal status of any debt.''
                The Bureau interprets FDCPA section 807 and 807(2)(A) to prohibit debt
                collectors from suing or threatening to sue consumers on time-barred
                debts because such suits and threats of suit explicitly or implicitly
                misrepresent, and cause consumers to believe, that the debts are
                legally enforceable. In addition, threats to sue consumers on time-
                barred debts are similar to threats to take actions that cannot legally
                be taken, which FDCPA section 807(5) specifically prohibits, because
                both involve the threat of action to which the consumer has a complete
                legal defense.\124\ The Bureau's interpretation of FDCPA section 807 is
                generally consistent with well-established case law holding that suits
                and threats of suits on time-barred debt violate FDCPA section
                807.\125\
                ---------------------------------------------------------------------------
                 \124\ A consumer advocate commenter requested that the Bureau
                clarify that a debt collector who brings or threatens to bring a
                legal action against a consumer to collect a time-barred debt also
                violates the Dodd-Frank Act. The Bureau is finalizing Sec.
                1006.26(b) as an interpretation of FDCPA section 807 only.
                 \125\ See, e.g., Pantoja, 852 F.3d at 683; McMahon, 744 F.3d at
                1020; Phillips, 736 F.3d at 1079; Kimber, 668 F. Supp. at 1488-89.
                ---------------------------------------------------------------------------
                Proposed Provision Not Finalized
                 In the February 2020 proposal, the Bureau proposed to require a
                debt collector collecting a debt that the debt collector knows or
                should know is a time-barred debt to provide time-barred debt
                disclosures and, if applicable, revival disclosures (proposed Sec.
                1006.26(c)(1) and (2)).\126\ The Bureau proposed to require these
                disclosures in the debt collector's initial communication with the
                consumer, on any validation notice, and in certain situations if the
                debt became time barred during collections. The February 2020 proposal
                also included, among other things, model forms and language a debt
                collector could have used to comply with the proposed disclosure
                requirements (proposed Model Forms B-4 through B-7), and it provided a
                safe harbor to a debt collector who used the model forms or language
                (proposed Sec. 1006.26(c)(3)). In support of proposed Sec.
                1006.26(c), the Bureau cited, among other things, the results of its
                quantitative testing survey.\127\
                ---------------------------------------------------------------------------
                 \126\ Specifically, proposed Sec. 1006.26(c)(1) would have
                required a debt collector collecting a debt that the debt collector
                knows or should know is a time-barred debt to disclose (i) that the
                law limits how long a consumer can be sued for a debt and that,
                because of the age of the debt, the debt collector will not sue the
                consumer to collect it; and (ii) if, under applicable law, the debt
                collector's right to bring a legal action against the consumer can
                be revived, then the fact that revival can occur and the
                circumstances in which it can occur. 85 FR 12672, 12696 (Mar. 3,
                2020).
                 \127\ See id. at 12678-79.
                ---------------------------------------------------------------------------
                 Although some commenters expressed general support for the idea of
                addressing the risk of deception associated with the collection of
                time-barred debts by requiring time-barred debt and revival
                disclosures, many commenters opposed the Bureau's specific proposal.
                According to industry commenters, the proposal would have imposed a
                significant burden on debt collectors by requiring them to conduct
                time-barred debt and revival analyses for each debt in collection.
                These commenters also reported that they would face a significant risk
                of liability given uncertainty about the statute of limitations and
                revival law in at least some States. Industry commenters stated that
                most debt collectors lack the legal training to determine whether a
                debt is time barred or the circumstances in which it can be revived. To
                comply with the disclosure requirements, these commenters asserted that
                debt collectors would need to engage an attorney or otherwise incur
                substantial costs. Industry commenters particularly objected to
                imposing these costs on debt collectors who never sue to collect debts,
                or never sue to collect revived debts. Industry commenters also raised
                concerns about being required to respond to legal questions from
                consumers as a result of providing the disclosures.
                 Among consumer, consumer advocate, academic, and State Attorneys
                General commenters who opposed the Bureau's proposal, many doubted that
                disclosures can effectively convey information about topics as
                complicated and unfamiliar to consumers as time-barred debt and
                revival. These commenters also raised concerns about the Bureau's
                proposed model disclosures, characterizing them as confusing, vague,
                and ineffective--particularly for the least sophisticated
                consumer.\128\ Some consumer advocate commenters also expressed concern
                about the accuracy of the proposed disclosures and the frequency with
                which the Bureau proposed to require them. These commenters urged the
                Bureau to reconsider or significantly revise the proposal.
                ---------------------------------------------------------------------------
                 \128\ Courts have applied an objective standard of an
                ``unsophisticated'' or ``least sophisticated'' consumer to claims
                brought under FDCPA section 807. Jensen v. Pressler & Pressler, 791
                F.3d 413, 419 (3d Cir. 2015) (``The standard is an objective one,
                meaning that the specific plaintiff need not prove that she was
                actually confused or misled, only that the objective least
                sophisticated debtor would be.''); Hartman v. Great Seneca Fin.
                Corp., 569 F.3d 606, 613 (6th Cir. 2009) (applying least
                sophisticated consumer standard to section 807 claim); Bentley v.
                Great Lakes Collection Bureau, 6 F.3d 60, 62 (2d Cir. 1993) (same);
                Swanson v. S. Or. Credit Serv., Inc., 869 F.2d 1222, 1227 (9th Cir.
                1988) (per curiam) (same). This standard ``protects the consumer who
                is uninformed, naive, or trusting, yet it admits an objective
                element of reasonableness.'' Gammon v. GC Servs. Ltd. P'ship, 27
                F.3d 1254, 1257 (7th Cir. 1994). As discussed in part IV, the Bureau
                interprets FDCPA sections 807 to incorporate an objective,
                ``unsophisticated'' or ``least sophisticated'' consumer standard.
                ---------------------------------------------------------------------------
                 Given industry commenters' concerns about the burden on debt
                collectors of the Bureau's specific proposal, and consumer advocate
                commenters' concerns about whether the Bureau's specific proposal would
                effectively cure consumer deception, the Bureau has decided not to
                finalize proposed Sec. 1006.26(c). In deciding not to finalize
                proposed Sec. 1006.26(c), the Bureau determines only that the specific
                disclosure requirements described in the February 2020 proposal may not
                sufficiently accommodate the concerns raised by different stakeholders.
                However, the Bureau concludes, as discussed in the February 2020
                proposal, that, in many circumstances, disclosures can effectively cure
                the potential deception associated with the collection of time-barred
                debt.
                 Finally, the Bureau emphasizes that the FDCPA, the November 2020
                Final Rule, and this final rule nevertheless apply to debt collectors'
                activities involving the collection of time-barred debts, including
                debt collectors' communications when collecting such debts.
                Accordingly, a debt collector may not use any false, deceptive, or
                misleading representation or means in connection with the collection of
                a time-barred debt. Nor may a debt collector use unfair or
                unconscionable means to collect or attempt to collect a time-barred
                debt. Depending on the circumstances associated with the collection of
                a specific time-barred debt, a debt collector may decide that, to avoid
                violating the FDCPA and the final
                [[Page 5783]]
                rule, the debt collector needs to disclose information to consumers
                about the debt collector's ability to sue and the possibility of
                revival and, in that case, the debt collector may do so.
                Section 1006.30 Other Prohibited Practices
                30(a) Required Actions Prior to Furnishing Information
                 The Bureau proposed in Sec. 1006.30(a) to prohibit so-called
                passive collections, i.e., the practice of a debt collector furnishing
                to a consumer reporting agency, as defined in section 603(f) of the
                Fair Credit Reporting Act (FCRA),\129\ information regarding a debt
                before communicating with the consumer about the debt. The Bureau
                proposed Sec. 1006.30(a) pursuant to its authority under FDCPA section
                814(d) to prescribe rules with respect to the collection of debts by
                debt collectors; pursuant to its authority to interpret FDCPA section
                806, which prohibits a debt collector from engaging in any conduct the
                natural consequence of which is to harass, oppress, or abuse any person
                in connection with the collection of a debt; and pursuant to its
                authority to interpret FDCPA section 808, which prohibits a debt
                collector from using unfair or unconscionable means to collect or
                attempt to collect any debt. Courts have interpreted FDCPA sections 806
                and 808 to prohibit certain coercive collection methods that may cause
                consumers to pay debts not actually owed.\130\
                ---------------------------------------------------------------------------
                 \129\ 15 U.S.C. 1681a(f).
                 \130\ See, e.g., Fox v. Citicorp Credit Servs., Inc., 15 F.3d
                1507, 1517 (9th Cir. 1994) (reversing grant of summary judgment to
                debt collector in part because ``a jury could rationally find'' that
                filing writ of garnishment was unfair or unconscionable under
                section 808 when debt was not delinquent); Ferrell v. Midland
                Funding, LLC, No. 2:15-cv-00126-JHE, 2015 WL 2450615, at *3-4 (N.D.
                Ala. May 22, 2015) (denying debt collector's motion to dismiss
                section 806 claim where debt collector allegedly initiated
                collection lawsuit even though it knew plaintiff did not owe debt);
                Pittman v. J.J. Mac Intyre Co. of Nev., Inc., 969 F. Supp. 609, 612-
                13 (D. Nev. 1997) (denying debt collector's motion to dismiss claims
                under sections 807 and 808 where debt collector allegedly attempted
                to collect fully satisfied debt).
                ---------------------------------------------------------------------------
                 For the reasons discussed below, the Bureau is: (1) Finalizing
                Sec. 1006.30(a) as Sec. 1006.30(a)(1), with changes to specify the
                required actions that a debt collector generally must take before
                furnishing information to a consumer reporting agency; and (2)
                finalizing in Sec. 1006.30(a)(2) a special rule for information
                furnished to certain specialty consumer reporting agencies.
                30(a)(1) In General
                 The Bureau received comments on proposed Sec. 1006.30(a) from
                consumer advocates and individuals, nonprofits, industry commenters,
                and government agencies. Many commenters supported the proposed
                prohibition on passive collections. A consumer group emphasized the
                consumer harms identified in the proposal and agreed that, because with
                passive collections a consumer does not know a debt is in collection,
                the practice can cause a consumer's credit score to decrease, increase
                the cost of future credit for the consumer, make it more difficult for
                a consumer to obtain affordable housing, and jeopardize some job
                opportunities, all without the consumer's knowledge. Three government
                commenters also supported the proposed prohibition; one of them
                reported receiving consumer complaints regarding passive collections.
                An industry commenter supporting the proposal noted that the commenter
                provides consumers with a 90-day grace period before furnishing
                information to consumer reporting agencies.
                 A number of comments, primarily from industry or industry trade
                groups, opposed the prohibition or suggested changes or clarifications.
                Two industry trade groups and a law firm commenter argued that proposed
                Sec. 1006.30(a) should not be finalized because it conflicts with the
                FCRA, including section 623(a)(7), which requires certain financial
                institutions to provide written notice to customers if they furnish
                negative information to a consumer reporting agency, and section
                623(a)(5), which requires furnishers to provide certain information
                about a reported delinquency to the consumer reporting agency no later
                than 90 days after furnishing information.\131\ Other industry
                commenters argued that the proposal would encourage consumers to ignore
                communications, provide inaccurate forwarding information to the
                creditor, or falsely mark mail as undeliverable to avoid having
                collection items furnished to consumer reporting agencies. In addition,
                several industry commenters stated that locating consumers for certain
                debts, such as medical debt, telecommunications debt, or rental debt,
                is costly and may not be justified for small amounts. If debt
                collectors cannot passively collect these debts, the commenters argued,
                then the debts are effectively uncollectible. One industry trade group
                similarly argued that passive collections benefits consumers who
                otherwise cannot be located, rather than harming them, because the
                collection item on their credit report will provide them contact
                information for the debt collector, which the consumer can then use to
                make payment arrangements.
                ---------------------------------------------------------------------------
                 \131\ 15 U.S.C. 1681s-2(a)(5) and (7).
                ---------------------------------------------------------------------------
                 A number of commenters suggested changing or clarifying the
                proposed requirement to ``communicate'' before furnishing information
                to a consumer reporting agency. Some urged the Bureau to adopt a
                stricter requirement, such as by requiring written notice to the
                consumer before reporting, mandating specific disclosure language,
                imposing across-the-board waiting periods before reporting, or
                prohibiting indirect communications. Others expressed concern that the
                proposal would impose more stringent communication requirements than
                the FDCPA otherwise requires and asked the Bureau to relax the
                proposal, such as by clarifying that proof of receipt of a
                communication is not required, by allowing debt collectors to satisfy
                the proposed requirement by leaving limited-content messages (as
                defined in Sec. 1006.2(j) of the November 2020 Final Rule), or by
                permitting debt collectors to presume receipt of a communication after
                a waiting period expires.
                 After considering all of the comments, the Bureau is finalizing
                proposed Sec. 1006.30(a) and its related commentary with substantial
                revisions, as follows.
                 Subject to Sec. 1006.30(a)(2) (discussed below), final Sec.
                1006.30(a)(1) requires a debt collector to take certain actions before
                furnishing information about a debt to a consumer reporting agency, as
                defined in section 603(f) of the FCRA. Specifically, the debt collector
                must either: (1) Speak to the consumer about the debt in person or by
                telephone, or (2) place a letter in the mail or send an electronic
                message to the consumer about the debt and wait a reasonable period of
                time to receive a notice of undeliverability. During the reasonable
                period, the debt collector must permit receipt of, and monitor for,
                notifications of undeliverability from communications providers. If the
                debt collector receives such a notification during the reasonable
                period, the debt collector must not furnish information about the debt
                to a consumer reporting agency until the debt collector otherwise
                satisfies Sec. 1006.30(a)(1). The Bureau is finalizing commentary to
                clarify these requirements as discussed below.
                 The Bureau finalizes the requirements under Sec. 1006.30(a)(1) to
                address consumer harms that may arise if a debt collector furnishes
                information about a debt to a consumer reporting agency without first
                informing the consumer about the debt. As discussed in the proposal,
                consumers who have not been informed about the debt are likely to be
                unaware that they have a debt in
                [[Page 5784]]
                collection unless they obtain and review their consumer report. In
                turn, many consumers may not obtain their consumer reports until they
                apply for credit, housing, employment, or another product or service
                provided by an entity that reviews consumer reports during the
                application process. At that point, consumers may feel pressure to pay
                debts that they otherwise would dispute, including debts they do not
                owe, or may face the denial of an application, a higher interest rate,
                or other negative consequences.
                 In addition, as discussed in the proposal, debt collectors may
                attempt to collect debts passively if the expected return from that
                technique exceeds the cost of attempting to collect the debt by
                communicating with consumers.\132\ The Bureau understands that imposing
                a requirement intended to inform the consumer about a debt before
                furnishing information about a debt to consumer reporting agencies will
                increase costs for debt collectors who do not currently attempt to do
                so. However, passive collection practices can harm consumers for the
                reasons discussed above. The Bureau has determined that the final rule
                best balances debt collectors' cost concerns with protections for
                consumers against the harms imposed by passive collection practices.
                Final Sec. 1006.30(a)(1) gives a debt collector flexibility to contact
                consumers in a variety of ways, including in person, by telephone, by
                mail, or by electronic message.\133\ This gives debt collectors
                flexibility to contact the consumer in a manner that works best for
                their operations, and debt collectors need not confirm receipt of mail
                or electronic messages.
                ---------------------------------------------------------------------------
                 \132\ 84 FR 23274, 23330 (May 21, 2019).
                 \133\ Because medical offices, telecommunications companies, and
                rental offices typically have contact information for their
                customers, and because a variety of options to verify and forward
                mail to a consumer's new address exist, a debt collector of such
                debts should be able to satisfy Sec. 1006.30(a)'s requirements
                without incurring significant costs.
                ---------------------------------------------------------------------------
                 Although proposed Sec. 1006.30(a) used the term ``communicate,''
                the proposal did not clearly specify a debt collector's obligations if
                the debt collector learned after furnishing information to a consumer
                reporting agency that no communication actually occurred (because,
                e.g., the communication was sent by mail to the consumer's current
                address but the debt collector later received a notification that the
                letter was not delivered). Some commenters raised concerns that the
                proposal's use of the term ``communicate'' could be construed to
                require debt collectors to confirm a consumer's receipt of the
                information before furnishing information about a debt to a consumer
                reporting agency.
                 To respond to such comments, and because the proposal was designed
                to increase the likelihood that consumers would learn that a debt
                attributed to them is in collection but was not intended to be a
                broader limitation on furnishing valid information about debts to
                consumer reporting agencies, the Bureau finalizes specific requirements
                a debt collector must take before furnishing. The actions specified in
                the final rule are ones that increase the likelihood that a consumer
                will learn about a debt before a debt collector begins furnishing
                information about that debt to a consumer reporting agency. For this
                reason, after a debt collector has complied with Sec. 1006.30(a)(1)
                and furnished information to a consumer reporting agency, the debt
                collector may furnish additional information with respect to that debt
                without having to repeat the actions specified in Sec. 1006.30(a)(1).
                Accordingly, the Bureau does not incorporate a receipt requirement in
                final Sec. 1006.30(a)(1) and, instead of using the term
                ``communicate,'' sets forth the specific actions that a debt collector
                must take before furnishing.
                 The Bureau has also determined that final Sec. 1006.30(a)(1) does
                not conflict with FCRA section 623(a)(7) or (5) because those
                provisions have different requirements and goals than Sec.
                1006.30(a)(1). FCRA section 623(a)(7) applies only to ``financial
                institutions'' as defined in FCRA section 603(t), which will cover few,
                if any, FDCPA debt collectors. Final Sec. 1006.30(a)(1) does not
                prevent debt collectors from complying with the FCRA, and the FCRA does
                not prevent debt collectors from complying with final Sec.
                1006.30(a)(1).\134\ The FCRA also does not state that it is the
                exclusive Federal law governing credit reporting and, indeed, the FDCPA
                also references a debt collector's interactions with consumer reporting
                agencies.\135\
                ---------------------------------------------------------------------------
                 \134\ For example, FCRA section 623(a)(7) requires certain
                financial institutions that furnish negative information to a
                consumer reporting agency, as defined in FCRA section 603(p), to
                provide a written notice to consumers prior to, or no later than 30
                days after, furnishing the negative information. A financial
                institution that is required to provide a written notice under FCRA
                section 623(a)(7) and that is also acting as an FDCPA debt collector
                could comply with both requirements by, for example, placing a
                letter in the mail to the consumer that contains sufficient
                information to satisfy both requirements before furnishing
                information to a consumer reporting agency.
                 \135\ See, e.g., 15 U.S.C. 1692c(b), 1692d(3).
                ---------------------------------------------------------------------------
                 Because final Sec. 1006.30(a)(1) clearly describes the specific
                actions that a debt collector must take before furnishing information
                about a debt to a consumer reporting agency, a debt collector may
                ensure compliance with the final rule based on the debt collector's own
                actions, such as by placing a letter about the debt in the mail to the
                consumer and waiting a reasonable period of time to receive a notice of
                undeliverability. Therefore, the final rule also resolves concerns
                about consumers avoiding a debt collector's communications to prevent
                the debt collector from furnishing information to a consumer reporting
                agency.
                 The final rule specifies in Sec. 1006.30(a)(1)(i) and (ii) the
                methods by which a debt collector may meet its obligation to take
                certain actions before furnishing information about a debt to a
                consumer reporting agency. All of the methods require that information
                ``about the debt'' be conveyed to the consumer. Although the final rule
                does not specify the particular information required to meet the
                ``about the debt'' requirement, the final rule adds comment 30(a)(1)-1
                to clarify that the validation information required by Sec.
                1006.34(c), including such information if provided in a validation
                notice, is information ``about the debt.''
                 Under Sec. 1006.30(a)(1), information about a debt must be
                transmitted ``to the consumer'' as defined in Sec. 1006.2(e). A debt
                collector who sends information about the debt that reaches a
                ``consumer'' as defined in Sec. 1006.6(a), which includes additional
                persons,\136\ may not have communicated with the consumer as defined in
                Sec. 1006.2(e).
                ---------------------------------------------------------------------------
                 \136\ For purposes of Sec. 1006.6(a), the term ``consumer''
                also includes the consumer's spouse, parent (if the consumer is a
                minor), legal guardian, executor or administrator of the consumer's
                estate, if the consumer is deceased, and a confirmed successor in
                interest. See 85 FR 76734, 76889 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 The Bureau notes that, in taking any of the actions specified in
                Sec. 1006.30(a)(1), a debt collector must comply with the FDCPA and
                the November 2020 Final Rule, including the prohibition on
                communicating, in connection with the collection of any debt, with a
                third party.\137\
                ---------------------------------------------------------------------------
                 \137\ A debt collector sending an email or text message who uses
                the procedures provided for in Sec. 1006.6(d)(4) or (5) as
                finalized in the November 2020 Final Rule does not violate the
                prohibition on third-party disclosure under Sec. 1006.6(d)(1).
                ---------------------------------------------------------------------------
                 Proposed comment 30(a)-1 provided clarifications regarding the term
                ``communicate'' in proposed Sec. 1006.30(a)(1). Because final Sec.
                1006.30(a)(1) does not use the term ``communicate'' and instead states
                the specific actions the debt collector must take before furnishing
                information about a debt to a consumer reporting agency, proposed
                comment 30(a)-1 is no longer
                [[Page 5785]]
                necessary and the Bureau is not finalizing it.
                 The final rule specifies in Sec. 1006.30(a)(1)(ii) that a debt
                collector who places a letter in the mail or sends an electronic
                message to the consumer about the debt to satisfy Sec. 1006.30(a)(1)
                must wait a reasonable period of time to receive a notice of
                undeliverability before furnishing information about a debt to a
                consumer reporting agency. New comment 30(a)(1)-2 clarifies that the
                reasonable period of time begins on the date that the debt collector
                places the letter in the mail or sends the electronic message. Comment
                30(a)(1)-2 also provides a safe harbor for waiting a reasonable period
                of time by clarifying that a period of 14 consecutive days after the
                date that the debt collector places a letter in the mail or sends an
                electronic message is a reasonable period of time.
                 Comment 30(a)(1)-3 clarifies that a debt collector who places a
                letter in the mail or sends an electronic message to the consumer about
                the debt to satisfy Sec. 1006.30(a)(1) and does not receive a notice
                of undeliverability during the reasonable period of time, and who
                thereafter furnishes information about the debt to a consumer reporting
                agency, does not violate Sec. 1006.30(a)(1) even if the debt collector
                subsequently receives a notice of undeliverability. Comment 30(a)(1)-3
                also provides three examples illustrating this requirement.
                 The Bureau determines that these provisions clarify the proposal
                with respect to pre-furnishing outreach by mail or electronic message
                and provide protection for consumers.\138\ The Bureau understands that
                the U.S. Postal Service typically notifies senders of most
                undeliverable-as-addressed mail within 14 days. The amount of time it
                takes a communications provider to return a notice of undeliverability
                with respect to electronic messages is less clear. While an
                undeliverability notice is typically received soon after sending an
                electronic message, the Bureau understands that the time for receiving
                a notice of undeliverability with respect to such electronic messages
                may vary by provider, and the Bureau does not have sufficient
                information to determine a uniform time period for electronic messages.
                Nevertheless, the Bureau has no reason to believe that notices of
                undeliverability are typically received more than 14 days after an
                electronic message is sent. Therefore, the Bureau is finalizing the
                same safe harbor time period (i.e., 14 consecutive days) for electronic
                messages as for mailed letters.\139\ The Bureau may consider revising
                the safe harbor for electronic messages in the future based on actual
                stakeholder experience with this provision.
                ---------------------------------------------------------------------------
                 \138\ The Bureau does not impose a similar period when a debt
                collector speaks to a consumer about the debt in person or by
                telephone because these scenarios do not have the potential for an
                equivalent undeliverable notice outcome.
                 \139\ The Bureau notes that the 14-consecutive-day period is a
                safe harbor. To comply with the rule, a debt collector only needs to
                wait a ``reasonable period of time'' to receive a notice of
                undeliverability. Therefore, a debt collector who shows that the
                debt collector waited a reasonable time period to receive notices of
                undeliverability for electronic messages may be able to satisfy the
                requirements of the final rule without waiting 14 days.
                ---------------------------------------------------------------------------
                 The Bureau recognizes that the final rule may result in instances
                in which debt collectors furnish information about a debt to a consumer
                reporting agency even though the consumer has not been made aware of
                the collection item, either because the mail or electronic message is
                returned as undeliverable after the reasonable period has passed or is
                not received but is also not returned. These consumers will not have
                the same opportunity to receive a message about their debt as those
                consumers for whom the mail or electronic message is delivered.
                Nevertheless, the Bureau determines that establishing a requirement
                that debt collectors wait a reasonable period of time after placing a
                letter in the mail or sending an electronic message provides sufficient
                consumer protection without unduly prohibiting a debt collector from
                furnishing information about a valid debt to a consumer reporting
                agency.
                 The Bureau declines commenters' other suggestions, such as those to
                require communications in writing, dictate specific language, apply
                longer waiting periods (e.g., 180 days), or establish other safe
                harbors because the suggestions are unnecessary to achieve the purpose
                of the passive collections ban. For example, requiring written
                communications and specific disclosure language is unnecessary to put
                the consumer on notice that a debt is in collections. Additional safe
                harbors are unnecessary and unwarranted at this time because the final
                rule clarifies the specific actions that must occur before furnishing
                information to a consumer reporting agency.
                30(a)(2) Special Rule--Information Furnished to Certain Specialty
                Consumer Reporting Agencies
                 The Bureau did not propose a special rule regarding furnishing to
                specialty consumer reporting agencies. An industry commenter and a
                consumer reporting agency argued in a joint comment that the final rule
                should exempt from Sec. 1006.30(a) information furnished to certain
                nationwide specialty consumer reporting agencies described in FCRA
                section 603(x)(3), i.e., consumer reporting agencies that maintain and
                compile files on consumers on a nationwide basis relating to check
                writing history (``check verification consumer reporting agencies'').
                 The commenters explained that merchants use check verification
                consumer reporting agencies to determine whether they should accept a
                particular check. When a merchant seeks check verification information,
                the check verification consumer reporting agency issues a check
                verification report with a code that will indicate if the check appears
                acceptable, the check is potentially fraudulent, or the checking
                account is likely overdrawn. These inquiries are usually completed in
                real time, while a transaction is occurring in a checkout lane or in
                remote retailing. The commenters expressed concern that proposed Sec.
                1006.30(a) would degrade the timely content of check verification
                reports issued by check verification consumer reporting agencies
                because debt collectors would be required to delay or refrain from
                reporting altogether, which would undermine the accuracy of check
                verification reports and reduce the willingness of merchants to accept
                checks.
                 The commenters argued that the current system benefits consumers by
                alerting them to potential fraud or that their account may be
                overdrawn. Requiring contact before furnishing information would harm
                these consumers because the fraud or overdrawn status of the account
                may never be detected and, thus, consumers may not be alerted to
                potential fraud or may unknowingly continue writing checks on an
                overdrawn account. Further, the commenters stated that these
                requirements could harm consumers by decreasing the number of merchants
                that accept checks or increasing prices at merchants who continue to
                accept checks.
                 The commenters also expressly recognized the harm that can occur if
                a debt unexpectedly appears on a credit-related consumer reporting
                agency report if the consumer is applying for credit, a job, or rental
                housing, and cannot move forward with the transaction. However, they
                noted that check verification reporting does not present comparable
                risk of harm because (1) such reports are used to determine whether a
                particular check should be accepted, not to evaluate a consumer's
                creditworthiness for credit, a job, or rental housing; and (2) any harm
                caused by refusal to accept a
                [[Page 5786]]
                check is outweighed by benefits, including alerting the consumer to
                potential fraud and preventing them from incurring additional overdraft
                or non-sufficient funds fees.
                 After carefully considering the comment, the Bureau has determined
                that Sec. 1006.30(a) should not apply to a debt collector's furnishing
                of information about a debt to a check verification consumer reporting
                agency. The Bureau finds that a debt collector's furnishing of
                information about a debt to a check verification consumer reporting
                agency before engaging in outreach to the consumer about the debt is
                unlikely to undermine the ability of consumers to decide whether to pay
                debts in the same manner as the furnishing of information about debts
                to other consumer reporting agencies. As a result, the Bureau has not
                found that furnishing information about a debt to a check verification
                consumer reporting agency before engaging in outreach to the consumer
                about the debt constitutes conduct that may have the natural
                consequence of harassment, oppression, or abuse in violation of FDCPA
                section 806, or that is an unfair or unconscionable means to collect or
                attempt to collect a debt under FDCPA section 808.
                 Immediate and frequent reporting appears to be a critical aspect of
                check verification consumer reporting, and it appears that imposing a
                requirement that debt collectors inform consumers about debts before
                furnishing information to those check verification consumer reporting
                agencies would require significant operational changes and could
                significantly reduce the effectiveness of those reports. This is unlike
                credit-related reporting, which typically involves less immediate
                furnishing. The Bureau also finds that the consumer harm that Sec.
                1006.30(a)(1) is designed to address is not present for check
                verification consumer reporting because these reports are unlikely to
                be used in making credit, employment, or rental housing decisions.
                While consumers could also be harmed if they are unaware of checking
                account report items, the harm of reducing the effectiveness of the
                check verification system, including the potential harm to consumers if
                checks are accepted by fewer merchants, outweighs the benefits of
                requiring communication before furnishing. In addition, the immediacy
                of the current check verification system provides countervailing
                benefits to consumers who are alerted to potential fraud or to
                discontinue writing checks on an overdrawn account. Further, a special
                rule for check verification consumer reporting agencies is consistent
                with several State laws regulating passive collections.\140\ For these
                reasons, the Bureau concludes that furnishing of information to a check
                verification consumer reporting agency before engaging in outreach to
                the consumer does not raise concerns under FDCPA sections 806 and 808
                similar to furnishing to other types of consumer reporting agencies.
                ---------------------------------------------------------------------------
                 \140\ Colo. Rev. Stat. sec. 12-14-108 limits when ``debt
                collectors'' may furnish information to a consumer reporting agency,
                but exempts checks, negotiable instruments, or credit card drafts.
                California and Utah also limit when information can be furnished to
                a consumer reporting agency, but those laws only apply to
                ``creditors.'' Cal. Civ. Code sec. 1785.26; Utah Code sec. 70C-7-
                107.
                ---------------------------------------------------------------------------
                 Therefore, the final rule adds Sec. 1006.30(a)(2) to state that
                Sec. 1006.30(a)(1) does not apply to a debt collector's furnishing of
                information about a debt to a nationwide specialty consumer reporting
                agency that compiles and maintains information on a consumer's check
                writing history, as described in FCRA section 603(x)(3).\141\
                ---------------------------------------------------------------------------
                 \141\ If and to the extent a check verification consumer
                reporting agency compiles and maintains other types of information
                specified in FCRA section 603(x) (e.g., residential or tenant
                history), the special rule in Sec. 1006.30(a)(2) does not apply
                with respect to a debt collector's furnishing of that information to
                the check verification consumer reporting agency.
                ---------------------------------------------------------------------------
                 For the reasons discussed above, the Bureau is adopting final Sec.
                1006.30(a) pursuant to its authority under FDCPA section 814(d) to
                prescribe rules with respect to the collection of debts by debt
                collectors. The Bureau is also adopting final Sec. 1006.30(a) pursuant
                to its authority to interpret FDCPA section 806, which prohibits a debt
                collector from engaging in any conduct the natural consequence of which
                is to harass, oppress, or abuse any person in connection with the
                collection of a debt, and FDCPA section 808, which prohibits a debt
                collector from using unfair or unconscionable means to collect or
                attempt to collect any debt.
                Section 1006.34 Notice for Validation of Debts
                 FDCPA section 809(a) generally requires a debt collector to provide
                certain information to a consumer either at the time that, or shortly
                after, the debt collector first communicates with the consumer in
                connection with the collection of a debt.\142\ The required
                information--i.e., the validation information--includes details about
                the debt and about consumer protections, such as the consumer's rights
                to dispute and receive verification of the debt and to request
                information about the original creditor. When this validation
                information is provided in writing, the document containing the
                information is commonly referred to as a ``validation notice.''
                ---------------------------------------------------------------------------
                 \142\ See 15 U.S.C. 1692g(a).
                ---------------------------------------------------------------------------
                 The requirement to provide validation information is an important
                component of the FDCPA and was intended to improve the debt collection
                process by helping consumers to recognize debts that they owe and raise
                concerns about debts that are unfamiliar. Congress in 1977 considered
                the requirement a ``significant feature'' of the FDCPA, explaining that
                it was designed to ``eliminate the recurring problem of debt collectors
                dunning the wrong person or attempting to collect debts which the
                consumer has already paid.'' \143\ Congress provided the Bureau with
                rulemaking authority in 2010 apparently to address continuing
                inadequacies around validation information and verification, among
                other things.\144\ In addition, debt collectors have sought
                clarification about how to provide information consistent with the
                FDCPA, noting, for instance, that a significant number of lawsuits are
                filed each year alleging deficiencies in their validation notices.
                ---------------------------------------------------------------------------
                 \143\ S. Rep. No. 382, supra note 57; see also Jacobson v.
                Healthcare Fin. Servs., Inc., 516 F.3d 85, 95 (2d Cir. 2008)
                (validation notices ``make the rights and obligations of a
                potentially hapless debtor as pellucid as possible''); Wilson v.
                Quadramed Corp., 225 F.3d 350, 354 (3d Cir. 2000); Miller v. Payco-
                Gen. Am. Credits, Inc., 943 F.2d 482, 484 (4th Cir. 1991); Swanson
                v. S. Oregon Credit Serv., Inc., 869 F.2d 1222, 1225 (9th Cir.
                1988).
                 \144\ See S. Rep. No. 111-176, at 19 (``In addition to concerns
                about debt collection tactics, the Committee is concerned that
                consumers have little ability to dispute the validity of a debt that
                is being collected in error.'').
                ---------------------------------------------------------------------------
                 For these reasons, the Bureau proposed Sec. 1006.34 to require
                debt collectors to provide certain validation information to consumers
                and to specify when and how the information must be provided. As
                discussed in more detail below, the Bureau is finalizing Sec. 1006.34
                with modifications in response to feedback and for clarity and
                consistency with other provisions in this final rule and the November
                2020 Final Rule.
                 Final Sec. 1006.34(a) sets forth the general requirement to
                provide validation information and describes how such information may
                be provided on a validation notice. Section 1006.34(b) sets forth
                definitions for purposes of Sec. 1006.34. Section 1006.34(c) sets
                forth the validation information, and Sec. 1006.34(d) sets forth a
                general requirement that such information be clear and conspicuous.
                Section 1006.34(d) also provides safe harbors for use of Model Form B-1
                in appendix B to Regulation F, specified variations of the model
                notice, or a
                [[Page 5787]]
                substantially similar form, and describes optional disclosures that
                debt collectors may, but are not required to, provide with the
                validation information.\145\ Section 1006.34(e) affirmatively permits
                debt collectors to provide validation notices translated into other
                languages and requires debt collectors who offer to provide consumers
                translated notices to provide them to consumers who request them.
                ---------------------------------------------------------------------------
                 \145\ The Bureau proposed a model validation notice as Model
                Form B-3. The Bureau is finalizing that form, with revisions, as
                Model Form B-1. This Notice refers to proposed Model Form B-3 as the
                ``proposed model validation notice'' or the ``proposed model
                notice'' and final Model Form B-1 as the ``model validation notice''
                or ``model notice.'' This Notice uses the phrase ``specified
                variations of the model notice'' to refer to the specifically
                enumerated versions of the model notice that receive a safe harbor
                pursuant to Sec. 1006.34(d)(2)(i) and (ii) (i.e., notices that are
                the same as, or substantially similar to, the model notice but for:
                Omitting some or all of the optional disclosures that appear on the
                model notice; including optional disclosures that do not appear on
                the model notice; or including certain disclosures on a separate
                page as permitted by Sec. 1006.34(c)(2)(viii) and (5)).
                ---------------------------------------------------------------------------
                 As discussed in further detail in the section-by-section analysis
                of Sec. 1006.34(d), the Bureau proposed to require that validation
                notices must be the same as, or substantially similar to, the proposed
                model validation notice. The Bureau is not finalizing that requirement.
                Instead, the final rule provides certain safe harbors for compliance
                with the information and form requirements in Sec. 1006.34(c) and
                (d)(1) for debt collectors who use the model validation notice,
                specified variations of the model notice, or a substantially similar
                notice.
                34(a) Validation Information Required
                34(a)(1) In General
                 FDCPA section 809(a) provides, in relevant part, that, within five
                days after the initial communication with a consumer in connection with
                the collection of any debt, a debt collector shall send the consumer a
                written notice containing the validation information, unless that
                information is contained in the initial communication or the consumer
                has paid the debt. The Bureau proposed Sec. 1006.34(a)(1) to implement
                and interpret this general requirement.\146\ Specifically, proposed
                Sec. 1006.34(a)(1) provided that, subject to a limited exception for
                if a consumer has already paid a debt, a debt collector must provide a
                consumer the required validation information either: (1) By sending the
                consumer a validation notice (i.e., a written or electronic notice)
                \147\ in the manner permitted by Sec. 1006.42 \148\ in the initial
                communication with the consumer in connection with the collection of
                the debt (proposed Sec. 1006.34(a)(1)(i)(A)) or within five days of
                that initial communication (proposed Sec. 1006.34(a)(1)(i)(B)); or (2)
                by providing the validation information orally in the initial
                communication (proposed Sec. 1006.34(a)(1)(ii)).\149\ As discussed
                below, the Bureau is adopting Sec. 1006.34(a)(1) with certain minor
                revisions.
                ---------------------------------------------------------------------------
                 \146\ See 84 FR 23274, 23333-34 (May 21, 2019).
                 \147\ Proposed Sec. 1006.34(b)(4) defined a validation notice
                as any written or electronic notice that provides the validation
                information described in Sec. 1006.34(c).
                 \148\ As finalized, Sec. 1006.42 generally requires debt
                collectors to send written disclosures in a manner that is
                reasonably expected to provide actual notice, and in a form that the
                consumer may keep and access later. 85 FR 76734, 76893 (Nov. 30,
                2020).
                 \149\ Proposed Sec. 1006.34(b)(2) provided that, with limited
                exceptions, initial communication means the first time that, in
                connection with the collection of a debt, a debt collector conveys
                information, directly or indirectly, to the consumer regarding the
                debt.
                ---------------------------------------------------------------------------
                 Some commenters recommended that the Bureau modify proposed Sec.
                1006.34(a)(1) generally. Some consumer advocate commenters stated that
                the Bureau should require debt collectors to provide non-electronic,
                written validation notices to all consumers. According to at least one
                commenter, the Bureau should require a written validation notice even
                if a debt collector also provides the validation information
                electronically. Another consumer advocate commenter asked the Bureau to
                require debt collectors to provide a consumer a validation notice in
                every communication.
                 The Bureau declines to require debt collectors to always provide
                written, non-electronic validation notices to consumers. For the
                reasons set forth in the November 2020 Final Rule, the Bureau
                interprets FDCPA section 809(a) as not requiring that the notice of
                debt be provided in writing when it is contained in the initial
                communication.\150\ Moreover, if FDCPA section 809(a) does require that
                the notice of debt be provided in writing--i.e., if the validation
                information is not contained within the initial communication--nothing
                in the FDCPA prohibits a debt collector from providing the required
                written validation notice electronically in accordance with the
                consumer-consent provisions of section 101(c) of the E-SIGN Act. In
                turn, if a statute (here, the FDCPA) requires a written disclosure, the
                E-SIGN Act's consumer-consent provisions specify requirements pursuant
                to which debt collectors may send the required written disclosures
                electronically. Accordingly, pursuant to Sec. 1006.42, a debt
                collector may send the validation notice electronically under Sec.
                1006.34(a)(1)(i)(A) (i.e., within the initial communication) if the
                debt collector complies with Sec. 1006.42(a)(1), which requires that
                the debt collector send the notice in a manner that is reasonably
                expected to provide actual notice, and in a form that the consumer may
                keep and access later. A debt collector may send the validation notice
                electronically under Sec. 1006.34(a)(1)(i)(B) (i.e., not within the
                initial communication) if the debt collector complies with Sec.
                1006.42(a)(1) and also complies with Sec. 1006.42(b), which requires
                that the debt collector send the notice in accordance with section
                101(c) of the E-SIGN Act. The Bureau concludes that, if debt collectors
                send validation notices electronically as described above, there is a
                reasonable likelihood that consumers will receive and be able to retain
                the notices.
                ---------------------------------------------------------------------------
                 \150\ 85 FR 76734, 76854 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 The Bureau determines, therefore, that it is unnecessary and
                unwarranted to impose the burden on debt collectors that would result
                from a requirement to always provide the validation notice in written,
                non-electronic form; to provide a validation notice in written form
                even if the debt collector also provides the validation notice
                electronically; or to provide a validation notice or validation
                information with every consumer communication.\151\ Such requirements
                would go beyond the FDCPA's provisions and would be unduly burdensome
                on debt collectors, because, as stated above, the Bureau concludes that
                the Regulation F provisions that the Bureau is adopting provide
                sufficient consumer protection. Accordingly, the Bureau does not impose
                such requirements.
                ---------------------------------------------------------------------------
                 \151\ The Bureau additionally notes that, if a statute (here,
                FDCPA section 809(a)) requires a written disclosure, E-SIGN Act
                section 104(c)(1) states that Federal agencies' authority to
                interpret E-SIGN Act section 101 (including the consumer-consent
                provisions in E-SIGN Act section 101(c)) does not include the
                ``authority to impose or reimpose any requirement that a record be
                in a tangible printed or paper form.'' See 15 U.S.C. 7004(c)(1).
                ---------------------------------------------------------------------------
                 The Bureau received few comments specifically about proposed Sec.
                1006.34(a)(1)(i). Commenters who provided feedback supported the
                Bureau's proposal. Thus, the Bureau is adopting Sec. 1006.34(a)(1)(i)
                largely as proposed.
                 A large number of commenters responded to the clarification in
                proposed Sec. 1006.34(a)(1)(ii) that debt collectors may provide
                validation information orally in the initial communication. Commenters,
                including most consumer advocates who addressed the topic, urged the
                Bureau to
                [[Page 5788]]
                prohibit debt collectors from providing validation information orally.
                These commenters stated that debt collectors could not effectively
                convey orally to consumers the amount of validation information that
                the Bureau proposed.\152\ Commenters argued that, if validation
                information were conveyed orally, a consumer would be unable to review
                the information at a later time, unless the consumer transcribed or
                recorded the communication with the debt collector. Commenters stated
                that this dynamic would place an unreasonable burden on consumers and
                would be atypical compared to other consumer law disclosure regimes,
                which mandate that required notices be provided in written form. At
                least one commenter stated that oral delivery would be incompatible
                with the formatting requirements in proposed Sec. 1006.34(d).
                ---------------------------------------------------------------------------
                 \152\ Proposed Sec. 1006.34(c) described the validation
                information that proposed Sec. 1006.34(a)(1) would have required
                debt collectors to provide. As discussed in the section-by-section
                analysis of Sec. 1006.34(c), the final rule requires debt
                collectors to provide up to 18 items of validation information.
                ---------------------------------------------------------------------------
                 On the other hand, some industry commenters supported the Bureau's
                clarification that debt collectors may provide validation information
                orally. These commenters asked the Bureau to provide additional
                guidance about oral delivery of validation information, including, for
                example, specific content for an oral notice, such as a script.
                 As proposed, the Bureau is finalizing the provision in Sec.
                1006.34(a)(1)(ii) that debt collectors may provide the required
                validation information orally in the initial communication. The Bureau
                agrees that there may be significant challenges to conveying the
                required validation information orally.\153\ Nevertheless, FDCPA
                section 809(a) does not prohibit oral delivery. FDCPA section 809(a)
                states that the required validation information may be ``contained in
                the initial communication'' and that a written notice is mandatory only
                if that required information is not contained in the initial
                communication. Further, FDCPA section 807(11) indicates that the
                initial communication may be oral.\154\ Accordingly, the Bureau
                concludes that the most reasonable interpretation of FDCPA sections
                809(a) and 807(11) is that the FDCPA permits the required validation
                information to be conveyed orally if it is contained in the initial
                communication.
                ---------------------------------------------------------------------------
                 \153\ Section 1006.34(c) requires a significant amount of
                validation information that debt collectors may not currently
                include in the validation information they provide to consumers. It
                might be difficult for a debt collector to convey all of the
                required information orally, particularly in an initial
                communication, which is the only context in which a debt collector
                could comply with its legal obligation by providing the validation
                information orally. Further, real-time communications with consumers
                are unpredictable. Accordingly, even if the required components of
                the validation information are contained in the oral communication,
                the debt collector might not convey them in a way that meets the
                requirements of the regulation; for example, as commenters noted the
                debt collector might not convey the required information clearly and
                conspicuously.
                 \154\ See 15 U.S.C. 1692e(11).
                ---------------------------------------------------------------------------
                 Moreover, debt collectors providing validation information orally
                will not be able to use the model validation notice and therefore will
                not receive a safe harbor for compliance under Sec. 1006.34(d)(2). The
                Bureau declines to provide additional guidance about oral delivery of
                validation information. The Bureau is not aware of debt collectors
                providing validation information orally today, and, for the reasons
                discussed, the Bureau believes they will be unlikely to do so in the
                future. As a result, the Bureau concludes that such additional guidance
                is not necessary or warranted at this time.
                 The Bureau proposed comment 34(a)(1)-1 to clarify the provision of
                validation notices if the consumer is deceased. Proposed comment
                34(a)(1)-1 explained that, if the debt collector knows or should know
                that the consumer is deceased, and if the debt collector has not
                previously provided the deceased consumer the validation information, a
                person who is authorized to act on behalf of the deceased consumer's
                estate operates as the consumer for purposes of providing validation
                information under Sec. 1006.34(a)(1). Under proposed comment 34(a)(1)-
                1, a debt collector attempting to collect a debt from a deceased
                consumer's estate generally would provide the validation information to
                the named person who is authorized to act on behalf of the deceased
                consumer's estate, if the debt collector had not already provided that
                information to the consumer.
                 As discussed in the section-by-section analysis of Sec. 1006.2(e),
                the Bureau is interpreting the term consumer to mean any natural
                person, whether living or deceased, who is obligated or allegedly
                obligated to pay any debt. And the Bureau is adopting commentary
                clarifying how this definition operates in the decedent debt context,
                including with respect to debt collectors' obligations to provide the
                validation information and respond to disputes and requests for
                original-creditor information. Accordingly, the Bureau is finalizing
                comment 34(a)(1)-1 as proposed.
                 For all of these reasons, and pursuant to its authority under FDCPA
                section 814(d) to prescribe rules with respect to the collection of
                debts by debt collectors, the Bureau is finalizing Sec. 1006.34(a)(1)
                to implement and interpret the FDCPA section 809(a) requirement that
                debt collectors provide validation information to consumers.
                34(a)(2) Exception
                 FDCPA section 809(a) contains a limited exception that provides
                that, if required validation information is not contained in the
                initial communication, a debt collector need not send the consumer a
                written validation notice within five days of that communication if the
                consumer has paid the debt prior to the time that the notice is
                required to be sent. The Bureau proposed in Sec. 1006.34(a)(2) to
                implement this exception by providing that a debt collector who
                otherwise would be required to send a validation notice pursuant to
                Sec. 1006.34(a)(1)(i)(B) is not required to do so if the consumer has
                paid the debt prior to the time that Sec. 1006.34(a)(1)(i)(B) would
                require the validation notice to be sent. Proposed Sec. 1006.34(a)(2)
                generally restated the statute, except for minor changes for
                organization and clarity.\155\
                ---------------------------------------------------------------------------
                 \155\ See 84 FR 23274, 23334-35 (May 21, 2019).
                ---------------------------------------------------------------------------
                 At least two consumer advocate commenters recommended that debt
                collectors be required to provide a validation notice even if a
                consumer has already paid the debt. According to these commenters, some
                consumers, including seniors, will pay a debt that they do not owe or
                recognize because they ``pay first and ask questions later.'' These
                commenters suggested that validation information would help such
                consumers assess after the fact whether they paid a debt that they
                owed. An industry trade group commenter stated that, for open-end
                credit, a debt collector should be permitted to satisfy Sec.
                1006.34(a)(1) by providing a periodic statement pursuant to Regulation
                Z, 12 CFR 1026.7, because periodic statements disclose sufficient
                account information to consumers.
                 The Bureau declines to require debt collectors to provide a
                validation notice if a consumer has already paid the debt. FDCPA
                section 809(a) explicitly provides that a debt collector is not
                required to send the validation notice if the consumer has paid the
                debt, and the Bureau has determined that it is neither necessary nor
                warranted to adopt a rule requiring otherwise.
                 The Bureau also declines to adopt recommendations to include an
                exception to Sec. 1006.34(a)(1) for open-
                [[Page 5789]]
                end credit, because a periodic statement provided in accordance with
                Regulation Z, 12 CFR 1026.7, is not an adequate substitute for the
                validation information. While such a periodic statement discloses some
                information about the debt, it typically does not disclose other
                information required under the final rule, such as the information
                about consumer protections required by FDCPA section 809(a)(3) through
                (5) and the corresponding provisions of final Sec. 1006.34.
                 Accordingly, pursuant to its authority under FDCPA section 814(d)
                to prescribe rules with respect to the collection of debts by debt
                collectors, and to implement and interpret FDCPA section 809(a), the
                Bureau is finalizing Sec. 1006.34(a)(2) as proposed.
                34(b) Definitions
                 To facilitate compliance with Sec. 1006.34, proposed Sec.
                1006.34(b) defined several terms that appear throughout the section. As
                discussed below, the Bureau is finalizing those definitions and related
                commentary with certain modifications in response to feedback.
                Consistent with the proposal, unless noted otherwise below, the Bureau
                is finalizing the definitions to implement and interpret FDCPA section
                809(a) and pursuant to its authority under FDCPA section 814(d) to
                prescribe rules with respect to the collection of debts by debt
                collectors.
                34(b)(1) Clear and Conspicuous
                 The Bureau proposed Sec. 1006.34(b)(1) to define the term clear
                and conspicuous for purposes of Regulation F consistent with the
                standards used in other consumer financial services laws and their
                implementing regulations, including, for example, Regulation E, subpart
                B (Remittance Transfers).\156\ Proposed Sec. 1006.34(b)(1) thus
                provided that disclosures are clear and conspicuous if they are readily
                understandable. The proposal provided that, in the case of written and
                electronic disclosures, the location and type size also must be readily
                noticeable to consumers and that, in the case of oral disclosures, the
                disclosures must be given at a volume and speed sufficient for a
                consumer to hear and comprehend them.\157\ For the reasons discussed
                below, the Bureau is adopting Sec. 1006.34(b)(1) largely as proposed
                but with minor modifications for clarity and in response to feedback.
                ---------------------------------------------------------------------------
                 \156\ See 12 CFR 1005.31(a)(1), comment 31(a)(1)-1.
                 \157\ See 84 FR 23274, 23335 (May 21, 2019).
                ---------------------------------------------------------------------------
                 An industry commenter objected to the clear and conspicuous
                definition in proposed Sec. 1006.34(b)(1). This commenter stated that
                a clear-and-conspicuous requirement is unnecessary in the debt
                collection context because consumers have an ongoing relationship with
                debt collectors, and a consumer therefore has the ability to ask a debt
                collector to explain a particular disclosure or communication if the
                consumer does not understand it.
                 Other commenters asked the Bureau to clarify the proposed
                definition. For instance, industry trade group and consumer advocate
                commenters offered various suggestions for specific font size or
                disclosure placement requirements. At least one industry commenter
                suggested that the Bureau explain how proposed Sec. 1006.34(b)(1)
                would interact with State disclosure laws, which may have their own
                clear-and-conspicuous standards that dictate font size or disclosure
                placement. An industry trade group commenter asked the Bureau to
                provide additional guidance about oral delivery of the validation
                information because, in the commenter's view, the proposal that oral
                communications be ``given at a volume and speed sufficient for a
                consumer to hear and comprehend them'' was ambiguous.
                 The Bureau disagrees that ongoing relationships between debt
                collectors and consumers make a clear and conspicuous definition
                unnecessary or unwarranted in the debt collection context. Consumer
                financial services laws and their implementing regulations commonly
                include standards for clear and conspicuous disclosures provided in the
                context of ongoing customer and business relationships between
                consumers and consumer financial services providers.\158\ Additionally,
                validation information is provided at the outset of collection
                communications. If a consumer chooses not to engage with the debt
                collector, no ongoing communications will be established.
                ---------------------------------------------------------------------------
                 \158\ See, e.g., 12 CFR 1026.5(a)(1)(i) (disclosures for open-
                end credit) and 12 CFR 1026.17(a)(1) (disclosures for closed-end
                credit). Moreover, a consumer does not typically get to choose which
                debt collector collects the consumer's debt, whereas a consumer does
                choose his or her financial services providers. Further, some
                customer relationships between consumers and debt collectors may be
                of shorter duration than customer relationships between consumers
                and other types of consumer financial services providers. These
                factors suggest that a standard for clear and conspicuous
                disclosures may be even more important in the debt collection
                context than in other consumer financial services contexts.
                ---------------------------------------------------------------------------
                 The Bureau declines to further clarify the clear and conspicuous
                definition in Sec. 1006.34(b)(1) by, for example, dictating font sizes
                or requirements regarding disclosure placement as requested by some
                commenters. Different debt collectors may design their communications
                in different ways, and the Bureau does not believe it is necessary or
                warranted to specify such details, as long as the disclosure satisfies
                the clear and conspicuous standard. In addition, the definition is
                consistent with, and provides the same level of specificity as,
                standards in some other consumer financial services laws and their
                implementing regulations, including but not limited to the Bureau's
                Remittance Transfers rule,\159\ which do not specify font size or
                disclosure placement requirements. Moreover, the Bureau concludes that
                the lack of more prescriptive guidance will not impose material burden
                on debt collectors. As discussed in the section-by-section analysis of
                Sec. 1006.34(d)(2), a debt collector who uses the model validation
                notice, specified variations of the model notice, or a substantially
                similar form, receives a safe harbor for the information requirements
                in Sec. 1006.34(c) and for the clear-and-conspicuous requirement in
                Sec. 1006.34(d)(1). Because debt collectors may use the model
                validation notice, specified variations of the model notice, or a
                substantially similar form if providing validation notices, debt
                collectors need not incur significant expenses ascertaining what meets
                the clear-and-conspicuous standard. Nevertheless, the final rule does
                clarify that, in the case of written and electronic disclosures,
                although no minimum font size is required, the location and type size
                must be both readily noticeable and legible to consumers.\160\
                ---------------------------------------------------------------------------
                 \159\ See 12 CFR 1005.31(a)(1), comment 31(a)(1)-1. See also,
                e.g., the general disclosure requirements for open-end and closed-
                end credit in, respectively, 12 CFR 1026.5(a)(1) and 1026.17(a)(1)
                and their commentary.
                 \160\ The section-by-section analysis of Sec. 1006.38(b)(2)
                discusses a new safe harbor from the overshadowing prohibition in
                Sec. 1006.38(b)(1) for a debt collector who uses the model
                validation notice.
                ---------------------------------------------------------------------------
                 The Bureau declines to revise Sec. 1006.34(b)(1) to clarify how
                the definition of clear and conspicuous interrelates with State
                disclosure laws. A debt collector can comply with both Sec.
                1006.34(b)(1) and State disclosure requirements that specify font size
                or disclosure placement. With respect to font size, the Bureau
                concludes, in general, that debt collectors satisfying State-law
                minimum-font-size requirements will also satisfy the standard in Sec.
                1006.34(b)(1) for a type size that is readily noticeable and legible to
                consumers. With respect to disclosure placement, as discussed in the
                section-by-section analysis of
                [[Page 5790]]
                Sec. 1006.34(d)(3)(iv), a debt collector may place disclosures
                specifically required under other applicable law, which includes
                disclosures specifically required by State law, on the reverse (or, in
                certain specified circumstances, on the front) of the validation
                notice. The Bureau believes that Sec. 1006.34(d)(3)(iv) will permit
                debt collectors to provide State law disclosures in a manner that is
                clear and conspicuous under applicable law.
                 The Bureau also declines to further clarify the meaning of clear
                and conspicuous in the context of oral delivery of validation
                information. The Bureau determines that the proposed and final
                regulatory text is sufficiently clear and that the final rule will not
                impose an undue burden on debt collectors, particularly in light of the
                Bureau's expectation that few, if any, oral disclosures will be
                provided.
                 For the reasons discussed above, the Bureau is finalizing Sec.
                1006.34(b)(1) to provide that clear and conspicuous means readily
                understandable and that, in the case of written and electronic
                disclosures, the location and type size also must be readily noticeable
                and legible to consumers, although no minimum type size is mandated.
                Final Sec. 1006.34(b)(1) also provides that oral disclosures must be
                given at a volume and speed sufficient for the consumer to hear and
                comprehend them.
                34(b)(2) Initial Communication
                 FDCPA section 809(a) requires debt collectors to provide consumers
                with certain validation information either in the debt collector's
                initial communication with the consumer in connection with the
                collection of the debt, or within five days after that initial
                communication. FDCPA section 803(2) defines the term communication
                broadly to mean the conveying of information regarding a debt directly
                or indirectly to any person through any medium.\161\ FDCPA section
                809(d) and (e) identifies particular communications that are not
                initial communications for purposes of FDCPA section 809(a) and that
                therefore do not trigger the validation notice requirement.\162\
                Pursuant to FDCPA section 809(d), an initial communication excludes a
                communication in the form of a formal pleading in a civil action.
                Pursuant to FDCPA section 809(e), an initial communication also
                excludes the sending or delivery of any form or notice that does not
                relate to the collection of the debt and is expressly required by the
                Internal Revenue Code of 1986, title V of the Gramm-Leach-Bliley Act,
                or any provision of Federal or State law relating to notice of a data
                security breach or privacy, or any regulation prescribed under any such
                provision of law.
                ---------------------------------------------------------------------------
                 \161\ See 15 U.S.C. 1692a(2). The November 2020 Final Rule
                implemented this definition in Sec. 1006.2(d). 85 FR 76734, 76888
                (Nov. 30, 2020).
                 \162\ See 15 U.S.C. 1692g(d), (e).
                ---------------------------------------------------------------------------
                 The Bureau proposed Sec. 1006.34(b)(2) to implement FDCPA section
                809(a), (d), and (e) by defining the term initial communication. The
                proposed definition largely restated the FDCPA and defined initial
                communication as the first time that, in connection with the collection
                of a debt, a debt collector conveys information, directly or
                indirectly, regarding the debt to the consumer, other than a
                communication in the form of a formal pleading in a civil action, or a
                communication in any form or notice that does not relate to the
                collection of the debt and is expressly required by any of the laws
                referenced in FDCPA section 809(e).\163\
                ---------------------------------------------------------------------------
                 \163\ See 84 FR 23274, 23335 (May 21, 2019).
                ---------------------------------------------------------------------------
                 An industry trade group recommended a bankruptcy-specific exception
                to the definition of initial communication for debt collectors
                collecting debts owed by consumers in bankruptcy. The commenter
                expressed concern that certain actions by a debt collector in the
                context of a consumer's bankruptcy proceeding, in particular filing a
                proof of claim, may be construed to be an initial communication and
                therefore trigger the FDCPA section 809(a) validation notice
                requirement.\164\ Additionally, according to the commenter, content on
                the validation notice, including the debt collection communication
                disclosure required by FDCPA section 807(11), could be construed as a
                demand for payment that violates the automatic stay provisions of the
                United States Bankruptcy Code (Bankruptcy Code) \165\ or, if the
                consumer has been relieved of personal liability, the discharge
                injunction.\166\ According to the commenter, some courts have opined
                that a debt collector would face an irreconcilable conflict between
                complying with the FDCPA and the Bankruptcy Code if the debt collector
                were required to provide a validation notice to a consumer in
                bankruptcy.\167\
                ---------------------------------------------------------------------------
                 \164\ To receive a distribution from a bankruptcy estate, a
                creditor generally must file with the bankruptcy court a proof of
                claim, which includes details about an alleged debt or interest. See
                Fed. R. Bankr. P. 3002.
                 \165\ See 11 U.S.C. 362.
                 \166\ A debtor's bankruptcy petition operates as an automatic
                stay that, among other things, prohibits ``any act to collect,
                assess, or recover a claim against the debtor that arose before the
                commencement of the case.'' 11 U.S.C. 362(a)(6). When a debtor's
                liability is discharged through bankruptcy, the discharge ``operates
                as an injunction against the commencement or continuation of an
                action, the employment of process, or an act, to collect, recover or
                offset any such debt as a personal liability of the debtor, whether
                or not discharge of such debt is waived.'' 11 U.S.C. 524(a)(2).
                 \167\ See, e.g., In re Chaussee, 399 B.R. 225, 238 (B.A.P. 9th
                Cir. 2008) (``In our opinion, the debt validation provisions
                required by the FDCPA clearly conflict with the claims processing
                procedures contemplated by the [Bankruptcy] Code and Rules.'').
                ---------------------------------------------------------------------------
                 The Bureau has determined to interpret the term initial
                communication not to include proofs of claim filed in bankruptcy
                proceedings. Courts have reached different conclusions about whether
                the FDCPA conflicts with the Bankruptcy Code.\168\ The Bureau is
                unaware of any case definitively holding that a proof of claim is an
                initial communication and that a debt collector therefore must provide
                a validation notice after filing a proof of claim. On the other hand,
                some courts have held that proofs of claim are not initial
                communications because, under FDCPA section 809(d), they are
                communications in the form of a formal pleading in a civil action.\169\
                Further, the Bureau has decided to permit a debt collector to file a
                proof of claim in a bankruptcy proceeding as required by the Bankruptcy
                Code without thereby triggering the debt collector's obligation to
                provide a validation notice under the FDCPA, because the Bureau finds
                it unlikely that consumer harm will result if a consumer does not
                receive a validation notice subsequent to a proof of claim in
                bankruptcy. The bankruptcy proof-of-claim form is filed under penalty
                of perjury, and a person who files a fraudulent claim could be fined up
                to $500,000, imprisoned for up to 5 years, or both.\170\ Thus, the
                Bureau concludes that bankruptcy proof-of-claim forms generally are
                likely to contain accurate information about the debt.
                ---------------------------------------------------------------------------
                 \168\ See Walls v. Wells Fargo Bank, 276 F.3d 502, 511 (9th Cir.
                2002) (holding that the Bankruptcy Code precludes application of
                FDCPA requirements in bankruptcy cases); Chaussee, 399 B.R. at 239
                (same); contra Simon v. FIA Card Servs., N.A., 732 F.3d 259, 274 (3d
                Cir. 2013) (stating that when ``FDCPA claims arise from
                communications a debt collector sends a bankruptcy debtor in a
                pending bankruptcy proceeding, and the communications are alleged to
                violate the Bankruptcy Code or Rules, there is no categorical
                preclusion of the FDCPA claims'').
                 \169\ See Simon, 732 F.3d at 273; Townsend v. Quantum3 Grp.,
                LLC, 535 B.R. 415, 423 (M.D. Fla. 2015); In re Brimmage, 523 B.R.
                134, 141-42 (Bankr. N.D. Ill. 2015).
                 \170\ The official bankruptcy proof-of-claim form is available
                here: https://www.uscourts.gov/forms/bankruptcy-forms/proof-claim-0.
                ---------------------------------------------------------------------------
                 Accordingly, to provide clarity for debt collectors while
                maintaining protections for consumers, the Bureau is interpreting the
                term initial
                [[Page 5791]]
                communication not to include proofs of claim filed in bankruptcy.
                Specifically, the Bureau is adopting new comment 34(b)(2)-1, which
                clarifies that a proof of claim that a debt collector files in a
                bankruptcy proceeding in accordance with the requirements of the
                Bankruptcy Code is a communication in the form of a formal pleading in
                a civil action and therefore is not an initial communication for
                purposes of Sec. 1006.34. The Bureau adopts this comment as an
                interpretation of the phrase ``[a] communication in the form of a
                formal pleading in a civil action'' in FDCPA section 809(d). The Bureau
                interprets that phrase to include a proof of claim that a debt
                collector files in a bankruptcy proceeding in accordance with the
                requirements of the Bankruptcy Code.
                 The Bureau acknowledges that other scenarios may exist in which a
                debt collector communicates with a consumer in bankruptcy and
                subsequently may be required to provide a validation notice. To the
                extent that debt collectors do provide validation notices to consumers
                in bankruptcy, Sec. 1006.34(a)(1) implements an existing FDCPA
                disclosure requirement and does not create a new tension between the
                FDCPA and the Bankruptcy Code. In addition, nothing in the final rule
                requires debt collectors to include payment requests in the validation
                information; instead, payment requests are optional disclosures that
                Sec. 1006.34(d)(3)(iii) permits debt collectors to include along with
                the validation information. Consequently, a debt collector concerned
                that a payment request would violate the Bankruptcy Code's automatic
                stay or discharge injunction is not required to include a payment
                request and, additionally, could use the model validation notice,
                specified variations of the model notice, or a substantially similar
                form, without a payment request and receive a safe harbor under Sec.
                1006.34(d)(2).
                 An industry trade group recommended that the Bureau exclude from
                the Sec. 1006.34(b)(2) definition of initial communication the notice
                of transfer of loan servicing required by Regulation X.\171\ According
                to the commenter, after an FDCPA-covered mortgage debt is transferred
                and a consumer receives a servicing transfer notice, the transferee may
                not have received all the information necessary to send a validation
                notice within the five-day timeframe required by FDCPA section 809(a).
                For this reason, the commenter suggested that Regulation X servicing
                transfer notices should not trigger the validation information
                requirement.
                ---------------------------------------------------------------------------
                 \171\ Generally, under Regulation X, each transferor servicer
                and transferee servicer of any mortgage loan shall provide to the
                borrower a notice of transfer for any assignment, sale, or transfer
                of the servicing of the mortgage loan. 12 CFR 1024.33(b)(1).
                Generally, the transferor servicer shall provide the notice of
                transfer to the borrower not less than 15 days before the effective
                date of the transfer of the servicing of the mortgage loan. The
                transferee servicer shall provide the notice of transfer to the
                borrower not more than 15 days after the effective date of the
                transfer. The transferor and transferee servicers may provide a
                single notice, in which case the notice shall be provided not less
                than 15 days before the effective date of the transfer of the
                servicing of the mortgage loan. 12 CFR 1024.33(b)(3)(i).
                ---------------------------------------------------------------------------
                 The Bureau declines to interpret the term initial communication to
                exclude servicing transfer notices required by Regulation X. Section
                1006.34(b)(2) largely mirrors existing language in FDCPA sections
                803(2) and 809(a), (d), and (e) and does not impose new substantive
                requirements or obligations on covered entities. As discussed in the
                section-by-section analysis of Sec. 1006.34(c), Regulation F will
                result in validation notices containing more information about the debt
                than they typically do today, but that information is, generally,
                either routine account information that owners of debts currently
                provide to debt collectors or that owners of debts can include without
                significant additional expense. Although the commenter argues that
                there may be timing considerations unique to mortgage servicing
                transfer notices, the Bureau determines that such timing concerns do
                not warrant an exception that would deem a mortgage servicing transfer
                notice, even one that does convey information, directly or indirectly,
                regarding the debt to the consumer to be excluded from the definition
                of an ``initial communication.''
                 Other commenters asked the Bureau to clarify whether a consumer-
                initiated communication, such as a consumer visiting a debt collector's
                website or a consumer leaving a voicemail with a debt collector, would
                constitute an initial communication under proposed Sec. 1006.34(b)(2).
                The Bureau notes that, under Sec. 1006.34(b)(2), for an initial
                communication to occur, a debt collector must ``convey[ ] information,
                directly or indirectly, regarding the debt. . . .'' Section
                1006.34(b)(2) is clear that, if a debt collector conveys no
                information, directly or indirectly, regarding the debt, an initial
                communication has not occurred and, consequently, the validation notice
                requirement has not been triggered. Thus, a consumer's voicemail left
                with a debt collector generally would not qualify as an initial
                communication. Similarly, an initial communication generally would not
                include a consumer's visit to a debt collector's website, unless during
                that visit the debt collector conveyed information regarding the
                consumer's specific debt.\172\
                ---------------------------------------------------------------------------
                 \172\ For example, a debt collector potentially could convey
                information regarding the debt during a consumer's visit to a
                website through a website chat feature.
                ---------------------------------------------------------------------------
                 For the reasons discussed above, the Bureau is finalizing Sec.
                1006.34(b)(2) largely as proposed but with a revision to clarify that
                proofs of claim filed in bankruptcy proceedings are not initial
                communications.
                34(b)(3) Itemization Date
                 FDCPA section 809(a)(1) requires debt collectors to disclose to
                consumers, either in the debt collector's initial communication in
                connection with the collection of the debt, or within five days after
                that communication, the amount of the debt.\173\ The Bureau proposed in
                Sec. 1006.34(c)(2)(vii) through (ix) to interpret the phrase ``amount
                of the debt'' to mean that debt collectors must disclose the amount of
                the debt as of a particular ``itemization date.'' \174\ To facilitate
                compliance with proposed Sec. 1006.34(c)(2), the Bureau proposed Sec.
                1006.34(b)(3) to define itemization date as one of four reference dates
                for which a debt collector can ascertain the amount of the debt. The
                proposed reference dates were the last statement date, the charge-off
                date, the last payment date, and the transaction date.\175\
                ---------------------------------------------------------------------------
                 \173\ See 15 U.S.C. 1692g(a)(1).
                 \174\ Proposed Sec. 1006.34(c)(2)(vii) and (viii) would have
                required debt collectors to disclose, respectively, the itemization
                date and the amount of the debt on the itemization date. Proposed
                Sec. 1006.34(c)(2)(ix) would have required debt collectors to
                disclose an itemization of the debt reflecting interest, fees,
                payments, and credits since the itemization date. For additional
                discussion of these provisions, which have been renumbered in the
                final rule, see the section-by-section analysis of Sec.
                1006.34(c)(2)(vi) through (viii).
                 \175\ See 84 FR 23274, 23335-37 (May 21, 2019). The reference
                dates were set forth in proposed Sec. 1006.34(b)(3)(i) through (iv)
                and are discussed in the section-by-section analysis of those
                paragraphs below.
                ---------------------------------------------------------------------------
                 The proposed definition of itemization date was designed to allow
                the use of dates that debt collectors could identify with relative ease
                because they reflect routine and recurring events, and that correspond
                to notable events in the debt's history that consumers may recall or be
                able to verify with records. The proposed definition also was intended
                to include dates for which debt collectors typically may receive
                account information from debt owners and that, therefore, debt
                [[Page 5792]]
                collectors would be able to use to provide the disclosures proposed in
                Sec. 1006.34(c)(viii) and (ix).
                 Proposed comment 34(b)(3)-1 explained that a debt collector could
                select any of the four reference dates as the itemization date. Once a
                debt collector used one of the reference dates for a specific debt in a
                communication with a consumer, however, the debt collector would be
                required to use that reference date for that debt consistently when
                providing disclosures pursuant to Sec. 1006.34 to that consumer.
                 For the reasons discussed below, the Bureau is adopting Sec.
                1006.34(b)(3) and its related commentary largely as proposed but with
                minor wording changes and to include an additional reference date in
                response to feedback: The judgment date. The Bureau also is adopting
                new comment 34(b)(3)-2, which provides that a debt collector may use a
                different reference date than a prior debt collector used for the same
                debt.
                 Some industry commenters supported the itemization date definition
                in proposed Sec. 1006.34(b)(3). At least two industry commenters
                supported providing debt collectors with a choice of several reference
                dates because a debt collector might not be able ascertain the amount
                of the debt on a single reference date. According to an industry trade
                group commenter, the proposed reference dates would provide adequate
                flexibility, as a creditor's information systems will have recorded at
                least one of those dates for any given debt. Another industry trade
                group commenter stated that the proposal's standardization of account
                information would allow debt collectors to build better internal
                procedures and improve consumer communication practices. An industry
                commenter stated that proposed Sec. 1006.34(b)(3) would require
                significant client education and information technology investment but
                ultimately concluded that the framework was feasible.
                 Other commenters objected to proposed Sec. 1006.34(b)(3). An
                industry commenter stated that creditors may provide debt collectors
                information about multiple reference dates. According to this
                commenter, analyzing creditor records to identify and organize account
                information as of a single reference date would be complicated, costly,
                and increase the likelihood of validation notice errors. A group of
                consumer advocate commenters stated that, instead of permitting debt
                collectors to choose between reference dates, Sec. 1006.34(b)(3)
                should define the itemization date as a single reference date supported
                by consumer testing.
                 The Bureau determines that Sec. 1006.34(b)(3) will facilitate
                compliance with the itemization date-related requirements in final
                Sec. 1006.34(c)(2)(vi) through (viii). Account information available
                to debt collectors may vary by debt type because some account
                information is not universally tracked or used across product markets.
                To facilitate the ability of debt collectors across debt markets to
                comply with Regulation F, the final rule permits debt collectors to
                determine the itemization date by selecting from one of five reference
                dates for which they can ascertain the amount of the debt.
                 The Bureau finds that this framework will not result in undue
                industry burden. Debt collectors today routinely analyze and organize
                account information included in files from creditors when creditors
                place accounts for collection. Debt collectors should be able to use or
                build on these existing functions to select an itemization date based
                on the definition in Sec. 1006.34(b)(3). Therefore, even if creditors
                provide or retain account information based on multiple reference
                dates, debt collectors should not face substantial new costs or
                litigation risks from complying with Sec. 1006.34(b)(3).
                 The Bureau declines consumer advocates' suggestion to specify a
                single reference date. As discussed in the proposal, the Bureau
                considered requiring debt collectors to provide an itemization of the
                debt based on a single reference date but rejected that approach
                because of the infeasibility of identifying a single reference date
                that applies to all debt types across all relevant markets.\176\ The
                group of consumer advocate commenters that recommended a single
                reference date did not suggest or provide evidence that it would be
                feasible to identify a single date that would be appropriate for all
                types of debt. The Bureau also declines to exercise its discretion to
                conduct consumer testing to attempt to determine an optimal itemization
                date for debt collectors to use within each debt collection market
                (e.g., mortgage debt, credit card debt, student loan debt, medical
                debt, and so on). The Bureau determines that such testing is not
                necessary or warranted, because the Bureau finds that debt collectors'
                use of any one of the five itemization dates set forth in Sec.
                1006.34(b)(3) should correspond, in most cases, to events in the debt's
                history that consumers may recall or be able to verify with records.
                ---------------------------------------------------------------------------
                 \176\ See 84 FR 23274, 23336 (May 21, 2019).
                ---------------------------------------------------------------------------
                 In the proposal, the Bureau requested comment on whether the
                itemization date should be structured as a prescriptive ordering of
                reference dates, such as a hierarchy that would permit a debt collector
                to use a date listed later in the hierarchy only if the debt collector
                did not have information about any dates earlier in the hierarchy.
                Industry and industry trade group commenters generally favored the
                proposed flexible approach. According to commenters, a prescriptive
                ordering would significantly increase costs and litigation risk for
                debt collectors. As noted above, consumer advocates expressed concern
                that the proposed approach would result in disclosure of itemization
                dates that are not meaningful to consumers and urged the Bureau to use
                consumer testing to determine a date that would be meaningful.
                 The Bureau agrees that a prescriptive ordering could impose undue
                costs and litigation risks for debt collectors. In addition, as
                discussed below in the section-by-section analysis of Sec.
                1006.34(b)(3)(i) through (v), each reference date may be meaningful to
                consumers because it corresponds to a notable event in the debt's
                history that consumers may recall or be able to verify with records.
                Because each reference date may be meaningful to a consumer, and
                because each reference date may be more or less meaningful to the
                consumer than one of the other reference dates depending on the
                circumstances surrounding the debt, there may not be a benefit to
                consumers if the Bureau were to structure the dates as a hierarchy. The
                Bureau therefore declines to adopt a prescriptive ordering of the
                reference dates.
                 Some commenters who did not object to the proposed itemization date
                framework in principle either raised concerns that the proposed
                reference dates would not accommodate debts in all product markets or
                recommended additional reference dates. At least one industry trade
                group commenter asked the Bureau to clarify what reference date debt
                collectors should use for debts in bankruptcy. An industry commenter
                stated that the proposal might not accommodate a debt a consumer owes
                to a government, such as a tax debt. According to this commenter,
                although the FDCPA does not cover many debts consumers owe to
                governments,\177\ some debt collectors who collect debts on behalf of
                Federal government agencies are legally or contractually obliged to
                [[Page 5793]]
                abide by the FDCPA.\178\ This commenter stated that the proposed
                reference dates might not accommodate tax debt because, in some
                instances, it will be the case that no previous statement was provided,
                no prior payment was made, and there was no transaction per se between
                the consumer and the government creditor.
                ---------------------------------------------------------------------------
                 \177\ FDCPA section 803(5) defines a ``debt'' as any obligation
                arising out of a transaction ``primarily for personal, family, or
                household purposes.'' 15 U.S.C. 1692a(5). According to the
                commenter, a debt a consumer owes to a government in many cases does
                not meet this definition.
                 \178\ For example, debt collectors who collect on behalf of the
                Internal Revenue Service under a ``qualified tax collection
                contract'' generally are required by statute to comply with the
                FDCPA. See 26 U.S.C. 6306(g) (``The provisions of the [FDCPA] shall
                apply to any qualified tax collection contract, except to the extent
                superseded by section 6304, section 7602(c), or by any other
                provision of this title.'').
                ---------------------------------------------------------------------------
                 According to another commenter, an additional reference date for
                student loan debt is necessary because debt collectors collecting
                Federal student loans do not receive any of the proposed reference
                dates at the time of placement. Some commenters suggested that the
                Bureau permit debt collectors to use the date of default as defined by
                the Higher Education Act of 1965; commenters argued that this date is a
                widely used reference date in the student loan market.\179\ By
                contrast, an FTC commissioner urged the Bureau not to use the Higher
                Education Act's definition of default and instead to use the date a
                student loan borrower becomes 90 days past due.
                ---------------------------------------------------------------------------
                 \179\ The Higher Education Act defines ``default'' as ``the
                failure of a borrower . . . to make an installment payment when due,
                or to meet other terms of the promissory note, the Act, or
                regulations as applicable, if the Secretary or guaranty agency finds
                it reasonable to conclude that the borrower and endorser, if any, no
                longer intend to honor the obligation to repay, provided that this
                failure persists for--(1) 270 days for a loan repayable in monthly
                installments; or (2) 330 days for a loan repayable in less frequent
                installments.'' 34 CFR 682.200(b).
                ---------------------------------------------------------------------------
                 In addition, an industry commenter recommended that Sec.
                1006.34(b)(3) incorporate: (1) The date a creditor places a debt with
                the debt collector, or (2) the date the debt collector provides
                validation information to the consumer. Another industry commenter
                suggested that Sec. 1006.34(b)(3) incorporate the date of a previously
                obtained court judgment.
                 The Bureau determines that Sec. 1006.34(b)(3)--in conjunction with
                the five reference dates described in Sec. 1006.34(b)(3)(i) through
                (v)--provides adequate flexibility for debts in all product markets,
                including for debts in bankruptcy. A debt collector may choose which of
                the five reference dates to use based on the facts and circumstances
                surrounding the history of the debt--e.g., whether a creditor provided
                statements, whether the consumer made payments--and the information
                available to the debt collector.
                 With respect to which reference date a debt collector should use to
                itemize a tax obligation a consumer owes to a government, the date the
                tax was assessed may be a transaction date for tax debt, as discussed
                in the section-by-section analysis of Sec. 1006.34(b)(3)(iv). In
                addition, a date on which the government provided a written invoice or
                tax bill may constitute a last statement date for tax debt under Sec.
                1006.34(b)(3)(i).
                 The Bureau determines that a reference date specific to student
                loan debt is unnecessary and unwarranted because the reference dates in
                Sec. 1006.34(b)(3) are sufficient. For virtually any student loan
                debt, there will be a last statement date as described in Sec.
                1006.34(b)(3)(i), a last payment date as described in Sec.
                1006.34(b)(3)(ii), or a transaction date as described in Sec.
                1006.34(b)(3)(iv). For many student loan debts, all three reference
                dates will exist.
                 The Bureau also declines to incorporate into Sec. 1006.34(b)(3)
                the date of placement or the date the debt collector provides the
                validation notice. From a consumer's perspective, these dates do not
                correspond to notable events in a debt's history that the consumer may
                recall or be able to verify. As noted above, however, in response to
                feedback, the Bureau is adding a new reference date called the
                ``judgment date,'' which is the date of a final court judgment that
                determines the amount of the debt owed by the consumer. The judgment
                date is discussed in the section-by-section analysis of final Sec.
                1006.34(b)(3)(v).
                 With respect to the Bureau's request for comment about whether a
                subsequent debt collector should be permitted to use a different
                itemization date than a prior debt collector used for the same debt,
                industry and industry trade group commenters generally agreed that
                requiring debt collectors to use the same reference date as a prior
                collector would be burdensome and impractical. These commenters stated
                that debt collectors would be unable to ensure compliance with such a
                requirement because a creditor might not disclose the reference date
                that a prior debt collector used. By contrast, an academic and a
                consumer advocate commenter stated that a debt collector should be
                required to use the same itemization date the prior debt collector used
                because a consumer may not be able to assess the amount owed if the
                subsequent debt collector uses a different reference date.
                 The final rule permits a debt collector to use a different
                itemization date than a prior debt collector used for the same debt.
                The availability of account information, including about a prior debt
                collector's activities, to a subsequent debt collector depends on the
                creditor or debt buyer who places the debt with the subsequent debt
                collector. If the creditor or debt buyer does not provide the
                previously used itemization date, the subsequent debt collector may be
                unable to determine that date, and therefore fail to comply with a
                requirement to use it. It is conceivable that, were the rule to require
                use of the same itemization date previously used, debt collectors and
                creditors could begin to structure their contracts and processes to
                enable creditors and debt collectors to transfer a previously used
                itemization date. However, establishing such contracts and processes
                would likely impose costs on creditors and debt collectors,\180\ and
                those costs would likely be passed on to consumers. Further, the Bureau
                finds that the costs are not warranted because permitting a subsequent
                debt collector to use a different itemization date will maintain
                protections for consumers, as long as the debt collector uses one of
                the five itemization dates specified in the rule. As stated above, the
                Bureau finds that the five itemization dates are all dates that should
                result in reasonably meaningful and recognizable debt amounts for
                consumers. Accordingly, the Bureau is adopting new comment 34(b)(3)-2
                to clarify that, when selecting an itemization date pursuant to Sec.
                1006.34(b)(3), a debt collector may use a different reference date than
                a prior debt collector who attempted to collect the debt.
                ---------------------------------------------------------------------------
                 \180\ In order for the contractual framework and processes to
                achieve the desired result of a creditor passing the previously used
                itemization date to the current debt collector, creditors would have
                to structure contracts to require the previous debt collectors to
                pass back to the creditors the previously used itemization dates so
                that the creditors, in turn, can pass them on to the current debt
                collectors. Developing and implementing such contractual provisions
                and processes across the debt collection industry would likely
                impose potentially significant costs.
                ---------------------------------------------------------------------------
                 For the reasons set forth above, the Bureau is finalizing Sec.
                1006.34(b)(3) and its related commentary with minor wording changes and
                to include a new reference date, the judgment date, in Sec.
                1006.34(b)(3)(v). In addition, the Bureau is adopting new comment
                34(b)(3)-2 to explain that a debt collector may use a different
                reference date than a prior debt collector. The Bureau is finalizing
                Sec. 1006.34(b)(3) and Sec. 1006.34(b)(3)(i) through (v), discussed
                below, pursuant to its authority under FDCPA section 814(d) to
                prescribe rules with respect to the collection of debts by debt
                collectors and pursuant to its
                [[Page 5794]]
                authority under Dodd-Frank Act section 1032(a) to prescribe rules to
                ensure that the features of consumer financial products and services
                are disclosed to consumers fully, accurately, and effectively.
                34(b)(3)(i)
                 The Bureau proposed in Sec. 1006.34(b)(3)(i) to permit debt
                collectors to use as the itemization date the date of the last periodic
                statement or written account statement or invoice provided to the
                consumer. Proposed comment 34(b)(3)(i)-1 explained that a statement
                provided by a creditor or a third party acting on the creditor's
                behalf, including a creditor's service provider, may constitute the
                last statement provided to the consumer for purposes of Sec.
                1006.34(b)(3)(i).
                 Commenters disagreed about whether the Bureau should adopt the last
                statement date as a permissible reference date. Several industry and
                industry trade group commenters supported the proposal, stating that,
                for some debts, the last statement date is readily available to debt
                collectors and recognizable to consumers. Some commenters stated that,
                even when creditors do not initially provide periodic statements to
                debt collectors, such statements are available upon request. However,
                some consumer advocate commenters stated that the last statement date
                may not be meaningful to some consumers and may not help them recognize
                a debt. For example, a commenter stated that a creditor may send
                duplicates of the same periodic statement or invoice to a consumer
                multiple times, even when the balance is changing due to interest or
                fees. In this scenario, the commenter said, the last statement a
                consumer received would not reflect the actual amount owed and would
                not be helpful to the consumer.
                 At least two commenters stated that a validation notice provided by
                a prior debt collector should not constitute a last statement for
                purposes of Sec. 1006.34(b)(3)(i). According to a consumer advocate
                commenter, the date of a prior validation notice will not be meaningful
                to consumers and, consequently, an itemization as of that date will not
                help consumers recognize an alleged debt. An industry trade group
                commenter advised against relying on a validation notice provided by a
                prior debt collector because creditors generally do not provide
                previously sent validation notices to subsequent debt collectors.
                 The Bureau determines that the last statement date may be used as a
                reference date. Many creditors or third parties acting on a creditor's
                behalf routinely provide consumers with account statements, such as
                periodic statements or invoices. If a consumer has received an account
                statement from a creditor, the consumer either may recognize the date
                that they last received a statement or may be able to verify that date
                in their records.\181\ Further, last statement information is often
                readily available to debt collectors, as debt collectors frequently
                receive, or have the ability to request, last statement information or
                records from creditors.
                ---------------------------------------------------------------------------
                 \181\ This is likely to be true even if the consumer has
                received a duplicative statement as the last statement. In that
                scenario, under Sec. 1006.34(c)(2)(vii), which requires a debt
                collector to disclose the amount of the debt on the itemization
                date, the debt amount that the debt collector discloses to the
                consumer must be the debt amount as of that last statement date.
                ---------------------------------------------------------------------------
                 The Bureau determines that only a last statement or invoice
                provided to a consumer by a creditor, as opposed to a statement, such
                as a validation notice, provided by a debt collector, should serve as a
                basis for a last statement date as defined in Sec. 1006.34(b)(3)(i)
                because consumers may be more likely to recall or be able to verify a
                statement sent by a creditor than by a debt collector. This may be true
                even if a creditor issues a statement after the debt has gone into
                collection. Under Sec. 1006.34(b)(3)(i), such a new statement may
                serve as the last statement for purposes of the itemization date.
                 For these reasons, the Bureau is finalizing Sec. 1006.34(b)(3)(i)
                and its related commentary with revisions to provide that only a
                statement or invoice provided by a creditor qualifies as a last
                statement for purposes of Sec. 1006.34(b)(3)(i). Specifically, the
                Bureau is revising Sec. 1006.34(b)(3)(i) to state that the last
                statement date is the date of the last periodic statement or written
                account statement or invoice provided to the consumer by a creditor.
                The Bureau also is revising comment 34(b)(3)(i)-1 to provide that a
                statement or invoice provided by a debt collector is not a last
                statement for purposes of Sec. 1006.34(b)(3)(i), unless the debt
                collector is also a creditor.
                34(b)(3)(ii)
                 The Bureau proposed in Sec. 1006.34(b)(3)(ii) to permit debt
                collectors to use the date that the debt was charged off as the
                itemization date.
                 An industry trade group and an industry commenter supported the use
                of the charge-off date, particularly for debts associated with open-end
                credit, such as credit cards. The commenters stated that charge off is
                a regulated Federal standard for consumer credit \182\ and would be a
                reliable reference date for itemization-related disclosures in some
                circumstances. An industry trade group commenter stated that creditors
                frequently provide debt collectors account information as of the
                charge-off date. Commenters stated that consumers may recognize the
                amount due as of the charge-off date because some creditors provide
                charge-off statements that reflect the charge-off balance and, they
                said, consumers have the ability to review these charge-off statements.
                ---------------------------------------------------------------------------
                 \182\ 65 FR 36903 (June 12, 2000); Off. of the Comptroller of
                the Currency, Bulletin 2000-20, Uniform Retail Credit Classification
                and Account Management Policy (June 20, 2000).
                ---------------------------------------------------------------------------
                 Other commenters objected to including the charge-off date as a
                permissible reference date. An industry commenter stated that not all
                creditors maintain account information as of the charge-off date or
                communicate that information to debt collectors at placement. Consumer
                advocates and at least two industry trade group commenters stated that,
                although the charge-off date may be widely used for some financial
                products, it may not resonate with consumers or help them recognize a
                debt because consumers might not know the charge-off date.\183\
                ---------------------------------------------------------------------------
                 \183\ An individual commenter requested clarification whether,
                for medical debt, the date of charge off is the date a creditor
                places the account for collection. The Bureau is not aware that such
                a definition is commonly used.
                ---------------------------------------------------------------------------
                 The Bureau determines that the charge-off date may be used as a
                reference date. Creditors frequently provide account information as of
                the charge-off date for various types of debts, including credit card
                debt, to debt collectors. The Bureau acknowledges that not all
                creditors maintain account information as of the charge-off date or
                provide such information to debt collectors, but the charge-off date is
                only one of five reference dates specified in the final rule. Further,
                account information at charge off is readily available to a
                sufficiently large number of debt collectors--including collectors of
                credit card debt--to justify its adoption as a reference date. In
                addition, while consumers might not know the specific charge-off date,
                they may, in fact, recognize account information as of approximately
                the charge-off date because charge off often occurs at around the time
                the creditor provided a last account statement. Further, as noted by
                commenters, some creditors may provide consumers with charge-off
                statements that reflect the balance as of the charge-off date.
                 Accordingly, the Bureau is finalizing Sec. 1006.34(b)(3)(ii) as
                proposed.
                [[Page 5795]]
                34(b)(3)(iii)
                 The Bureau proposed in Sec. 1006.34(b)(3)(iii) to permit debt
                collectors to use the date the last payment was applied to the debt as
                the itemization date.
                 Industry and consumer advocate commenters generally supported
                proposed Sec. 1006.34(b)(3)(iii). These commenters agreed that account
                information as of the last payment date is readily available to debt
                collectors and recognizable to consumers. According to one consumer
                advocate, a consumer may have a general idea of when a bill was last
                paid, especially if the consumer's delinquency was related to a
                significant life event, such as a job loss, a divorce, or an illness.
                Accordingly, the Bureau determines that the last payment date as
                defined in Sec. 1006.34(b)(3)(iii) is an appropriate reference date.
                 Commenters asked the Bureau to clarify whether a third-party
                payment could serve as the basis for the last payment date. For
                example, several trade group commenters stated that, if a consumer's
                car is repossessed, the sale of the collateral may be applied to the
                consumer's balance after receipt of the consumer's last payment.
                Another commenter raised the possibility of third-party payments and
                insurance adjustments in the medical debt context. A group of consumer
                advocates recommended that only a payment from a consumer to a creditor
                should serve as the basis for a last payment date. According to this
                commenter, a last consumer payment to a prior debt collector may not be
                significant or recognizable to a consumer.
                 The Bureau determines that third-party payments may serve as the
                basis for the last payment date under Sec. 1006.34(b)(3)(iii). The
                Bureau finds that the date of a third-party payment on the debt, such
                as a payment from an auto repossession agent or an insurance company,
                may be meaningful to a consumer because such payments may be
                accompanied by a notice to the consumer, and therefore the consumer
                could recognize or verify with records the date of such payments.
                 The Bureau also determines that a consumer's payment to a prior
                debt collector may serve as the last payment date. The Bureau finds
                that consumers are at least as likely to recognize or be able to verify
                with records the status of the debt as of the consumer's last payment
                to a prior debt collector as consumers are able to recognize or verify
                an earlier (perhaps much earlier) payment to the creditor, particularly
                if the debt has been outstanding for a long time.
                 For these reasons, the Bureau is finalizing Sec.
                1006.34(b)(3)(iii) as proposed to provide that the last payment date is
                the date the last payment was applied to the debt. The Bureau also is
                adopting new comment 34(b)(3)(iii)-1, which clarifies that a third-
                party payment applied to the debt, such as a payment from an auto
                repossession agent or an insurance company, can be a last payment for
                purposes of Sec. 1006.34(b)(3)(iii).
                34(b)(3)(iv)
                 The Bureau proposed in Sec. 1006.34(b)(3)(iv) to permit debt
                collectors to use as the itemization date the date of the transaction
                that gave rise to the debt. Proposed comment 34(b)(3)(iv)-1 explained
                that the transaction date is the date that a creditor provided, or made
                available, a good or service to a consumer, and it included examples of
                transaction dates. The comment also explained that, if a debt has more
                than one potential transaction date, a debt collector may use any such
                date as the transaction date but must use whichever transaction date it
                selects consistently.
                 A number of commenters, including consumer advocates, industry
                trade groups, and at least one industry commenter, supported including
                the transaction date in the itemization date definition. According to
                several commenters, consumers likely would recognize the transaction
                date as defined by proposed Sec. 1006.34(b)(3)(iv). At least one
                commenter stated that creditors provide account information as of the
                transaction date for some debt types.
                 With respect to proposed comment 34(b)(3)(iv)-1, a consumer
                advocate commenter stated that, if a debt has more than one potential
                transaction date, the debt collector should not be permitted to choose
                which date to use as the transaction date for purposes of Sec.
                1006.34(b)(3)(iv). The commenter urged the Bureau to develop a
                prescriptive standard for identifying the appropriate transaction date
                for scenarios where multiple transaction dates exist.
                 Several commenters also stated that determining the transaction
                date may be problematic in some circumstances. For example, a consumer
                advocate commenter explained that, while determining the transaction
                date is straightforward with one-time transactions, identifying the
                transaction date may be more difficult with respect to contracts for
                ongoing services, such as gym memberships, cellular telephone
                contracts, or lawn care service contracts. In addition, an industry
                commenter stated that medical providers may combine multiple dates of
                service into one account or use family billing that combines separate
                bills for family members into one account. The commenter suggested
                that, if an account in collection reflects services on multiple dates
                or for multiple individuals, identifying a transaction date may be
                difficult for the debt collector.
                 The Bureau finds that, for some debts, creditors may provide debt
                collectors with account information related to the transaction date. In
                addition, consumers may recognize the amount of a debt on the
                transaction date, which may be reflected on a copy of a contract or a
                bill provided by a creditor. For this reason, the Bureau is finalizing
                Sec. 1006.34(b)(3)(iv) as proposed to provide that the transaction
                date, which is the date of the transaction that gave rise to the debt,
                can be the itemization date for purposes of Sec. 1006.34(b)(3).
                 As commenters noted, various dates may serve as potential
                transaction dates under Sec. 1006.34(b)(3)(iv). For example, potential
                transaction dates may include the date a service or good was provided
                to a consumer or the date that a consumer signed a contract for a
                service or good. In the case of a consumer's tax debt, the date a
                government assessed the tax may be a transaction date for purposes of
                Sec. 1006.34(b)(3)(iv).\184\ Nevertheless, the Bureau declines to
                adopt a prescriptive standard for identifying the only transaction date
                debt collectors may use. Both the contract date and the service date
                are significant dates that may resonate with a consumer. Because the
                consumer may recognize the amount of the debt on those dates, the
                Bureau finds that either date may serve as the transaction date.
                Further, the Bureau determines that developing a more prescriptive
                standard that would apply to all debt types is not feasible. For this
                reason, the Bureau is finalizing comment 34(b)(3)(iv)-1, with minor
                changes for clarity, to provide that, if a debt has more than one
                transaction date, a debt collector may use any such date as the
                transaction date, but the debt collector must use whichever date the
                debt collector selects consistently, as described in comment 34(b)(3)-
                1. Comment 34(b)(3)(iv)-1 also addresses concerns regarding identifying
                the transaction date for medical debt that includes services on
                [[Page 5796]]
                multiple dates or for multiple individuals.\185\
                ---------------------------------------------------------------------------
                 \184\ See the discussion of tax debts in the introductory
                section-by-section analysis of Sec. 1006.34(b)(3).
                 \185\ Because of differences between various debt types and the
                particular facts and circumstances of any given transaction, Sec.
                1006.34(b)(3)(iv) provides debt collectors flexibility when
                selecting a transaction date. However, if the total amount of a debt
                in collection includes amounts incurred on different dates of
                service, the Bureau believes that, even though Sec.
                1006.34(b)(3)(iv) does not require it, debt collectors generally
                will select the last date of service as the transaction date. This
                date may be most recognizable to consumers. Further, disclosing
                itemization-related information as of the last date, as opposed to
                an earlier date, likely would be easier for a debt collector.
                ---------------------------------------------------------------------------
                 The Bureau recognizes that the transaction date may be difficult to
                determine in some circumstances. However, under the framework in Sec.
                1006.34(b)(3) for determining the itemization date, the transaction
                date is one of five reference dates from which a debt collector may
                choose. Section 1006.34(b)(3) does not require a debt collector to use
                the transaction date as the reference date for itemization-related
                disclosures. If a debt collector cannot determine the transaction date,
                the debt collector may use another reference date.
                34(b)(3)(v)
                 As discussed above, the proposed definition of itemization date
                included four reference dates. In response to the proposed definition,
                an industry commenter suggested that the Bureau add a fifth date--the
                date of a court judgment. The Bureau has determined to adopt this
                recommendation. As a general matter, debt collectors will know if a
                court judgment against a consumer exists and consumers are likely to
                recognize the date of a court judgment against them or be able to
                verify the date with records. Further, the amount of the debt as of the
                date of a court judgment is verifiable as it will have been
                memorialized in court records. Accordingly, the Bureau is finalizing
                Sec. 1006.34(b)(3)(v) to permit debt collectors to use as the
                itemization date the judgment date, which is the date of a final court
                judgment that determines the amount of the debt owed by the consumer.
                34(b)(4) Validation Notice
                 FDCPA section 809(a) provides, in relevant part, that, within five
                days after the initial communication with a consumer in connection with
                the collection of any debt, a debt collector shall send the consumer a
                written notice containing specified information (i.e., validation
                information), unless that information is contained in the initial
                communication or the consumer has paid the debt. Debt collectors and
                others commonly refer to the written notice required by FDCPA section
                809(a) as a ``validation notice'' or a ``g notice.'' The Bureau
                proposed in Sec. 1006.34(b)(4) to define validation notice to mean a
                written or electronic notice that provides the validation information
                described in Sec. 1006.34(c).\186\ The Bureau received no comments
                regarding proposed Sec. 1006.34(b)(4) and is finalizing it with a
                minor wording change for consistency with final Sec. 1006.34(c).
                ---------------------------------------------------------------------------
                 \186\ See 84 FR 23274, 23337 (May 21, 2019).
                ---------------------------------------------------------------------------
                34(b)(5) Validation Period
                 FDCPA section 809(b) contains certain requirements that a debt
                collector must satisfy if a consumer disputes a debt or requests the
                name and address of the original creditor.\187\ If a consumer disputes
                a debt in writing within 30 days of receiving the validation
                information, a debt collector must stop collection of the debt until
                the debt collector obtains verification of the debt or a copy of a
                judgment against the consumer and mails it to the consumer. Similarly,
                if a consumer requests the name and address of the original creditor in
                writing within 30 days of receiving the validation information, the
                debt collector must cease collection of the debt until the debt
                collector obtains and mails such information to the consumer. FDCPA
                section 809(b) also prohibits a debt collector, during the 30-day
                period for written disputes and original-creditor information requests,
                from engaging in collection activities and communications that
                overshadow, or are inconsistent with, the disclosure of the consumer's
                rights to dispute the debt and request original-creditor information,
                which are sometimes referred to as ``verification rights.''
                ---------------------------------------------------------------------------
                 \187\ 15 U.S.C. 1692g(b).
                ---------------------------------------------------------------------------
                 As described in the section-by-section analysis of Sec.
                1006.34(c)(3)(i) through (iii), the Bureau proposed to require debt
                collectors to disclose to a consumer the date certain on which the
                consumer's verification rights under FDCPA section 809(b) expire. To
                facilitate compliance with that proposed requirement, proposed Sec.
                1006.34(b)(5) defined the term validation period to mean the period
                starting on the date that a debt collector provides the validation
                information described in Sec. 1006.34(c) and ending 30 days after the
                consumer receives or is assumed to receive the validation
                information.\188\ To clarify how to calculate the end of the validation
                period--including how debt collectors may disclose a period that
                provides consumers additional time beyond the required 30 days to
                exercise their validation rights--proposed Sec. 1006.34(b)(5) provided
                that a debt collector may assume that a consumer receives the
                validation information on any day that is at least five days (excluding
                legal public holidays, Saturdays, and Sundays) after the debt collector
                provides it. Proposed comment 34(b)(5)-1 clarified that, if a debt
                collector sends an initial validation notice that was not received and
                then sends a subsequent validation notice, the validation period ends
                30 days after the consumer receives or is assumed to receive the
                subsequent validation notice.
                ---------------------------------------------------------------------------
                 \188\ 84 FR 23274, 23337-38 (May 21, 2019).
                ---------------------------------------------------------------------------
                 For the reasons discussed below, the Bureau is finalizing proposed
                Sec. 1006.34(b)(5) and proposed comment 34(b)(5)-1 (which is
                renumbered as comment 34(b)(5)-2) with minor wording changes for
                clarity and consistency with other provisions of Regulation F. The
                Bureau is adopting new comment 34(b)(5)-1 to illustrate how a debt
                collector may calculate the end of the validation period before sending
                the validation notice.
                 A number of commenters, including industry commenters, supported
                proposed Sec. 1006.34(b)(5). According to several commenters, the
                proposed definition is consistent with current industry practices. For
                example, with respect to the proposed five-day delivery timing
                assumption, industry commenters stated that debt collectors generally
                assume that a consumer receives a validation notice five to eight days
                after mailing. Consumer advocate commenters objected to the proposed
                definition, stating that debt collectors should be obligated to honor
                consumer verification requests at any time, not only during the
                validation period.
                 Some commenters recommended lengthening the proposed five-day
                delivery timing assumption. A consumer advocate commenter and an
                industry trade group commenter suggested that the validation period
                definition should assume that the consumer receives the validation
                notice seven days after the debt collector mails it to account for
                delays or bulk mail delivery.\189\ Another trade group
                [[Page 5797]]
                commenter recommended a fixed ten-day assumption that omits
                consideration of weekends and holidays.
                ---------------------------------------------------------------------------
                 \189\ United States Postal Service (USPS) delivery times for
                Standard Mail, commonly referred to as bulk mail, are typically
                longer than delivery times for first-class mail. For example, based
                on the USPS Originating Service Standards, bulk mail originated in
                Washington, DC takes six days to reach New York City, seven days to
                reach Denver, and nine days to reach Seattle. By contrast, first-
                class mail from Washington, DC reaches New York City in two days and
                Denver and Seattle in three days. See U.S. Postal Serv., Service
                Standards Maps, https://postalpro.usps.com/ppro-tools/service-standards-maps (last visited Nov. 16, 2020).
                ---------------------------------------------------------------------------
                 Other commenters recommended shortening the delivery timing
                assumption. For example, an industry trade group commenter recommended
                that the Bureau eliminate the assumption entirely and clarify that the
                validation period commences upon mailing of a validation notice. Other
                industry commenters urged the Bureau to shorten the assumption for
                near-instantaneous communication methods, such as electronic or oral
                delivery. In contrast, at least two industry trade groups commenters
                and a consumer advocate commenter recommended a uniform validation
                period across delivery methods. According to an industry trade group
                commenter, if the validation period is not the same for all delivery
                methods, consumers may be confused if they receive validation notices
                through different delivery methods with different due dates.
                 After considering this feedback, the Bureau determines that a
                validation period definition will facilitate debt collectors'
                compliance with the requirement in Sec. 1006.34(c)(3) to disclose to a
                consumer the date certain on which the consumer's FDCPA section 809(b)
                verification rights expire. The Bureau declines, as requested by
                consumer advocate commenters, to require a debt collector to comply
                with a verification request that a consumer submits after the 30-day
                period provided by the statute has expired. FDCPA section 809(b)
                establishes a 30-day period for consumers to exercise their
                verification rights.\190\
                ---------------------------------------------------------------------------
                 \190\ Although the FDCPA and this implementing regulation do not
                require a debt collector to provide verification after the
                validation period expires, a debt collector nevertheless may choose
                to do so. The Bureau has received feedback from debt collectors and
                at least one industry trade group that many debt collectors respond
                to disputes with verification, and to original-creditor-information
                requests, after the validation period has expired.
                ---------------------------------------------------------------------------
                 The Bureau also declines to modify the length of the five-day
                delivery timing assumption. The Bureau proposed Sec. 1006.34(b)(5) on
                the basis that a consumer typically receives a validation notice no
                more than five days (excluding legal public holidays, Saturdays, and
                Sundays) after the debt collector provides the notice. Based on its
                market monitoring activities, the Bureau understands that debt
                collectors typically send consumer communications by first-class mail,
                which generally is delivered in three business days or less.\191\ The
                Bureau is unaware that debt collectors typically use bulk mail to
                deliver validation notices, and commenters offered no evidence
                otherwise. For these reasons, the Bureau declines to extend the five-
                day delivery timing assumption.
                ---------------------------------------------------------------------------
                 \191\ See U.S. Postal Serv., Service Standards Maps, https://postalpro.usps.com/ppro-tools/service-standards-maps (last visited
                Dec. 1, 2020).
                ---------------------------------------------------------------------------
                 The Bureau also declines to shorten the validation period's five-
                day delivery timing assumption. The FDCPA's 30-day validation period
                begins to run when the consumer receives the validation
                information.\192\ If the 30-day clock began to run upon the debt
                collector's mailing of the validation notice, as some commenters
                suggested, the consumer would be deprived of the full 30-day period
                provided by the FDCPA to respond to the notice. Further, the Bureau
                declines to shorten the length of the validation period for validation
                information provided by communication methods such as electronic
                delivery. A delivery timing assumption that varied by delivery method
                could pose compliance challenges and incentivize use of one
                communication method over another. Therefore, as proposed, the five-day
                delivery timing assumption applies uniformly to all validation
                information delivery methods.
                ---------------------------------------------------------------------------
                 \192\ FDCPA section 809(a)(3) requires the validation notice to
                include ``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.'' 15 U.S.C. 1692g(a)(3) (emphasis added).
                ---------------------------------------------------------------------------
                 A group of consumer advocates asked the Bureau to define the
                validation period based solely on when the consumer is assumed to
                receive the validation information. In other words, this commenter
                requested that the rule not permit the date that a consumer actually
                received the validation notice to serve as the basis of the validation
                period. According to this commenter, relying solely on the date that
                the consumer is assumed to receive the information would prevent
                confusion if the date the consumer received the notice and the date the
                debt collector assumed the consumer received it are different.
                 The Bureau declines to adopt this suggestion. The FDCPA's 30-day
                validation period begins to run when the consumer receives the
                validation information. Nevertheless, the Bureau determines that, at
                least in certain contexts, the date that the consumer is assumed to
                receive the validation notice is the only date information that a debt
                collector will have at the time the validation information is
                generated. Specifically, a debt collector who sends a written or
                electronic validation notice will not know, at the time the notice is
                generated, the date on which the consumer will receive the notice and,
                therefore, must be able to use the date of assumed receipt to calculate
                the validation period end date. The Bureau is adding new comment
                34(b)(5)-1 to clarify that, in such circumstances, debt collectors may
                rely on the date of assumed receipt, even if they learn after sending
                the notice that the consumer received the validation information on a
                different date.
                 Several industry and industry trade group commenters expressed
                concern about the use of the term ``legal public holiday'' in proposed
                Sec. 1006.34(b)(5). According to these commenters, legal public
                holidays may include State and local holidays that the debt collector
                is not aware of and cannot reasonably ascertain. In response to these
                concerns, and consistent with Sec. 1006.22(c)(1) in the November 2020
                Final Rule,\193\ the Bureau is revising Sec. 1006.34(b)(5) to provide
                that a debt collector may assume that a consumer receives the
                validation information on any date that is at least five days
                (excluding legal public holidays identified in 5 U.S.C. 6103(a),
                Saturdays, and Sundays) after the debt collector provides it.
                ---------------------------------------------------------------------------
                 \193\ 85 FR 76734, 76833-34, 76892 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 Several industry commenters asked the Bureau to clarify whether a
                debt collector must receive a consumer's verification request before
                the validation period end date, or whether the consumer need only send
                the request by the validation period end date for the request to be
                effective. The Bureau determines that a consumer's verification
                request--whether an original-creditor information request or a
                dispute--is effective if the consumer sends or submits the request
                within the 30-day period established in Sec. 1006.34(b)(5), even if
                the debt collector does not receive the request until after the 30-day
                period. In specifying requirements for debt collectors' responses to
                consumers' verification requests, Sec. 1006.38(c) and (d)(2) of the
                Bureau's November 2020 Final Rule implemented FDCPA section 809(b) by
                providing that, upon receipt of an original-creditor information
                request (Sec. 1006.38(c)) or a dispute (Sec. 1006.38(d)(2))
                ``submitted by the consumer in writing within the validation period, a
                debt collector must cease collection of the debt . . . .'' (emphasis
                added). The Bureau determines that a consumer's original-
                [[Page 5798]]
                creditor information request or dispute has been ``submitted by the
                consumer'' for purposes of Sec. 1006.38(c) and (d)(2) if the consumer
                sends or submits the request within the 30-day period established in
                Sec. 1006.34(b)(5), even if the debt collector does not receive the
                request until after the 30-day period.
                 For the reasons discussed above, the Bureau is adopting Sec.
                1006.34(b)(5) to provide that validation period means the period
                starting on the date that a debt collector provides the validation
                information and ending 30 days after the consumer receives or is
                assumed to receive it. Section 1006.34(b)(5) also specifies that a debt
                collector may assume that a consumer receives the validation
                information on any date that is at least five days (excluding legal
                public holidays identified in 5 U.S.C. 6103(a) (i.e., federally
                recognized public holidays), Saturdays, and Sundays) after the debt
                collector provides it.
                 Proposed comment 34(b)(5)-1 clarified that, if a debt collector
                sends a subsequent validation notice to a consumer because the consumer
                did not receive the original validation notice and the consumer has not
                otherwise received the validation information, the debt collector must
                calculate the end of the validation period based on the date the
                consumer receives or is assumed to receive the subsequent validation
                notice.
                 At least two industry trade group commenters stated that proposed
                comment 34(b)(5)-1 was consistent with current industry practice.
                According to these commenters, if a validation notice is returned as
                undeliverable, debt collectors typically send a new validation notice
                and provide a new period for consumers to exercise their verification
                rights. A law firm commenter asked the Bureau to provide additional
                guidance on a debt collector's duties if a validation notice is
                returned as undeliverable after the validation period has expired.
                 The Bureau concludes based on feedback received and its own market-
                monitoring, supervision, and enforcement experience that proposed
                comment 34(b)(5)-1 is consistent with existing industry practice and
                therefore is adopting it largely as proposed but renumbered as comment
                34(b)(5)-2. If a validation notice is returned as undeliverable after
                the validation period has expired and the debt collector sends a
                subsequent notice, then, as stated in the comment, the debt collector
                must calculate the end of the validation period based on the date the
                consumer receives or is assumed to receive the subsequent validation
                notice.
                34(c) Validation Information
                 Proposed Sec. 1006.34(c) set forth the validation information that
                proposed Sec. 1006.34(a)(1) would have required debt collectors to
                disclose. The validation information consisted of four general
                categories: Information to help consumers identify debts (including the
                information specifically referenced in FDCPA section 809(a));
                information about consumers' protections in debt collection;
                information to facilitate consumers' ability to exercise their rights
                with respect to debt collection; and certain other statutorily required
                information. Each of those categories is addressed separately in the
                section-by-section analysis of Sec. 1006.34(c)(1) through (4).
                34(c)(1) Debt Collector Communication Disclosure
                 FDCPA section 807(11) requires a debt collector to disclose in its
                initial written communication with a consumer--and, if the initial
                communication is oral, in that oral communication as well--that the
                debt collector is attempting to collect a debt and that any information
                obtained will be used for that purpose.\194\ A debt collector must also
                disclose in each subsequent communication that the communication is
                from a debt collector. If a debt collector provides validation
                information, the debt collector engages in a debt collection
                communication and must make an appropriate FDCPA section 807(11)
                disclosure.\195\
                ---------------------------------------------------------------------------
                 \194\ See 15 U.S.C. 1692e(11).
                 \195\ See, e.g., Dorsey v. Morgan, 760 F. Supp. 509 (D. Md.
                1991).
                ---------------------------------------------------------------------------
                 The Bureau proposed to implement the FDCPA section 807(11)
                disclosures in Sec. 1006.18(e).\196\ In turn, the Bureau proposed in
                Sec. 1006.34(c)(1) that the Sec. 1006.18(e) disclosure is required
                validation information. The Bureau finalized Sec. 1006.18(e) in the
                November 2020 Final Rule.\197\ Section 1006.18(e)(1) requires a debt
                collector to disclose in its initial communication that the debt
                collector is attempting to collect a debt and that any information
                obtained will be used for that purpose. Section 1006.18(e)(2) requires
                a debt collector to disclose in each subsequent communication that the
                communication is from a debt collector.
                ---------------------------------------------------------------------------
                 \196\ See 84 FR 23274, 23322-23, 23402 (May 21, 2019).
                 \197\ See 85 FR 76734, 76830-31, 76891-92 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 At least one industry trade group supported proposed Sec.
                1006.34(c)(1)'s cross-reference to the FDCPA section 807(11)
                requirement. A consumer advocate commenter asked the Bureau to clarify
                what version of the FDCPA section 807(11) disclosure should appear on
                the validation notice: The longer, initial disclosure described in
                Sec. 1006.18(e)(1) or the shorter, subsequent disclosure described in
                Sec. 1006.18(e)(2).
                 The Bureau is adopting new comment 34(c)(1)-1 to clarify that a
                debt collector who provides the validation notice required by Sec.
                1006.34(a)(1)(i)(A)--i.e., a debt collector who provides the validation
                notice in the initial communication--complies with Sec. 1006.34(c)(1)
                by providing the disclosure described in Sec. 1006.18(e)(1). The
                disclosure described in Sec. 1006.18(e)(1) is broader than, and
                incorporates the content of, the disclosure described in Sec.
                1006.18(e)(2). Accordingly, new comment 34(c)(1)-1 also clarifies that
                a debt collector who provides the validation notice required by Sec.
                1006.34(a)(1)(i)(B)--i.e., a debt collector who provides the validation
                notice within five days of the initial communication--complies with
                Sec. 1006.34(c)(1) by providing either the disclosure required by
                Sec. 1006.18(e)(1) or the disclosure required by Sec.
                1006.18(e)(2).\198\ The Bureau determines that this clarification will
                facilitate compliance, encourage use of the model validation notice,
                and protect consumers.
                ---------------------------------------------------------------------------
                 \198\ The model validation notice includes the disclosure
                required by Sec. 1006.18(e)(1). As explained in the section-by-
                section analysis of Sec. 1006.34(d)(2), new comment 34(d)(2)(i)-1
                clarifies that a debt collector who uses the model notice to provide
                a validation notice as described in Sec. 1006.34(a)(1)(i)(B) may
                replace the disclosure required by Sec. 1006.18(e)(1) with the
                disclosure required by Sec. 1006.18(e)(2) without losing the safe
                harbor provided by use of the model notice.
                ---------------------------------------------------------------------------
                 The consumer advocate commenter also recommended that the Bureau
                require every validation notice to include a Spanish translation of the
                FDCPA section 807(11) disclosure to assist Spanish-speaking consumers.
                The Bureau declines to do so. Mandating that every debt collector
                provide a Spanish translation of the disclosure is unnecessary for the
                majority of consumers, who are not Spanish speakers. Further, a
                mandatory translation could undermine the effectiveness of the other
                validation information disclosures. Moreover, the November 2020 Final
                Rule contained a targeted language access intervention on this topic.
                Pursuant to Sec. 1006.18(e)(4) in that rule, debt collectors will be
                required to make the FDCPA section 807(11) disclosure in the same
                language or languages used for the rest of the communication in which
                the disclosures are conveyed. Thus, if a debt collector provides a
                consumer a
                [[Page 5799]]
                validation notice in Spanish pursuant to Sec. 1006.34(e), the debt
                collector must include on that notice a Spanish translation of the
                FDCPA section 807(11) disclosure.
                 Accordingly, the Bureau is finalizing Sec. 1006.34(c)(1) as
                proposed and is finalizing new comment 34(c)(1)-1 as described above.
                34(c)(2) Information About the Debt
                 Proposed Sec. 1006.34(c)(2) specified that certain information
                about the debt and the parties related to the debt was required
                validation information.\199\ The section-by-section analysis of
                proposed Sec. 1006.34(c)(2)(i) through (x) discussed the specific
                items of information, which were designed to help consumers recognize
                debts and included existing disclosures. The Bureau addresses comments
                related to specific disclosures in the section-by-section analysis of
                Sec. 1006.34(c)(2)(i) through (x). In this section-by-section
                analysis, the Bureau addresses comments related to Sec. 1006.34(c)(2)
                more generally.
                ---------------------------------------------------------------------------
                 \199\ 84 FR 23274, 23338-42, 23404 (May 21, 2019). Proposed
                Sec. 1006.34(c)(5) set forth a special rule for information about
                the debt for certain residential mortgage debt.
                ---------------------------------------------------------------------------
                 Some commenters supported proposed Sec. 1006.34(c)(2). A consumer
                advocate and a municipal government commenter stated that the proposed
                validation information would help consumers determine whether they owe
                a debt. A group of State Attorneys General stated that consumers today
                do not consistently receive the information they need to identify
                debts. According to these commenters, consumers routinely submit
                complaints that they do not recognize the debts or creditors disclosed
                on validation notices. An industry trade group stated that it would be
                feasible for debt collectors to disclose the proposed information
                because debt buyers routinely obtain such information at purchase.
                 Other commenters objected to proposed Sec. 1006.34(c)(2) and
                suggested that consumers do not need information beyond what the FDCPA
                expressly requires. An industry trade group stated, without providing
                verifiable evidence, that most debts are valid and asserted that less
                than one-half of 1 percent of debts lack a contractual basis or are
                miscalculated. According to this commenter, the small number of debts
                that are problematic can be resolved by consumers invoking their FDCPA
                verification rights.
                 Other commenters who objected to proposed Sec. 1006.34(c)(2) cited
                industry burden. For example, one industry commenter stated that
                requiring debt collectors to disclose the proposed information about
                the debt and parties related to the debt would increase costs for debt
                collectors as well as for creditors. Another industry commenter
                suggested that proposed Sec. 1006.34(c)(2) was not feasible because
                debt collectors rely on creditors for account information and records.
                According to this commenter, if creditors did not provide the
                information, debt collectors would be unable to comply with Sec.
                1006.34(c)(2).
                 Some commenters stated that the information proposed Sec.
                1006.34(c)(2) would require might confuse consumers and questioned
                whether it was supported by the Bureau's consumer testing.
                 Some commenters recommended that the Bureau revise proposed Sec.
                1006.34(c)(2) to require additional validation information. Federal
                government agency staff, a group of State Attorneys General, and a
                government commenter suggested that the name of the original creditor
                and the date of the original transaction should be required validation
                information. A group of State Attorneys General suggested that the
                Bureau require debt collectors to provide information about the debt as
                of the charge-off date. Two associations representing State regulatory
                agencies recommended that the Bureau require disclosure of a debt
                collector's State license or registration number, such as the
                Nationwide Multi-State Licensing System identification. According to
                these commenters, requiring debt collectors to disclose license or
                registration information would assist regulators examining for
                compliance with State debt collection laws. In addition, a consumer
                advocate, an industry trade group, and an industry commenter
                recommended that, for medical debt, validation information should
                include the facility name associated with the debt. According to these
                commenters, a consumer may be more likely to recognize a facility where
                treatment was provided than the name of the physician or healthcare
                provider to whom the consumer owes the debt.
                 After considering the feedback, the Bureau has determined to
                finalize Sec. 1006.34(c)(2). The Bureau determines that validation
                notices in use today frequently lack sufficient information about the
                debt and the parties related to the debt, and this lack of information
                undermines the ability of consumers to determine whether they owe an
                alleged debt. This conclusion is consistent with feedback from Federal
                and State government commenters, including the FTC and a group of State
                Attorneys General. The Bureau's testing also supports this
                conclusion.\200\
                ---------------------------------------------------------------------------
                 \200\ Certain information that Bureau qualitative testing
                indicates helps consumers to recognize a debt--including a debt's
                original account number or an itemization of interest and fees--may
                not consistently appear on validation notices. See FMG Cognitive
                Report, supra note 27, at 8-11.
                ---------------------------------------------------------------------------
                 The Bureau determines that requiring debt collectors to disclose
                the information about the debt and parties related to the debt in Sec.
                1006.34(c)(2) is necessary. Industry commenters did not support their
                claims about the relative infrequency of problematic debts with
                verifiable evidence.\201\ In addition, a group of State Attorneys
                General stated that consumers routinely complain that they do not
                recognize debts being collected, and the Bureau's complaint statistics
                indicate similar concerns about debts among consumers.\202\ Thus, the
                Bureau is finalizing Sec. 1006.34(c)(2) to require information about
                the debt and parties related to the debt.
                ---------------------------------------------------------------------------
                 \201\ Even assuming one commenter's claim that only one-half of
                1 percent of debts lack a contractual basis or are miscalculated,
                this error rate would impact hundreds of thousands of consumers
                annually. As the proposal noted, 49 million consumers are contacted
                by debt collectors every year. See 84 FR 23274, 23382 n.656 (May 21,
                2019). If one-half of 1 percent of these consumers received
                validation notices for debts they did not owe, 245,000 consumers
                could be impacted.
                 \202\ The most common debt collection complaint received by the
                Bureau continues to be about attempts to collect a debt that the
                consumer reports is not owed. See 2020 FDCPA Annual Report, supra
                note 12, at 14. Consumers may report that a debt is not owed for a
                variety of reasons including, but not limited to, that the debt is
                being collected in error or that the consumer does not recognize the
                debt.
                ---------------------------------------------------------------------------
                 The Bureau also determines that Sec. 1006.34(c)(2) will not impose
                undue industry burden. As discussed in part VII, while Sec.
                1006.34(c)(2) may increase some costs for debt collectors, as well as
                cause some indirect costs for creditors, the Bureau does not expect
                these costs to be substantial. The Bureau disagrees that a significant
                number of debt collectors will be unable to comply with Sec.
                1006.34(c)(2). The Bureau acknowledges that debt collectors depend on
                creditors to provide account information and that creditors will not be
                required by the final rule to provide the information that Sec.
                1006.34(c)(2) will require. Notwithstanding this fact, the Bureau has
                received feedback that many creditors today make available much of the
                information mandated by Sec. 1006.34(c)(2). To the extent that
                creditors do not already provide debt collectors with this information,
                the Bureau determines that creditors will be incentivized to do so
                after Sec. 1006.34(c)(2)'s effective date because the debt collectors
                they hire or sell debts to will be unable to legally collect without
                it.
                [[Page 5800]]
                 The Bureau determines that the information required by Sec.
                1006.34(c)(2) will not confuse consumers. As discussed in part III.C,
                the Bureau has validated the model validation notice and the validation
                information contained therein through four rounds of consumer testing.
                 The Bureau declines the recommendation to add certain disclosures
                to Sec. 1006.34(c)(2). First, the Bureau declines to require the name
                of the original creditor and the date of the original transaction.
                Requiring this additional information on validation notices may
                overwhelm consumers, may be repetitive, or may otherwise not add to
                consumer understanding because the validation information already
                includes items such as the debt collector's name (Sec.
                1006.34(c)(2)(i)), the name of the creditor to whom the debt was owed
                on the itemization date (Sec. 1006.34(c)(2)(iii)), and the name of the
                creditor to whom debt is currently owed (Sec. 1006.34(c)(2)(v)).
                 The Bureau also declines to tie information disclosure requirements
                to the date that a debt was charged off because charge off is not
                relevant to all debt types. However, as discussed in the section-by-
                section analysis of Sec. 1006.34(b)(3)(ii), a debt collector may use
                the charge-off date as the itemization date, in which case consumers
                will receive information about the amount of the date as of the charge-
                off date, as well as information about interest, fees, payments, and
                credits since that date.\203\
                ---------------------------------------------------------------------------
                 \203\ See the section-by-section analysis of Sec.
                1006.34(c)(2)(vii) and (viii).
                ---------------------------------------------------------------------------
                 The Bureau also declines to require a debt collector to disclose a
                State license or registration number. If a debt collector is
                specifically required by applicable law to disclose such information, a
                debt collector may do so as an optional disclosure under final Sec.
                1006.34(d)(3)(iv)(A).
                 The Bureau does agree that a facility name associated with a debt
                may be helpful to consumers in the medical debt context. The Bureau is
                not modifying Sec. 1006.34(c)(2) to require this information, but
                final Sec. 1006.34(d)(3)(vii) permits debt collectors to include
                facility name as an optional disclosure.
                 Accordingly, as noted above, the Bureau is finalizing Sec.
                1006.34(c)(2) to require debt collectors to provide certain information
                about the debt and the parties related to the debt. Except with respect
                to final Sec. 1006.34(c)(2)(iii), the Bureau is finalizing Sec.
                1006.34(c)(2) pursuant to its authority under FDCPA section 814(d) to
                prescribe rules with respect to the collection of debts by debt
                collectors and, as described more fully below, its authority to
                implement and interpret FDCPA section 809. In addition, except with
                respect to final Sec. 1006.34(c)(2)(v) and (ix), the Bureau is
                finalizing Sec. 1006.34(c)(2) pursuant to its authority under section
                1032(a) of the Dodd-Frank Act, on the basis that the validation
                information describes the debt, which is a feature of debt collection.
                34(c)(2)(i)
                 FDCPA section 809(b) provides that a consumer may notify a debt
                collector in writing, within 30 days after receipt of the information
                required by FDCPA section 809(a), that the consumer is exercising
                certain verification rights, including the right to dispute the
                debt.\204\ FDCPA section 809(a)(3) through (5), in turn, requires debt
                collectors to disclose how consumers may exercise their verification
                rights. The proposal stated that to notify a debt collector in writing
                that the consumer is exercising the consumer's verification rights, the
                consumer must have the debt collector's name and address.\205\ Proposed
                Sec. 1006.34(c)(2)(i) therefore provided that the debt collector's
                name and mailing address are required validation information.
                ---------------------------------------------------------------------------
                 \204\ 15 U.S.C. 1692g(b).
                 \205\ 84 FR 23274, 23339, 23404 (May 21, 2019).
                ---------------------------------------------------------------------------
                 Industry and industry trade group commenters recommended various
                revisions to proposed Sec. 1006.34(c)(2)(i). First, some industry
                trade group commenters suggested that the Bureau permit a debt
                collector to disclose a trade name or doing-business-as name (DBA), in
                lieu of the debt collector's legal name. According to these commenters,
                because a debt collector may not use its legal name when communicating
                with consumers, a consumer may be more likely to recognize the debt
                collector's trade name or DBA.
                 Next, one industry trade group commenter recommended that the
                Bureau permit a debt collector to disclose a vendor's mailing address
                because some debt collectors do not receive mail from consumers at
                their office locations and instead use letter vendors.
                 Finally, some industry and industry trade group commenters
                recommended that the Bureau permit debt collectors to disclose multiple
                addresses. Some of these commenters stated that debt collectors may use
                separate addresses for payments and other correspondence, including
                disputes. For example, an industry trade group stated that some clients
                of debt collectors, including the Department of Education, do not
                permit debt collectors to receive payments at their office locations
                and instead require debt collectors to direct payments to a
                ``lockbox,'' which is a post office box administered by a third party
                for the receipt of payments.
                 A consumer advocate asked the Bureau to modify proposed Sec.
                1006.34(c)(2)(i) to require debt collectors to also disclose a
                telephone number, an email address, and any other method the debt
                collector uses for consumer communications.
                 After considering the feedback, the Bureau is adopting Sec.
                1006.34(c)(2)(i) with a revision for clarity and is also adopting two
                new comments to incorporate certain suggestions made by commenters.
                 As noted, some commenters suggested that debt collectors who use
                multiple mailing addresses be permitted to include more than one
                mailing address as validation information. The Bureau declines to
                affirmatively permit the use of more than one mailing address as
                validation information. As discussed in the proposal, the purpose of
                validation information is to facilitate a consumer's exercise of their
                rights in debt collection, namely, the right to dispute the debt or to
                request original-creditor information. Accordingly, the mailing address
                included in the validation information must be an address at which the
                debt collector accepts disputes and original-creditor information
                requests. The Bureau is revising Sec. 1006.34(c)(2)(i) to
                affirmatively state this requirement. If a debt collector only accepts
                payments at a different address than the address at which it accepts
                disputes and original-creditor information requests, the Bureau notes
                that the debt collector need not include payment disclosures with the
                validation information; they are optional disclosures under Sec.
                1006.34(d)(3)(iii).\206\ Moreover, if a debt collector omits the
                optional payment disclosures, the validation
                [[Page 5801]]
                notice will continue to contain contact information for the debt
                collector, including, at the debt collector's option, the debt
                collector's telephone number pursuant to Sec. 1006.34(d)(3)(i), should
                the consumer wish to reach out for payment information or to make a
                payment.
                ---------------------------------------------------------------------------
                 \206\ The Bureau also notes that nothing in Regulation F
                prevents a debt collector from using a different mailing address in
                communications that do not contain the validation information. For
                example, if a debt collector accepts payments at a different
                address, the payment address may be included in a separate
                communication seeking payment. Additionally, as noted at the outset
                of the section-by-section analysis of Sec. 1006.34, the Bureau is
                not finalizing the proposed requirement that all validation notices
                be substantially similar to the Bureau's model validation notice.
                Therefore, a debt collector may include a separate payment address
                on a validation notice, but a debt collector who does so will not
                receive safe harbors pursuant to Sec. Sec. 1006.34(d)(2) and
                1006.38(b)(2) and must otherwise comply with the FDCPA and
                Regulation F.
                ---------------------------------------------------------------------------
                 The Bureau is also adopting new comment 34(c)(2)(i)-1 to clarify
                that a debt collector may disclose the debt collector's trade name or
                DBA in lieu of the debt collector's legal name. The Bureau observes
                that, in some cases, a debt collector's trade name or DBA may be more
                recognizable to consumers than the debt collector's legal name. The
                Bureau therefore determines that a debt collector may use its trade
                name or DBA when communicating with consumers. However, when disclosing
                a trade name or DBA, the debt collector may not do so in a manner that
                violates the FDCPA section 807 prohibition on false or misleading
                representations. For example, a debt collector may violate the FDCPA
                and this final rule if the debt collector discloses a trade name or DBA
                that falsely represents or implies that the debt collector is an
                attorney, when that is not the case.\207\
                ---------------------------------------------------------------------------
                 \207\ See 15 U.S.C. 1692e(3).
                ---------------------------------------------------------------------------
                 Second, the Bureau is adopting new comment 34(c)(2)(i)-2 to clarify
                that a debt collector may disclose a vendor's mailing address, if that
                is an address at which the debt collector accepts disputes and requests
                for original-creditor information. As one commenter observed, some debt
                collectors may use a vendor to receive mail from consumers. The Bureau
                is finalizing comment 34(c)(2)(i)-2 to accommodate this business
                practice.
                 The Bureau declines to adopt the recommendation of some commenters
                to require debt collectors to disclose other contact methods, including
                a telephone number or an email address. The FDCPA does not require debt
                collectors to communicate by telephone or email. However, as noted,
                Sec. 1006.34(d)(3)(i) permits a debt collector to disclose the debt
                collector's telephone number. Likewise, Sec. 1006.34(d)(3)(v)(A),
                permits a debt collector to disclose the debt collector's website and
                email address.
                34(c)(2)(ii)
                 FDCPA section 809(a) requires debt collectors to disclose
                information about the debt that helps consumers identify the debt and
                facilitates resolution of the debt. The proposal stated that, like the
                information FDCPA section 809(a) expressly requires, the consumer's
                name and address is essential information about the debt that may help
                a consumer determine whether the consumer owes a debt and is the
                intended recipient of a validation notice.\208\ The Bureau therefore
                proposed Sec. 1006.34(c)(2)(ii) to provide that the consumer's name
                and mailing address is required validation information. As discussed
                below, proposed comment 34(c)(2)(ii)-1 clarified the meaning of the
                term ``consumer's name.''
                ---------------------------------------------------------------------------
                 \208\ 84 FR 23274, 23339 (May 21, 2019).
                ---------------------------------------------------------------------------
                 A consumer advocate and an industry trade group expressed overall
                support for the proposed provision. The consumer advocate stated that
                consumer name information would help a consumer identify an alleged
                debt. The consumer advocate also stated that complete name
                information--such as a first name, middle name, last name, and suffix--
                would help consumers determine whether a debt collector is seeking a
                different consumer with a similar name. According to the industry trade
                group, it would be unreasonable for a debt collector to omit known name
                information. For the reasons discussed in the proposal, the Bureau is
                finalizing Sec. 1006.34(c)(2)(ii) as proposed.
                 Proposed comment 34(c)(2)(ii)-1 clarified that the consumer's name
                should reflect what the debt collector reasonably determines is the
                most complete version of the name information about which the debt
                collector has knowledge, whether obtained from the creditor or another
                source. Proposed comment 34(c)(2)(ii)-1 further explained that a debt
                collector would not be able to omit name information in a manner that
                would create a false, misleading, or confusing impression about the
                consumer's identity and provided an example.
                 Some commenters raised concerns about proposed comment
                34(c)(2)(ii)-1. A number of industry and industry trade group
                commenters objected to the statement that debt collectors would be
                required to determine the most complete version of the name about which
                the debt collector has knowledge, whether obtained from the creditor or
                another source. These commenters stated that the reference to ``another
                source'' was ambiguous and would create litigation risk and compel debt
                collectors to conduct open-ended research about a consumer's name.
                Several commenters urged the Bureau to omit the reference to ``another
                source.''
                 The Bureau is finalizing comment 34(c)(2)-1 with revisions in
                response to feedback and for clarity. First, the Bureau is deleting the
                phrase ``whether obtained from the creditor or another source.'' This
                phrase is unnecessary as it does not alter the fundamental expectation
                that a debt collector will disclose the most complete and accurate name
                about which the debt collector has knowledge. In addition, the Bureau
                determines that the reference to ``another source'' is ambiguous and
                may create unjustified litigation risk and industry burden.
                 Second, the Bureau is revising the comment to clarify that a debt
                collector must reasonably determine ``the most complete and accurate
                version'' of a consumer's name. The Bureau intended that a debt
                collector would be required to disclose ``accurate'' consumer name
                information, but proposed comment 34(c)(2)-1 only referred to ``the
                most complete version'' of the consumer's name. Finally, the Bureau has
                elaborated on the example of a debt collector omitting a consumer's
                name information.
                34(c)(2)(iii) \209\
                ---------------------------------------------------------------------------
                 \209\ Proposed Sec. 1006.34(c)(2)(iii) generally provided that
                the merchant brand, if any, associated with a credit card debt was
                required validation information. The Bureau is finalizing merchant
                brand information as an optional disclosure. See the section-by-
                section analysis of Sec. 1006.34(d)(3)(vii). The Bureau therefore
                is finalizing proposed Sec. 1006.34(c)(2)(iv) through (x) as Sec.
                1006.34(c)(2)(iii) through (ix).
                ---------------------------------------------------------------------------
                 FDCPA section 809(a)(2), which requires debt collectors to disclose
                to consumers the name of the creditor to whom the debt is owed,
                typically is understood to refer to the current creditor.\210\ As the
                proposal stated, if the original creditor (or the creditor as of the
                itemization date) and the current creditor are the same, a consumer is
                more likely to recognize the creditor's name. If they are different,
                however, a consumer may be less likely to recognize the current
                creditor than the name of the creditor as of the itemization date.
                Proposed Sec. 1006.34(c)(2)(iv) provided that, if a debt collector is
                collecting a consumer financial product or service debt (as that term
                was defined in proposed Sec. 1006.2(f)), the name of the creditor to
                whom the debt was owed on the itemization date is required validation
                information.\211\ For the reasons discussed below, the Bureau is
                finalizing proposed Sec. 1006.34(c)(2)(iv) with minor wording changes
                and renumbered as Sec. 1006.34(c)(2)(iii), and is adopting new comment
                34(c)(2)(iii)-1 to clarify that a debt collector may disclose the trade
                name or DBA of the creditor to whom the debt was owed on the
                itemization date.
                ---------------------------------------------------------------------------
                 \210\ See 15 U.S.C. 1692g(a)(2). See the section-by-section
                analysis of Sec. 1006.34(c)(2)(v).
                 \211\ 84 FR 23274, 23404 (May 21, 2019).
                ---------------------------------------------------------------------------
                [[Page 5802]]
                 An industry trade group commenter expressed support for requiring
                debt collectors to disclose the creditor to whom the debt was owed on
                the itemization date but asked the Bureau to clarify that a debt
                collector may disclose this creditor's trade name or DBA, as opposed to
                its legal name, which a consumer may not recognize.
                 A consumer advocate objected to the proposal because a consumer may
                not recognize the creditor to whom the debt was owed on the itemization
                date. According to the commenter, in some cases, the itemization date
                may have occurred years after the debt was incurred. And, particularly
                if the debt was transferred before the itemization date, the consumer
                may not recognize the creditor as of that date. As an alternative, the
                commenter suggested that a debt collector be required to disclose the
                name of the original creditor.
                 As discussed in the section-by-section analysis of Sec.
                1006.34(c)(2)(i), an entity's trade name or DBA may be more
                recognizable to consumers than an entity's legal name. It may be
                appropriate for a debt collector to disclose a creditor's trade name or
                DBA, in lieu of the creditor's legal name, when communicating with
                consumers. Thus, the Bureau is adopting new comment 34(c)(2)(iii)-1 to
                clarify that a debt collector may disclose as validation information
                the trade name or DBA of the creditor to whom the debt was owed on the
                itemization date.
                 The Bureau declines to require a debt collector to disclose the
                name of the original creditor as validation information under Sec.
                1006.34(c). FDCPA section 809(a)(5) and (b) require a debt collector to
                provide the name and address of the original creditor in response to a
                consumer request. While the Bureau acknowledges that, in some cases, a
                consumer may not recognize the creditor to whom the debt was owed on
                the itemization date, this information will still benefit some
                consumers. For an older debt or a debt that has been transferred,
                consumers may be more likely to recognize the creditor as of the
                itemization date than the current creditor.
                 Accordingly, the Bureau is finalizing Sec. 1006.34(c)(2)(iii) to
                provide that, if the debt collector is collecting debt related to a
                consumer financial product or service as defined in Sec. 1006.2(f),
                the name of the creditor to whom the debt was owed on the itemization
                date is required validation information. In addition, the Bureau is
                finalizing comment 34(c)(2)(iii)-1 to clarify that a debt collector may
                disclose the trade name or DBA of the creditor to whom the debt was
                owed on the itemization date.
                34(c)(2)(iv)
                 The purpose of FDCPA section 809 is to ``eliminate the recurring
                problem of debt collectors dunning the wrong person or attempting to
                collect debts which the consumer has already paid.'' \212\ Consistent
                with the FDCPA's purpose, FDCPA section 809(a) requires debt collectors
                to disclose to consumers certain information, such as the amount of the
                debt, to help consumers identify debts. According to the proposal, an
                account number associated with a debt on the itemization date may be
                integral information that a consumer uses to identify the debt.\213\
                The Bureau proposed Sec. 1006.34(c)(2)(v) to provide that the account
                number, if any, associated with the debt on the itemization date, or a
                truncated version of that number, is required validation information.
                Proposed comment 34(c)(2)(v)-1 explained that a debt collector may
                truncate an account number provided that the account number remains
                recognizable. For the reasons discussed below, the Bureau is adopting
                proposed Sec. 1006.34(c)(2)(v), renumbered as Sec. 1006.34(c)(2)(iv),
                and its related commentary with minor wording changes.
                ---------------------------------------------------------------------------
                 \212\ S. Rep. No. 382, supra note 57, at 4.
                 \213\ 84 FR 23274, 23340 (May 21, 2019).
                ---------------------------------------------------------------------------
                 Industry commenters, a consumer advocate, and a group of State
                Attorneys General, expressed overall support for proposed Sec.
                1006.34(c)(2)(v). However, one industry commenter recommended that the
                Bureau exempt debt collectors collecting residential mortgage debt from
                the requirement to disclose an account number. According to the
                commenter, the account number for a residential mortgage that has had a
                servicing transfer may not be the current account number, which might
                confuse consumers.
                 The Bureau concludes that an account number associated with a debt
                on the itemization date may help some consumers recognize the debt. The
                Bureau declines to adopt the recommendation to exempt debt collectors
                collecting residential mortgage debt from disclosing an account number.
                As discussed in the section-by-section analysis of Sec. 1006.34(b)(3),
                the Bureau has determined that the reference dates that a debt
                collector may use to determine the itemization date may be meaningful
                to consumers because they correspond to a notable event in the debt's
                history that consumers may recall or be able to verify with records. By
                extension, the Bureau determines that an account number associated with
                a debt as of one of those dates will also likely resonate with a
                consumer, even if it is not the current account number.
                 Accordingly, the Bureau is finalizing Sec. 1006.34(c)(2)(iv) and
                its related commentary largely as proposed, with only minor wording
                changes to the commentary for clarity. No substantive change is
                intended.
                34(c)(2)(v)
                 FDCPA section 809(a)(2) requires debt collectors to disclose to
                consumers the name of the creditor to whom the debt is owed.\214\ By
                using the present tense ``is owed,'' the statute appears to refer to
                the creditor to whom the debt is owed when the debt collector makes the
                disclosure.\215\ The Bureau proposed Sec. 1006.34(c)(2)(vi) to provide
                that the name of the current creditor is required validation
                information. For the reasons discussed below, the Bureau is finalizing
                the proposal, renumbered as Sec. 1006.34(c)(2)(v), and is adopting new
                comment 34(c)(2)(v)-1 to clarify that a debt collector may disclose the
                trade name or DBA of the creditor to whom the debt is currently owed,
                instead of its legal name.
                ---------------------------------------------------------------------------
                 \214\ See 15 U.S.C. 1692g(a)(2).
                 \215\ 84 FR 23274, 23341 (May 21, 2019).
                ---------------------------------------------------------------------------
                 The Bureau received no comments specifically addressing proposed
                Sec. 1006.34(c)(2)(vi) and is finalizing it as proposed but renumbered
                as Sec. 1006.34(c)(2)(v). An industry trade group commenter
                recommended that the Bureau permit debt collectors to disclose, along
                with the required validation information, all current and past
                creditors associated with the debt. According to the commenter, some
                creditors, such as healthcare and financial services providers, may
                have multiple sub-entities with different corporate names. This
                commenter suggested that disclosing more names of creditors will
                increase the likelihood that a consumer will recognize one of them.
                 The Bureau declines to adopt this recommendation. Disclosing all
                current and past creditors along with the validation information could
                overwhelm and confuse consumers.\216\ Thus, as discussed in the
                section-by-section analysis of Sec. 1006.34(c), the Bureau is
                requiring debt collectors to
                [[Page 5803]]
                disclose as validation information only two creditors: The creditor to
                whom the debt was owed on the itemization date (Sec.
                1006.34(c)(2)(iii)) and the creditor to whom the debt is currently owed
                (Sec. 1006.34(c)(2)(v)). Nothing in the final rule prohibits a debt
                collector from including the name of another creditor on a validation
                notice, but a debt collector who does so will not receive the Sec.
                1006.34(d)(2) safe harbor and will risk not complying with the
                requirements of Sec. 1006.34, including the Sec. 1006.34(b)(1) clear
                and conspicuous standard.
                ---------------------------------------------------------------------------
                 \216\ During one round of cognitive testing, participants were
                shown disclosure language that included a list of prior creditors.
                Confusion was observed when participants tried to explain the
                difference between prior and current creditors. The unclear
                relationship between creditors was highlighted when participants
                attempted to identify the creditor that currently owned the debt.
                See FMG Cognitive Report, supra note 27, at 3-4.
                ---------------------------------------------------------------------------
                 As discussed in the section-by-section analysis of Sec.
                1006.34(c)(2)(i) and (iii), the Bureau is finalizing new comments
                34(c)(2)(i)-1 and 34(c)(2)(iii)-1 to clarify that a debt collector may
                disclose an entity's trade name or DBA, instead of its legal name. The
                Bureau concludes that it is also appropriate to permit a debt collector
                to disclose the trade name or DBA of a current creditor. Thus, the
                Bureau is adopting new comment 34(c)(2)(v)-1 to clarify that a debt
                collector may disclose the trade name or a DBA of the creditor to whom
                the debt is currently owed, instead of its legal name.
                34(c)(2)(vi)
                 FDCPA section 809(a)(1) requires debt collectors to disclose to
                consumers the amount of the debt.\217\ In Sec. 1006.34(c)(2)(viii),
                the Bureau proposed to interpret FDCPA section 809(a)(1), and to use
                its authority under Dodd-Frank Act section 1032(a), to provide that the
                amount of the debt on the itemization date is required validation
                information.\218\ Consistent with proposed Sec. 1006.34(c)(2)(viii),
                the Bureau proposed Sec. 1006.34(c)(2)(vii) to provide that the
                itemization date, as defined in Sec. 1006.34(b)(3), also is required
                validation information. For the reasons discussed below, the Bureau is
                finalizing Sec. 1006.34(c)(2)(vii) as proposed but renumbered as Sec.
                1006.34(c)(2)(vi).
                ---------------------------------------------------------------------------
                 \217\ See 15 U.S.C. 1692g(a)(1).
                 \218\ 84 FR 23274, 23341 (May 21, 2019).
                ---------------------------------------------------------------------------
                 Several commenters, including an industry commenter, an industry
                trade group commenter, and a group of consumer advocates, stated that
                the itemization date may not be meaningful to consumers or help them
                recognize debts, if disclosed without an explanation of its relevance.
                These commenters, along with Federal government agency staff,
                recommended requiring debt collectors to disclose with the itemization
                date a statement explaining which reference date the debt collector
                used to determine that date.\219\
                ---------------------------------------------------------------------------
                 \219\ As discussed in the section-by-section analysis of Sec.
                1006.34(b)(3), the Bureau defines itemization date to mean one of
                five reference dates for which a debt collector can ascertain the
                amount of the debt.
                ---------------------------------------------------------------------------
                 The Bureau declines to adopt this recommendation. As discussed in
                the section-by-section analysis of Sec. 1006.34(b)(3), the Bureau
                determines that the reference dates that a debt collector may use to
                determine the itemization date have a significant likelihood of being
                meaningful to consumers because they correspond to notable events in a
                debt's history that consumers may recall or be able to verify with
                records. Because each of the reference dates may be meaningful to
                consumers, the Bureau determines that no additional disclosure
                explaining their relevance is necessary. Moreover, the Bureau
                determines that an additional disclosure explaining the reference date
                may confuse or overwhelm some consumers. While a debt collector likely
                could describe some reference dates (e.g., a last statement date) in a
                straightforward manner, other reference dates (e.g., the charge-off
                date and the transaction date) do not lend themselves to a succinct
                explanation. That is because some reference dates reflect financial
                concepts that are inherently complex (i.e., charge off) or that could
                vary by debt type and the facts and circumstances surrounding a
                particular debt (i.e., transaction dates). For such reference dates, a
                statement explaining their relevance could distract or confuse
                consumers, thereby undermining the efficacy of the other validation
                information.
                34(c)(2)(vii)
                 As noted, FDCPA section 809(a)(1) requires debt collectors to
                disclose to consumers the amount of the debt. As discussed in the
                proposal, the phrase ``the amount of the debt'' is ambiguous; it does
                not specify which debt amount is being referred to, even though the
                debt amount may change over time. As also discussed in the proposal,
                consumers may recognize the amount of the debt as of the itemization
                date (as the Bureau proposed to define that term in Sec.
                1006.34(b)(3)). Because the amount of the debt on the itemization date
                may help a consumer recognize a debt and determine whether the amount
                of a debt is accurate, the Bureau proposed to interpret FDCPA section
                809(a)(1), and to use its authority under Dodd-Frank Act section
                1032(a), to provide in proposed Sec. 1006.34(c)(2)(viii) that the
                amount of the debt on the itemization date is required validation
                information.\220\ Proposed comment 34(c)(2)(viii)-1 explained that this
                amount includes any fees, interest, or other charges owed as of the
                itemization date.
                ---------------------------------------------------------------------------
                 \220\ 84 FR 23274, 23341 (May 21, 2019). As proposed, the Bureau
                is finalizing Sec. 1006.34(c)(2)(ix) (renumbered from proposed
                Sec. 1006.34(c)(2)(x)) separately to provide that the current
                amount of the debt also is required validation information.
                ---------------------------------------------------------------------------
                 An industry commenter questioned whether proposed Sec.
                1006.34(c)(2)(viii) would significantly improve consumer understanding.
                According to the commenter, if a debt collector determines the
                itemization date based on the last statement date pursuant to Sec.
                1006.34(b)(3)(i), and if the debt is placed for collection shortly
                after the last statement was provided, the current amount of the debt
                (which the Bureau proposed as a separate item of required validation
                information) and the amount of the debt on the itemization date would
                be approximately the same. The commenter stated that, in this scenario,
                disclosing the amount of the debt on the itemization date would not
                benefit the consumer.
                 The Bureau acknowledges that, for a given debt, the amount owed on
                the itemization date and the current amount of the debt may be similar
                or even the same. However, as discussed below in the section-by-section
                analysis of final Sec. 1006.34(c)(2)(viii), even in these cases, the
                itemization of the debt will still be required, and, as clarified in
                final comment 34(c)(2)(viii)-1, the itemization (if the amounts are the
                same) will show $0 in interest, fees, payments, and credits. As such,
                it should be clear to the consumer why the two amounts are the same. In
                many other cases, these amounts will differ, sometimes substantially.
                In these cases, the amount of the debt on the itemization date will
                help consumers recognize or evaluate the debt.
                 For these reasons, the Bureau is finalizing Sec.
                1006.34(c)(2)(viii) and its related commentary as proposed but
                renumbered as Sec. 1006.34(c)(2)(vii).
                34(c)(2)(viii)
                 As noted, FDCPA section 809(a)(1) requires a debt collector to
                disclose to consumers the amount of the debt. As discussed, the Bureau
                proposed to implement and interpret FDCPA section 809(a)(1) to provide
                that debt collectors must disclose to consumers both the amount of the
                debt on the itemization date and the current amount of the debt (i.e.,
                the amount of the debt on the date that the validation information is
                [[Page 5804]]
                provided).\221\ In conjunction with the amount of the debt on the
                itemization date and the current amount of the debt, the Bureau
                proposed Sec. 1006.34(c)(2)(ix) to provide that an itemization of the
                current amount of the debt, in a tabular format reflecting interest,
                fees, payments, and credits since the itemization date, is required
                validation information. Proposed comment 34(c)(2)(ix)-1 clarified how
                debt collectors could disclose that no interest, fees, payments, or
                credits were assessed or applied to a debt.
                ---------------------------------------------------------------------------
                 \221\ 84 FR 23274, 23341 (May 21, 2019).
                ---------------------------------------------------------------------------
                 For the reasons discussed below, the Bureau is finalizing the
                proposal, renumbered as Sec. 1006.34(c)(2)(viii), with revisions to
                permit debt collectors to disclose the itemization on a separate page
                provided in the same communication with a validation notice, if the
                debt collector includes on the validation notice, where the itemization
                would have appeared, a statement referring to that separate page. The
                Bureau also is finalizing comment 34(c)(2)(ix)-1 with a substantive
                modification and renumbered as comment 34(c)(2)(viii)-1, and is
                adopting new comments 34(c)(2)(viii)-2 through-4 to clarify other
                aspects of final Sec. 1006.34(c)(2)(viii).
                 Commenters offered differing opinions regarding proposed Sec.
                1006.34(c)(2)(ix). A group of State Attorneys General, Federal
                government agency staff, consumer advocate commenters, some industry
                trade group commenters, and at least one industry commenter supported
                the proposed provision. These commenters generally agreed that an
                itemization of the debt would help consumers recognize an alleged debt
                and understand how the debt had evolved over time due to interest,
                fees, payments, and credits. Further, the Bureau received feedback that
                the proposal was consistent with some industry practice. For instance,
                a commenter noted an industry certification standard that, during the
                sales of certain debt types, requires debt buyers to obtain or provide
                the unpaid balance due on the account, with a breakdown of the post-
                charge-off balance, interest, fees, payments, and credits or
                adjustments.\222\
                ---------------------------------------------------------------------------
                 \222\ See Receivables Mgmt. Ass'n Int'l, Receivables Management
                Certification Program, at 41-45 (Mar. 1, 2020), https://rmaintl.org/RMCP (last visited Dec. 9, 2020).
                ---------------------------------------------------------------------------
                 The majority of industry and industry trade group commenters
                objected to proposed Sec. 1006.34(c)(2)(ix). Some such commenters
                stated that the proposed itemization requirement would be burdensome.
                According to several industry commenters, debt collectors would either
                have to manually access itemization information in creditor files or
                implement costly information technology solutions to comply with the
                proposed requirement. Some industry commenters, industry trade groups,
                and the SBA argued that the proposed requirement would impose burdens
                on creditors. Commenters stated that some creditors may not maintain
                all of the itemization information that the proposal would require or
                do not typically provide itemization information at placement and that
                to do so would involve significant expense. Some commenters speculated
                that, to avoid such costs, creditors might refer fewer accounts for
                collection or file more collections lawsuits against consumers. The
                SBA, an industry trade group, and industry commenters argued that
                compliance costs could be onerous for smaller creditors and debt
                collectors. For the most part, commenters offered qualitative
                assessments of industry burden, but one industry trade group did
                estimate that proposed Sec. 1006.34(c)(2)(ix) would impose billions of
                dollars in compliance costs on industry.\223\
                ---------------------------------------------------------------------------
                 \223\ One industry trade group estimated that an itemization
                requirement would cost $600 million in professional fees to conduct
                legal analyses of HIPAA compliance for medical debt, $30 million for
                one-time system reprogramming for debt collectors, and $3 billion
                for one-time system reprogramming for creditors. The proposal
                allegedly would also result in billions of dollars in ongoing
                support costs and uncompensated medical care because, according to
                the commenter, the proposed requirement, if adopted, would increase
                the risks that hospitals might be unable to use debt collectors.
                ---------------------------------------------------------------------------
                 Some commenters stated that proposed Sec. 1006.34(c)(2)(ix) is
                unnecessary or unhelpful. Multiple industry commenters asserted that an
                itemization is superfluous because consumers can exercise their FDCPA
                section 809 verification rights to receive more account information if
                desired. With respect to medical debt, an industry trade group stated
                that proposed Sec. 1006.34(c)(2)(ix) is unnecessary because the
                Internal Revenue Service (IRS) requires non-profit hospitals to send
                letters with itemized information to consumers, and health insurance
                companies routinely mail to responsible parties ``Explanation of
                Benefits'' documents that provide details about coverage, payments, and
                co-pays. Some commenters expressed concern that proposed Sec.
                1006.34(c)(2)(ix) could increase legal risk for debt collectors if the
                itemization information confused consumers. At least one industry
                commenter stated that the Bureau's consumer testing did not support
                proposed Sec. 1006.34(c)(2)(ix) because the testing did not involve
                actual consumers assessing debts in a real-world setting.
                 A few industry commenters objected to proposed Sec.
                1006.34(c)(2)(ix) because the FDCPA does not expressly require an
                itemization of the current amount of the debt.
                 Some industry and industry trade group commenters objected to
                proposed Sec. 1006.34(c)(2)(ix) because the itemization that appears
                on the model validation notice is formatted for a single debt.
                According to commenters, the proposal would not accommodate debt
                collectors who combine multiple debts in a single validation notice.
                Several commenters stated that not permitting debt collectors to
                include multiple debts in one validation notice would dramatically
                increase the volume of mail sent to consumers and would require
                consumers to exercise their verification rights for each individual
                debt in the event that a consumer has a global dispute. Industry and
                industry trade group commenters stated that the inability to combine
                multiple debts would be particularly challenging for medical debt
                collectors. According to some commenters, healthcare providers
                routinely combine multiple debts, in part because they utilize family
                billing, which involves combining the separate bills for family members
                of a primary insured party. Commenters stated that itemizations for
                medical debt may be further complicated by the fact that healthcare
                providers typically do not maintain a rolling total of charges for a
                general service and instead individually bill for each good or service
                provided. At least one trade group stated that student loan debt
                presents comparable itemization-related challenges because student loan
                debt may be provided through multiple disbursements with separate
                account numbers.
                 An industry trade group suggested that proposed Sec.
                1006.34(c)(2)(ix) would not accommodate debts in bankruptcy. According
                to the commenter, the proposal did not have the specificity necessary
                to account for how the Bankruptcy Code permits a debtor to cure pre-
                bankruptcy defaults over the term of the bankruptcy plan while
                maintaining regular post-bankruptcy payments. In addition, the
                commenter argued, the proposal would not accommodate the nuances that
                arise in the context of certain bankruptcy scenarios, such as a
                cramdown plan or a lien strip.\224\
                ---------------------------------------------------------------------------
                 \224\ Pursuant to 11 U.S.C. 1322(b)(5), a bankruptcy court may
                change the underlying terms of a debt, which is referred to as a
                ``cramdown.'' Pursuant to 11 U.S.C. 1322(c)(2), a secured claim can
                be converted to an unsecured claim, which is referred to as a ``lien
                strip.''
                ---------------------------------------------------------------------------
                [[Page 5805]]
                 With regard to medical debt, industry commenters, an industry trade
                group, and the SBA stated that healthcare providers might violate the
                Health Insurance Portability and Accountability Act of 1996 (HIPAA)
                \225\ Privacy Rule if they provided the proposed itemization.\226\
                According to these commenters, proposed Sec. 1006.34(c)(2)(ix) would
                require debt collectors to disclose more information than the minimum
                necessary for treatment of the patient, payment of the bill, or
                healthcare operations, in violation of HIPAA.
                ---------------------------------------------------------------------------
                 \225\ Public Law 104-191, 110 Stat. 1936 (1996).
                 \226\ 45 CFR part 160 and part 164 subparts A and E.
                ---------------------------------------------------------------------------
                 Commenters recommended various modifications to proposed Sec.
                1006.34(c)(2)(ix). Industry and industry trade group commenters
                suggested that debt collectors should not need to comply with proposed
                Sec. 1006.34(c)(2)(ix) if interest and fees are not charged on an
                account.\227\ An industry commenter stated that debt collectors should
                be permitted to indicate ``U'' for ``unknown'' or ``unavailable'' in
                fields for which a creditor did not provide the relevant information.
                ---------------------------------------------------------------------------
                 \227\ In addition, an industry trade group suggested that debt
                collectors should not be required to comply with the itemization
                requirement for pre-charge-off debts, particularly if periodic
                statements continue to be provided. The Bureau notes that, in many
                cases, a person collecting a debt that was not in default at the
                time it was obtained by such person will not be a debt collector
                subject to the FDCPA or Regulation F. See FDCPA section
                803(6)(F)(iii), 15 U.S.C. 1692a(6)(F)(iii).
                ---------------------------------------------------------------------------
                 Several commenters asked the Bureau to clarify the proposal. An
                industry commenter asked how a debt collector could disclose third-
                party payments or insurance adjustments, particularly in the context of
                medical debt. An industry trade group sought additional guidance about
                how to disclose balance increases that are not caused by interest or
                fees, such as a balance increase caused by a returned payment. Noting
                the existence of validation notice itemization requirements imposed by
                other applicable law, such as New York State regulations, two industry
                trade groups requested guidance about how a debt collector should
                simultaneously comply with those requirements and proposed Sec.
                1006.34(c)(2)(ix).\228\
                ---------------------------------------------------------------------------
                 \228\ See 23 NYCRR 1.2(b)(2).
                ---------------------------------------------------------------------------
                 With respect to the Bureau's request for comment about whether the
                proposed itemization should be more detailed--for example, by
                reflecting each fee charged and each payment received--or whether
                certain itemization categories should be combined as proposed, industry
                commenters suggested that the Bureau not deviate from the proposal. For
                instance, a commenter stated that, in the context of medical debts,
                listing all payments and credits individually could result in multiple
                additional pages because of the number of third-party payments. In
                contrast, citing the Bureau's consumer testing, an academic commenter
                argued that the itemization should be more detailed because consumers
                prefer to see penalties and fees broken down into individual
                charges.\229\
                ---------------------------------------------------------------------------
                 \229\ FMG Summary Report, supra note 29.
                ---------------------------------------------------------------------------
                 After considering these comments, and for the reasons discussed
                below, the Bureau is adopting the proposed requirement, renumbered as
                Sec. 1006.34(c)(2)(viii), with revisions to provide that validation
                information includes an itemization of the current amount of the debt
                reflecting interest, fees, payments, and credits since the itemization
                date. Final Sec. 1006.34(c)(2)(viii) further provides that a debt
                collector may disclose the itemization on a separate page provided in
                the same communication with a validation notice, if the debt collector
                includes on the validation notice, where the itemization would have
                appeared, a statement referring to that separate page.
                 The Bureau determines that an itemization of the debt will help a
                significant number of consumers recognize whether they owe a debt and
                evaluate whether the debt is accurate, because the itemization will
                disclose how the amount may have changed over time due, for example, to
                interest, fees, payments, and credits that have been assessed or
                applied to the debt.
                 The Bureau determines that Sec. 1006.34(c)(2)(viii) will not
                create undue industry burden in light of modifications made in response
                to comments.\230\ The Bureau acknowledges that complying with the
                itemization requirement may result in some additional costs to debt
                collectors, particularly if they do not currently provide itemization
                information at placement or on validation notices, as well as in some
                indirect costs to creditors. However, the Bureau concludes that these
                costs will not substantially impact companies' business operations
                because the final rule provides sufficient flexibility to debt
                collectors to tailor the itemization to specific business practices and
                types of debt. Accordingly, the Bureau does not conclude, as some
                commenters suggested, that the itemization requirement will result in
                creditors referring significantly fewer accounts for collections or
                filing more lawsuits against consumers.\231\
                ---------------------------------------------------------------------------
                 \230\ For example, as noted in the section-by-section analysis
                of Sec. 1006.34(b)(3)(i), a creditor or a third-party servicer
                acting on the creditor's behalf may issue a statement even after the
                debt has gone into collection. In that case, under Sec.
                1006.34(b)(3)(i), that new statement may serve as the last statement
                for purposes of the itemization date.
                 \231\ An industry trade group cited an article to suggest that
                collection lawsuits nearly doubled in New York City since 2015
                because of New York State's debt collection rules, which mandate an
                itemization. See Yuka Hayashi, Debt Collectors Wage a Comeback, Wall
                Street Journal (July 5, 2019). The Bureau notes that the article did
                not cite a connection between higher rates of lawsuits and the
                itemization requirement. Instead, the article discussed the
                phenomenon of increasing lawsuits nationwide, including in States
                like Texas, which had not recently introduced a significant debt
                collection rule.
                ---------------------------------------------------------------------------
                 Although several commenters stated that the required itemization
                information may not be available for every debt, the Bureau notes that
                the itemization of the debt is based on the type of routine account
                information that debt collectors typically provide in response to
                consumer verification requests and that, as such, debt collectors
                should be able to obtain such information to comply with the final
                rule. While some debt collectors do not currently provide this itemized
                information at the outset of collection communications, providing such
                itemization information to consumers already is considered a best
                practice in some segments of the debt buying industry, including for
                credit card debt and student loan debt.\232\ Further, debt collectors
                are already required to disclose an itemization for some types of debt
                in at least one jurisdiction, New York State.\233\
                ---------------------------------------------------------------------------
                 \232\ See Receivables Mgmt. Ass'n Int'l, Receivables Management
                Certification Program, at 41-45 (Mar. 1, 2020), https://rmaintl.org/RMCP (last visited Dec. 9, 2020).
                 \233\ See 23 NYCRR 1.2(b) (requiring debt collectors to provide
                an itemized accounting of the debt within five days after the
                initial communication with a consumer in connection with the
                collection of certain types of charged-off debt, such as credit card
                debt).
                ---------------------------------------------------------------------------
                 In addition, as discussed in the section-by-section analysis of
                Sec. 1006.34(b)(3), the final rule's itemization date definition
                permits debt collectors to select an itemization date that is feasible
                for the type of debt in collection and the information debt collectors
                receive. And Sec. 1006.34(c)(2)(viii) requires itemization of fees,
                interest, and credits only subsequent to the selected itemization date.
                Thus, for example, if a debt collector selects the last statement date
                as the itemization date under Sec. 1006.34(b)(3), and if the creditor
                has
                [[Page 5806]]
                recently issued a statement to the consumer, the debt collector need
                only obtain and provide to the consumer an itemization with fees,
                interest, and credits subsequent to that last statement date. And, as
                discussed in the section-by-section analysis of Sec. 1006.34(d)(2), a
                debt collector may provide the itemization on a separate page and
                retain the safe harbor for the rest of the validation notice. For all
                of these reasons, the Bureau concludes that the final rule will not
                impose undue burdens on debt collectors and will provide consumers with
                useful information. The Bureau will monitor whether the itemization
                date definition, including the last statement date definition, meets
                these goals.
                 The Bureau disagrees that Sec. 1006.34(c)(2)(viii) is unnecessary
                or unhelpful. The verification rights afforded by FDCPA section 809 are
                an important statutory protection; however, they do not serve the same
                purpose or provide an adequate substitute to the itemization of the
                debt that Sec. 1006.34(c)(2)(viii) will require. The Bureau disagrees
                that an itemization of the current amount of the debt is unnecessary
                for medical debt, as some commenters argued. Although some non-profit
                hospitals or insurance companies may provide itemization information to
                some consumers, commenters did not suggest, and the Bureau is not aware
                of other evidence indicating, that all consumers with medical debt
                receive itemization information such that Sec. 1006.34(c)(2)(viii)
                would be unnecessary. The Bureau also disagrees with comments that an
                itemization will confuse consumers. As the proposal noted, the Bureau's
                qualitative consumer testing indicates that an itemization improves
                consumer understanding about the debt.\234\
                ---------------------------------------------------------------------------
                 \234\ See 84 FR 23274, 23341 (May 21, 2019); FMG Usability
                Report, supra note 28, at 16-19.
                ---------------------------------------------------------------------------
                 The Bureau also disagrees that the FDCPA's not expressly requiring
                an itemization is a sufficient reason for the Bureau not to require it
                by rule. The Bureau proposed and is finalizing the itemization
                requirement pursuant to its authority to interpret FDCPA section
                809(a), as well as pursuant to its authority under Dodd-Frank Act
                section 1032(a) to prescribe rules to ensure that the features of debt
                collection are fully, accurately, and effectively disclosed to
                consumers.
                 The Bureau is revising Sec. 1006.34(c)(2)(viii) to permit debt
                collectors to disclose the itemization on a separate page.\235\ The
                itemization that appears on the model validation notice may not
                accommodate all debt types in every instance. Some debt collectors may
                have legitimate reasons to combine multiple debts on a single
                validation notice. This may be the case with respect to medical debt
                (for instance, owing to healthcare provider billing practices) and
                student loan debt (because consumers may receive loans through multiple
                disbursements with separate account numbers). As finalized, Sec.
                1006.34(c)(2)(viii) states that a debt collector may disclose the
                itemization on a separate page provided in the same communication with
                a validation notice, if the debt collector includes on the validation
                notice, where the itemization would have appeared, a statement
                referring to that separate page.\236\ New comment 34(c)(2)(viii)-3
                clarifies that a debt collector may comply with the requirement to
                refer to the separate page by, for example, including on the validation
                notice the statement, ``See the enclosed separate page for an
                itemization of the debt,'' situated next to the information about the
                current amount of the debt required by Sec. 1006.34(c)(2)(ix).\237\
                ---------------------------------------------------------------------------
                 \235\ Under Sec. 1006.34(d)(2)(ii), a debt collector who
                otherwise uses the model validation notice or a substantially
                similar form, but who provides the itemization of the current amount
                of the debt on separate page, receives a safe harbor for compliance
                with the information and form requirements of Sec. 1006.34(c) and
                (d)(1) except with respect to the itemization that appears on the
                separate page.
                 \236\ For example, when delivering a validation notice by mail,
                a debt collector may include the separate itemization in the same
                envelope as the validation notice. Similarly, when delivering a
                validation notice electronically, a debt collector may include the
                separate itemization in the same email as the validation notice.
                 \237\ Section 1006.34(d)(2)(iii) establishes that a debt
                collector who uses the model validation notice and who provides an
                itemization on a separate page receives a safe harbor for compliance
                with the information and form requirements of Sec. 1006.34(c) and
                (d)(1), except with respect to the disclosures that appear on the
                separate page.
                ---------------------------------------------------------------------------
                 The Bureau is making an additional change to Sec.
                1006.34(c)(2)(viii). As finalized, Sec. 1006.34(c)(2)(viii) omits the
                proposed language that an itemization must be ``in a tabular format.''
                The Bureau determined that it is unnecessary and unwarranted to mandate
                the use of a tabular format because, if the itemization information is
                provided on a separate page or orally, using a tabular format may be
                impractical or infeasible and, if the itemization information is
                provided on a validation notice, debt collectors likely will use the
                tabular format shown on the model notice such that they may receive a
                safe harbor for compliance with the information and form requirements
                of Sec. 1006.34(c) and (d)(1).
                 To accommodate debt collectors who wish to combine multiple debts
                on a single validation notice, the Bureau is adopting new comment
                34(c)(2)(viii)-4 to clarify that a debt collector who combines multiple
                debts on a single validation notice complies with Sec.
                1006.34(c)(2)(viii) by disclosing either a single, cumulative
                itemization on the validation notice or a separate itemization of each
                debt on a separate page or pages provided in the same communication as
                the validation notice.\238\
                ---------------------------------------------------------------------------
                 \238\ Relatedly, as discussed in the section-by-section analysis
                of Sec. 1006.34(c)(2)(ix), the Bureau is adopting new comment
                34(c)(2)(ix)-2 to clarify that a debt collector who combines
                multiple debts on a single validation notice complies with Sec.
                1006.34(c)(2)(ix)'s requirement to disclose the ``current amount of
                the debt'' by disclosing on the validation notice a single,
                cumulative figure that is the sum of the current amount of all the
                debts.
                ---------------------------------------------------------------------------
                 The Bureau concludes that the itemization requirement will not
                cause healthcare providers or debt collectors to violate the HIPAA
                Privacy Rule. HHS staff has advised the Bureau that the HIPAA Privacy
                Rule generally permits covered entities to disclose protected health
                information required by applicable law.\239\ Because disclosure of
                itemization information will be necessary to comply with Sec.
                1006.34(c)(2)(viii), this guidance indicates that the HIPAA Privacy
                Rule will permit its disclosure.
                ---------------------------------------------------------------------------
                 \239\ See 45 CFR 164.512(a)(1) (``A covered entity may use or
                disclose protected health information to the extent that such use or
                disclosure is required by law and the use or disclosure complies
                with and is limited to the relevant requirements of such law.'');
                see also U.S. Dep't of Health & Human Servs., Does the HIPAA Privacy
                Rule prevent health plans and providers from using debt collection
                agencies? Does the Privacy Rule conflict with the Fair Debt
                Collection Practices Act?, https://www.hhs.gov/hipaa/for-professionals/faq/268/does-the-hipaa-privacy-rule-prevent-health-care-providers-from-using-debt-collection-agencies/index.html (last
                visited Dec. 1, 2020) (noting that the HIPAA Privacy Rule permits
                healthcare providers to provide the minimum necessary patient
                information to debt collectors for the purpose of receiving
                payment).
                ---------------------------------------------------------------------------
                 The Bureau declines to modify Sec. 1006.34(c)(2)(viii) as
                commenters otherwise recommended. An itemization, even if no interest
                and fees have been assessed or charged on an account, remains relevant
                information about the debt. Further, complying with Sec.
                1006.34(c)(2)(viii) if no interest and fees have been assessed or
                charged is relatively straightforward, and comment 34(c)(2)(viii)-1
                clarifies how debt collectors may do so.
                 However, the Bureau is finalizing proposed comment 34(c)(2)(viii)-1
                with a modification to delete language stating that debt collectors may
                indicate ``N/A'' in a required field when no interest, fees, payments,
                or creditors have been
                [[Page 5807]]
                assessed or applied to the account because different consumers may
                interpret ``N/A'' differently. For example, some consumers might
                understand it as indicating ``not available,'' and others might
                construe it as meaning ``not applicable.'' To eliminate this potential
                ambiguity, the Bureau is revising comment 34(c)(2)(viii)-1 to provide
                that a debt collector may indicate that the value of a required field
                is ``0,'' ``none,'' or may state that no interest, fees, payments, or
                credits have been assessed or applied to the debt. The Bureau also is
                revising the comment to clarify, as was intended in the proposal, that
                a debt collector may not leave a required field blank.
                 The Bureau declines the recommendation that debt collectors be
                permitted to indicate ``U'' for ``unknown'' or ``unavailable'' in the
                itemization if a creditor did not provide the relevant information.
                Allowing debt collectors to omit specific itemization information in
                this manner could incentivize debt collectors to avoid receiving it,
                thereby undermining the effectiveness of Sec. 1006.34(c)(2)(viii).
                 Debt collectors sought clarification as to how they should comply
                with Sec. 1006.34(c)(2)(viii) in various scenarios. Depending on the
                facts and circumstances, a third-party payment or insurance adjustment
                may be disclosed as a ``payment'' or a ``credit'' in the itemization.
                Also depending on the facts and circumstances, a payment that is
                returned may be omitted from the itemization provided that the payment
                and the return offset each other, and provided that the amount of the
                debt owed on the itemization date pursuant to Sec. 1006.34(c)(2)(vii)
                and the current amount of the debt pursuant to Sec. 1006.34(c)(2)(ix)
                are accurately disclosed.
                 Regarding Sec. 1006.34(c)(2)(viii)'s interaction with itemization
                requirements in other applicable law, the Bureau is finalizing new
                comment 34(c)(2)(viii)-2, which states that, if a debt collector is
                required by other applicable law to provide an itemization of the
                current amount of the debt with the validation information, the debt
                collector may comply with Sec. 1006.34(c)(2)(viii) by disclosing the
                itemization required by other applicable law in lieu of the itemization
                described in Sec. 1006.34(c)(2)(viii), if the itemization required by
                other applicable law is substantially similar to the itemization that
                appears on the model validation notice. The Bureau is aware of only one
                jurisdiction that requires debt collectors to provide an itemization
                with the validation information, and that itemization is substantially
                similar to the itemization required by Sec. 1006.34(c)(2)(viii).\240\
                Further, consumers likely would not benefit--and, in fact, may be
                disadvantaged--by receiving multiple itemizations with the validation
                information. For instance, although a debt collector could include both
                the itemization required by Sec. 1006.34(c)(2)(viii) on the front of a
                validation notice, and, on the reverse, an itemization specifically
                required by other applicable law (as an optional disclosure pursuant to
                Sec. 1006.34(d)(3)(iv)), a consumer would be unlikely to benefit from
                receiving two itemizations. In addition, permitting debt collectors to
                simultaneously satisfy the Bureau's itemization requirement and a
                substantially similar requirement under other applicable law with one
                itemization avoids burdening debt collectors with the costs of creating
                redundant disclosures.
                ---------------------------------------------------------------------------
                 \240\ See 23 NYCRR 1.2(b)(2).
                ---------------------------------------------------------------------------
                 The Bureau determines that the itemization of the current amount of
                the debt should not be more detailed (e.g., it should not include a
                detailed list of all payments). The itemization that appears on the
                model validation notice has been validated through four rounds of
                consumer testing and is effective, and the Bureau agrees with
                commenters who observed that a detailed disclosure of, for example, all
                payments could be overwhelming and not logistically feasible.
                 For all of these reasons, the Bureau is finalizing proposed Sec.
                1006.34(c)(2)(ix), renumbered as Sec. 1006.34(c)(2)(viii), to provide
                that required validation information includes an itemization of the
                current amount of the debt reflecting interest, fees, payments, and
                credits since the itemization date. Final Sec. 1006.34(c)(2)(viii)
                also provides that a debt collector may disclose the itemization on a
                separate page provided in the same communication with a validation
                notice if the debt collector includes on the validation notice, where
                the itemization would have appeared, a statement referring to that
                separate page. The Bureau is finalizing comment 34(c)(2)(ix)-1 with
                revisions and renumbered as comment 34(c)(2)(viii)-1 and is adding
                comments 34(c)(2)(viii)-2 through -4 to clarify various aspects of
                final Sec. 1006.34(c)(2)(viii), as discussed above. The Bureau is
                finalizing Sec. 1006.34(c)(2)(viii) and its related commentary
                pursuant to its authority to interpret FDCPA section 809(a), as well as
                its authority under Dodd-Frank Act section 1032(a).
                34(c)(2)(ix)
                 FDCPA section 809(a)(1) requires debt collectors to disclose to
                consumers the amount of the debt. Proposed Sec. 1006.34(c)(2)(x)
                provided that the current amount of the debt is required validation
                information.\241\ Proposed comment 34(c)(2)(x)-1 explained that, for
                residential mortgage debt subject to Regulation Z, 12 CFR 1026.41, a
                debt collector could comply with Sec. 1006.34(c)(2)(x) by including in
                the validation notice the total balance of the outstanding mortgage,
                including principal, interest, fees, and other charges.
                ---------------------------------------------------------------------------
                 \241\ 84 FR 23274, 23342, 23415 (May 21, 2019).
                ---------------------------------------------------------------------------
                 Some commenters raised concerns about how proposed Sec.
                1006.34(c)(2)(x) would disclose the current amount of the debt.
                Industry and industry trade group commenters stated that, if interest
                and fees are increasing, the current amount of the debt that appears on
                a validation notice may no longer be accurate by the time the consumer
                receives the notice. Some commenters stated that some State laws and
                court decisions require debt collectors to disclose if the current
                amount of the debt may change due to interest and fees.\242\ To address
                these concerns, industry and industry trade group commenters suggested
                that the Bureau should either develop a stand-alone increasing-
                interest-and-fee disclosure or structure Sec. 1006.34(c)(2)(x) to
                permit debt collectors to disclose that the itemized current amount of
                the debt may increase or decrease.\243\
                ---------------------------------------------------------------------------
                 \242\ See Avila v. Riexinger & Assocs., LLC, 817 F.3d 72, 76 (2d
                Cir. 2016) (holding that 15 U.S.C. 1692e requires debt collectors to
                disclose if the amount of a debt may increase due to interest and
                fees).
                 \243\ A trade group commenter recommended the following dynamic
                balance disclosure: ``As of the date of this letter, the balance due
                on the account is . Because interest, fees, and/or other
                charges may change the total owed from day to day, the amount due on
                the day you pay may be greater. If you pay the amount shown above,
                an adjustment may be necessary after we receive your payment, in
                which event you may be informed of any other amount due.''
                ---------------------------------------------------------------------------
                 An industry trade group stated that disclosing the current amount
                of the debt as proposed would present challenges for some reverse
                mortgage debt because that amount might differ from the amount
                disclosed in monthly statements.\244\ The commenter
                [[Page 5808]]
                recommended that, to avoid potential confusion in the context of
                reverse mortgage debt, a debt collector should be permitted to provide
                the last monthly account statement in lieu of disclosing the current
                amount of the debt.
                ---------------------------------------------------------------------------
                 \244\ The Bureau understands that, for some reverse mortgages,
                including Home Equity Conversion Mortgages insured by the FHA, when
                the reverse mortgage is due and payable, the amount due from the
                borrower may not be the amount of outstanding debt because these
                reverse mortgages are non-recourse loans and a borrower will never
                owe more than a portion of the appraised value of the home. See 24
                CFR 206.125.
                ---------------------------------------------------------------------------
                 A group of consumer advocates recommended that, for residential
                mortgage debt, the Bureau should require debt collectors to disclose
                the current amount of the total unpaid balance owed as well as the
                arrearage owed. According to this commenter, the arrearage owed is
                important information because, in many jurisdictions, homeowners in
                default can pay the arrearage to stop a foreclosure and reinstate a
                mortgage.
                 After considering these comments, the Bureau is finalizing Sec.
                1006.34(c)(2)(x) as proposed but renumbered as Sec. 1006.34(c)(2)(ix).
                In addition, the Bureau is finalizing comment 34(c)(2)(x)-1 as proposed
                and is adopting new comment 34(c)(2)(ix)-2 to clarify how a debt
                collector who combines multiple debts on a single validation notice
                complies with Sec. 1006.34(c)(2)(ix).
                 With respect to interest and fee accrual when disclosing the
                current amount of the debt, the Bureau declines to incorporate an
                increasing-interest-or-fee disclosure or to structure the current
                amount of the debt as a dynamic balance in Sec. 1006.34(c)(2)(ix). The
                Bureau notes, however, that comment 34(c)(2)(ix)-1 (proposed as comment
                34(c)(2)(x)-1) clarifies that the current amount of the debt is the
                amount of the debt as of the date that the validation information is
                provided. Therefore, a debt collector satisfies the requirement in
                Sec. 1006.34(c)(2)(ix) without providing a dynamic balance or
                increasing-interest-or-fee disclosure. Additionally, as discussed in
                the section-by-section analysis of Sec. 1006.34(d)(3)(iv), the final
                rule affirmatively permits debt collectors to include along with the
                required validation information other disclosures specifically required
                by applicable law. As such, debt collectors may include a disclosure
                pursuant to a judicial decision or order that the current amount of the
                debt may increase or vary due to interest, fees, or other charges. This
                modification addresses the challenges debt collectors face related to
                interest and fee accrual in disclosing the current amount of the debt.
                 The Bureau declines to permit debt collectors collecting reverse
                mortgage debt to include a last monthly account statement in place of
                disclosing the current amount of the debt. Unlike the special rule for
                certain residential mortgage debt discussed in the section-by-section
                analysis of Sec. 1006.34(c)(5), reverse mortgages are not generally
                subject to a separate disclosure requirement, such as 12 CFR
                1026.41(b)'s periodic statement requirement, that is functionally
                equivalent to, or as useful to consumers as, certain disclosures
                required by Sec. 1006.34(c)(2). Reverse mortgages generally are exempt
                from providing periodic statements under the Truth in Lending Act
                (TILA) \245\ and its implementing Regulation Z.\246\ While reverse
                mortgages may be subject to a monthly statement requirement that would
                require entities to disclose the ``total outstanding loan balance,''
                this regulatory requirement is not as prescriptive as the Bureau's
                periodic statement requirement for other residential mortgage
                debt.\247\ Thus, the Bureau determines that a last monthly statement
                for a reverse mortgage debt is not an adequate substitute for Sec.
                1006.34(c)(2)(ix).
                ---------------------------------------------------------------------------
                 \245\ 15 U.S.C. 1601 et seq.
                 \246\ See 12 CFR 1026.41(e)(1).
                 \247\ The regulation provides: ``The mortgagee shall provide to
                the borrower a monthly statement regarding the activity of the
                mortgage for each month, as well as for the calendar year. The
                statement shall summarize the total principal amount which has been
                paid to the borrower under the mortgage during that calendar year,
                the MIP paid to the Commissioner and charged to the borrower, the
                total amount of deferred interest added to the outstanding loan
                balance, the total outstanding loan balance, and the current
                principal limit. The mortgagee shall include an accounting of all
                payments for property charges. The statement shall be provided to
                the borrower monthly until the mortgage is paid in full by the
                borrower. The mortgagee shall provide the borrower with a new
                payment plan every time it recalculates monthly payments or the
                payment option is changed. The statements shall be in a format
                acceptable to the Commissioner.'' See 24 CFR 206.203(a).
                ---------------------------------------------------------------------------
                 The Bureau declines to require debt collectors to separately
                disclose an arrearage owed for residential mortgage debt. Because the
                Bureau did not propose this disclosure, it lacks the benefit of public
                comment and concludes that additional information, including through
                public comment, would be advisable before adopting any such
                interpretation. However, the Bureau notes that a debt collector who
                utilizes the special rule for certain residential mortgage debt
                described in Sec. 1006.34(c)(5) to comply with Sec. 1006.34(c)(2)(vi)
                through (viii) will provide a periodic statement that may disclose such
                information.\248\ Although a mortgage servicer is not required to use
                the special rule for certain residential mortgage debt, a mortgage
                servicer who does so and who otherwise uses the model validation notice
                or a substantially similar form receives a safe harbor for compliance
                pursuant to Sec. 1006.34(d)(2)(ii). The Bureau therefore expects that,
                in many circumstances, a debt collector who is also a mortgage servicer
                that is required to provide periodic statements under Regulation Z, 12
                CFR 1026.41 will disclose arrearage information.
                ---------------------------------------------------------------------------
                 \248\ 12 CFR 1026.41(d)(8)(vi) requires a periodic statement to
                include, if the consumer is more than 45 days delinquent, the total
                payment amount needed to bring the account current.
                ---------------------------------------------------------------------------
                 As noted in the section-by-section analysis of Sec.
                1006.34(c)(2)(viii), industry commenters requested further guidance
                about how to combine multiple debts on a single validation notice. The
                Bureau is adopting new comment 34(c)(2)(ix)-2 to clarify that a debt
                collector who combines multiple debts on a single validation notice
                complies with Sec. 1006.34(c)(2)(ix) by disclosing on the validation
                notice a single, cumulative figure that is the sum of the current
                amount of all the debts.
                Proposed Provision Not Finalized
                 As discussed in the section-by-section analysis of Sec.
                1006.26(c), in the February 2020 proposal, the Bureau proposed to
                require debt collectors collecting time-barred debt to include time-
                barred debt and revival disclosures on the validation notice.\249\
                Proposed Sec. 1006.34(c)(2)(xi) provided that validation information
                included those disclosures, as applicable, if the debt collector
                determined after a reasonable investigation that such disclosures were
                required by Sec. 1006.26(c).\250\ For the reasons discussed in the
                section-by-section analysis of Sec. 1006.26(c), the Bureau is not
                finalizing the proposed time-barred debt disclosure requirements and,
                accordingly, the Bureau is not finalizing proposed Sec.
                1006.34(c)(2)(xi). However, as discussed in the section-by-section
                analysis of Sec. 1006.34(d)(3)(iv)(B), any disclosures relating to
                time-barred debt that are specifically required by applicable law or
                that provide safe harbors under applicable law are optional disclosures
                that the final rule affirmatively permits debt collectors to include on
                the validation notice.
                ---------------------------------------------------------------------------
                 \249\ See 85 FR 12672 (Mar. 3, 2020).
                 \250\ Id. at 12685, 12696.
                ---------------------------------------------------------------------------
                34(c)(3) Information About Consumer Protections
                 The disclosures in FDCPA section 809(a) help consumers to determine
                if a particular debt is theirs and to facilitate action in response to
                the receipt of validation information. However, as the proposal stated,
                debt collectors typically disclose only the information that FDCPA
                section 809(a) specifically references and provide the FDCPA section
                809 information using statutory
                [[Page 5809]]
                language, rather than plain language that consumers can more easily
                comprehend.\251\ To address these concerns, proposed Sec.
                1006.34(c)(3) provided that certain information about a consumer's
                rights with respect to debt collection is required validation
                information. This information, which is discussed in the section-by-
                section analysis of Sec. 1006.34(c)(3)(i) through (vi) below, included
                disclosures specifically referenced in FDCPA section 809(a)(4) and (5),
                as well as additional disclosures intended to help consumers understand
                their debt collection rights.\252\
                ---------------------------------------------------------------------------
                 \251\ 84 FR 23274, 23342 (May 21, 2019).
                 \252\ See 15 U.S.C. 1692g(a)(4) and (5).
                ---------------------------------------------------------------------------
                 Commenters generally supported requiring debt collectors to
                disclose information about a consumer's rights with respect to debt
                collection. Federal government agency staff and a consumer advocate
                commenter stated that proposed Sec. 1006.34(c)(3) would improve
                consumers' understanding of their rights in debt collection. Some
                industry and industry trade group commenters supported using plain
                language disclosures to explain consumer protections in debt
                collection.
                 Some commenters recommended that the Bureau require additional
                disclosures about consumers' rights with respect to debt collection.
                Federal government agency staff, a group of 28 State Attorneys General,
                and a number of consumer advocate commenters recommended that debt
                collectors be required to disclose the FDCPA section 805(c) cease
                communication right.\253\ A State regulatory agency recommended that
                the Bureau require debt collectors to disclose that a consumer's
                failure to act or to dispute a debt may have credit reporting
                implications. This commenter also recommended that Sec. 1006.34(c)(3)
                require debt collectors to disclose how consumers may obtain an annual
                credit report, which consumers are entitled to under the FCRA and its
                implementing Regulation V.\254\
                ---------------------------------------------------------------------------
                 \253\ In the November 2020 Final Rule, the Bureau finalized
                Sec. 1006.6(c)(1) to implement FDCPA section 805(c) and to provide
                that, ``if a consumer notifies a debt collector in writing that the
                consumer refuses to pay a debt or that the consumer wants the debt
                collector to cease further communication with the consumer, the debt
                collector must not communicate or attempt to communicate further
                with the consumer with respect to such debt.'' 85 FR 76734, 78889
                (Nov. 30, 2020).
                 \254\ See 15 U.S.C. 1681j(a); 12 CFR 1022.136.
                ---------------------------------------------------------------------------
                 The Bureau determines, as discussed in the proposal, that consumers
                will benefit from receiving additional information about their rights
                in debt collection and from plain language disclosures rather than
                disclosures that parrot the FDCPA's statutory text.\255\ The Bureau
                therefore is adopting Sec. 1006.34(c)(3). Specifically, as discussed
                further in the section-by-section analysis below, the Bureau is
                adopting Sec. 1006.34(c)(3)(i) through (v) and its related commentary
                with minor modifications, but is not finalizing proposed Sec.
                1006.34(c)(3)(vi), which addressed the opt-out notice required by Sec.
                1006.6(e) for electronic communications or attempts to communicate.
                ---------------------------------------------------------------------------
                 \255\ 84 FR 23274, 23342 (May 21, 2019).
                ---------------------------------------------------------------------------
                 The Bureau declines to require additional disclosures about
                consumer protections in debt collection, as some commenters suggested.
                In particular, the Bureau concludes that, although consumers may
                benefit from understanding the rights the commenters discussed, those
                rights are not sufficiently related to the purposes of FDCPA section
                809--i.e., helping consumers to determine if a debt is theirs and to
                facilitate action in response to the receipt of validation
                information--to require debt collectors to include them as validation
                information.\256\ In addition, as discussed in the section-by-section
                analysis of Sec. 1006.34(c)(3)(iv), the final rule generally requires
                debt collectors to include a statement that informs consumers that
                additional information regarding consumer protections in debt
                collection is available on the Bureau's website, with a link to the
                information.\257\ The Bureau's website will disclose more information
                about consumer protections in debt collection, including about the
                cease communication right.
                ---------------------------------------------------------------------------
                 \256\ For example, when Congress established the cease
                communication right pursuant to FDCPA section 805(c), Congress did
                not require its disclosure pursuant to FDCPA section 809. The Bureau
                concludes that was intentional. Thus, the Bureau declines to include
                the cease communication right as validation information that debt
                collectors must disclose.
                 \257\ Section 1006.34(c)(3)(iv) requires debt collectors to
                include the disclosure if they are collecting debt related to a
                consumer financial product or service, as defined in Sec.
                1006.2(f). Otherwise, debt collectors can optionally include the
                disclosure under Sec. 1006.34(d)(3)(viii).
                ---------------------------------------------------------------------------
                 The Bureau is finalizing Sec. 1006.34(c)(3)(i) through (iii) and
                (v) pursuant to its authority under FDCPA section 814(d) to prescribe
                rules with respect to the collection of debts by debt collectors and,
                as described more fully below, its authority to implement and interpret
                FDCPA section 809. The Bureau also is finalizing Sec. 1006.34(c)(3)
                pursuant to its authority under section 1032(a) of the Dodd-Frank Act,
                on the basis that a consumer's rights are a feature of debt collection.
                34(c)(3)(i)
                 FDCPA section 809(a)(4) requires debt collectors to disclose to
                consumers their right under FDCPA section 809(b) to dispute the
                validity of the debt within 30 days after receipt of the validation
                information (i.e., during the validation period).\258\ If a consumer
                disputes a debt in accordance with FDCPA section 809(b), a debt
                collector must cease collecting the debt until the debt collector
                provides verification to the consumer; this is sometimes referred to as
                the collections pause. FDCPA section 809(a)(4) does not expressly
                indicate that a debt collector must disclose to consumers that a
                dispute triggers FDCPA section 809(b)'s collections pause, or whether a
                debt collector must disclose the end date of the validation period.
                ---------------------------------------------------------------------------
                 \258\ See 15 U.S.C. 1692g(a)(4).
                ---------------------------------------------------------------------------
                 The Bureau proposed Sec. 1006.34(c)(3)(i) to provide that
                validation information includes a statement that specifies the end date
                of the validation period and states that, if the consumer notifies the
                debt collector in writing before the end of the validation period that
                the debt, or any portion of the debt, is disputed, the debt collector
                must cease collection of the debt until the debt collector sends the
                consumer either the verification of the debt or a copy of a
                judgment.\259\
                ---------------------------------------------------------------------------
                 \259\ 84 FR 23274, 23343, 23404 (May 21, 2019).
                ---------------------------------------------------------------------------
                 The Bureau received a variety of comments in response to proposed
                Sec. 1006.34(c)(3)(i)'s incorporation of the validation period end
                date.\260\ On the one hand, an industry trade group and a group of
                consumer advocate commenters supported the inclusion, asserting the
                validation period end date would provide certainty to consumers about
                the timeframe within which to exercise their verification rights.
                ---------------------------------------------------------------------------
                 \260\ The discussion under the ``Model Validation Notice''
                heading in the section-by-section analysis of Sec. 1006.34(d)(2)
                provides details about how the statement required by Sec.
                1006.34(c)(3)(i) is disclosed on the model validation notice.
                ---------------------------------------------------------------------------
                 However, other commenters opposed the inclusion because, if
                delivery of a validation notice is delayed and the consumer receives
                the notice later than the debt collector presumed, the validation
                period end date would be inaccurate. Commenters suggested this could
                pose legal risk to debt collectors. To address this concern, an
                industry commenter recommended that the Bureau modify proposed Sec.
                1006.34(c)(3)(i) to replace the validation period end date with a
                generic statement that a consumer may request verification within 30
                days after receiving the validation notice.
                [[Page 5810]]
                 Some commenters, including consumer advocate commenters and an
                industry trade group, stated that disclosing the validation period end
                date might leave consumers with the false impression that they could
                not raise concerns about a debt after the validation period expires. A
                group of academic commenters argued that a study suggested that a
                significant number of consumers believed that, if they did not dispute
                a debt during the validation period, they would be unable to assert
                later that they did not owe the debt.\261\ Similarly, an industry
                commenter stated that disclosing the validation period end date might
                dissuade consumers from making verification requests after that date
                even though debt collectors sometimes honor such requests. To address
                this potential misunderstanding, some commenters recommended that the
                final rule require debt collectors to inform consumers that they can
                raise concerns about a debt after the validation period end date.
                ---------------------------------------------------------------------------
                 \261\ Jeff Sovern & Kate Walton, Are Validation Notices Valid?
                An Empirical Evaluation of Consumer Understanding of Debt Collection
                Validation Notices, 70 SMU L. Rev. 63, 128 (2017) (``Our study
                indicated that more than a third of the respondents believed that if
                they failed to meet the thirty-day deadline, they would either have
                to pay a debt they did not owe or would not be able to argue in
                court that they didn't owe the debt.'').
                ---------------------------------------------------------------------------
                 Commenters also addressed the Bureau's proposal to require debt
                collectors to disclose FDCPA section 809(b)'s collections pause.
                Federal government agency staff and a group of consumer advocate
                commenters supported the collections pause disclosure. However,
                industry commenters stated that the disclosure would be burdensome
                because it would encourage consumers to dispute the debt for the
                purpose of delaying or avoiding debt collection. According to an
                industry commenter, consumers do not need to be informed about FDCPA
                section 809(b)'s collections pause because debt collectors are aware of
                it and observe it.
                 The Bureau determines that consumers will benefit from Sec.
                1006.34(c)(3)(i)'s disclosure of the validation period end date. As
                discussed in the proposal, the validation period end date is an
                integral feature of consumers' dispute right. Among other things, the
                validation period end date will provide certainty to consumers about
                the timeframe provided by the FDCPA to exercise their verification
                rights.
                 The Bureau disagrees that a validation period end date that is
                inaccurate because a validation notice was delayed will present
                significant legal risk to debt collectors. Final Sec. 1006.34(b)(5)
                and comment 34(b)(5)-1 provide that, for purposes of determining the
                end of the validation period, a debt collector who provides the
                validation information in writing or electronically may assume that a
                consumer receives the validation information on any date that is at
                least five business days after the debt collector provides it. If a
                debt collector calculates the validation period end date in accordance
                with this presumption, the debt collector will not violate the FDCPA or
                its implementing Regulation F, even if, as final comment 34(b)(5)-1
                clarifies, the consumer receives the validation notice later than the
                debt collector assumed. Further, the Bureau determines that a generic
                statement that a consumer may request verification within 30 days after
                receiving the validation notice is not an adequate substitute for
                disclosing the validation period end date. Such a generic statement
                could leave many consumers unsure about when the validation period
                ends. For example, consumers might receive a validation notice in the
                mail but not open it immediately, or they might open it and return to
                it later without keeping track of how much time has passed. In these
                and similar scenarios, consumers would not be able to determine the
                validation period end date.
                 Regarding commenters' suggestion that the Bureau require debt
                collectors to inform consumers that they can raise concerns about a
                debt after the validation period end date, the Bureau concludes that it
                is not necessary to require such a disclosure. FDCPA section 809(a)
                requires specific consumer disclosures, including statements about the
                consumer's rights within 30 days of receipt of the notice, but does not
                require any additional statement addressing consumer actions after the
                expiration of that period. The Bureau determines that a specific end
                date will not increase consumer confusion more than general language
                such as ``within 30 days.'' The Bureau's testing shows that, while some
                confusion does occur, about 40 percent of participants said they could
                still dispute the debt after the validation period end date.\262\ Of
                the remaining 60 percent of participants, about 40 percent were unclear
                what would happen if they wrote to dispute the debt, and only about 20
                percent specifically said that they could not write to dispute the
                debt.\263\ When asked whether the debt collector would be required to
                send information saying they owe the debt if they wrote to dispute
                after the validation period end date, a small majority of consumers
                assumed that the debt collector would be required to do so.\264\ Thus,
                although consumers may not be certain of the effect of writing to
                dispute the debt after the validation period end date, the Bureau's
                testing indicates that a sizeable majority of consumers would not be
                inhibited about raising general concerns about the debt after the
                validation notice end date. As discussed above, the final rule's
                enhanced and plain-language disclosures should improve overall consumer
                understanding and empower consumers to respond, should they choose, to
                debt collectors. The Bureau therefore declines to require as part of
                the validation information an explicit statement informing consumers
                that they may continue to raise concerns about the debt after the
                validation period end date.
                ---------------------------------------------------------------------------
                 \262\ See November 2020 Qualitative Testing Report, supra note
                34, at 13. Similarly, the Bureau's prior testing suggested that
                ``[o]verall, participants' comments suggest that they understood the
                difference between writing before the specified date [and] writing
                after that date.'' FMG Usability Report, supra note 28, at 56.
                 \263\ Id.
                 \264\ Id. at 13-14.
                ---------------------------------------------------------------------------
                 The Bureau also determines that Sec. 1006.34(c)(3)(i) should not
                omit the collections pause disclosure. As the proposal noted, consumer
                testing indicates that knowing about the collections pause was
                important to consumers and would encourage them to exercise their
                dispute right if they questioned a debt's validity.\265\ Debt
                collectors have not provided evidence to support the premise that a
                significant number of consumers exercise their FDCPA section 809
                verification rights solely to evade or delay paying debts that they
                owe. Absent such evidence, the Bureau declines to conclude that
                consumers will exercise their rights for such purposes. Further,
                regardless of whether debt collectors are aware of and comply with
                FDCPA section 809(b)'s collections pause requirement, the Bureau
                concludes that consumers will benefit from this disclosure because it
                will provide them with more complete information about the actions that
                debt collectors must take if consumers notify them that the debt is
                disputed.
                ---------------------------------------------------------------------------
                 \265\ FMG Cognitive Report, supra note 27, at 30; see also FMG
                Summary Report, supra note 29, at 25.
                ---------------------------------------------------------------------------
                 For all of these reasons, the Bureau is finalizing Sec.
                1006.34(c)(3)(i) as proposed, with minor wording changes to clarify the
                content of the required disclosure, including by specifying that the
                consumer must notify the debt collector in writing ``on or before'' the
                end of the validation period, as opposed to
                [[Page 5811]]
                ``before'' the end of the validation period, as proposed.\266\
                ---------------------------------------------------------------------------
                 \266\ The model validation notice uses the term ``by'' instead
                of ``on or before'' for plain language purposes.
                ---------------------------------------------------------------------------
                34(c)(3)(ii)
                 FDCPA section 809(a)(5) requires debt collectors to disclose to
                consumers their right under FDCPA section 809(b) to request, within 30
                days after receipt of the validation information, the name and address
                of the original creditor, if different from the current creditor.\267\
                FDCPA section 809(a)(5) does not expressly indicate that a debt
                collector must disclose to consumers that an original-creditor
                information request invokes FDCPA section 809(b)'s collections pause,
                or whether a debt collector must disclose the end date of the
                validation period. The Bureau proposed Sec. 1006.34(c)(3)(ii) to
                provide that validation information includes a statement that specifies
                the end date of the validation period and states that, if the consumer
                requests in writing before the end of the validation period the name
                and address of the original creditor, the debt collector must cease
                collection of the debt until the debt collector sends the consumer the
                name and address of the original creditor, if different from the
                current creditor.\268\
                ---------------------------------------------------------------------------
                 \267\ See 15 U.S.C. 1692g(a)(5).
                 \268\ 84 FR 23274, 23343, 23404 (May 21, 2019).
                ---------------------------------------------------------------------------
                 Some industry and industry trade group commenters recommended that
                the Bureau not finalize proposed Sec. 1006.34(c)(3)(ii).\269\ Some
                commenters stated that the validation information need not include a
                statement informing consumers of their right to request original-
                creditor information because, under the Bureau's rule, the validation
                information will include the creditor as of the itemization date and,
                according to the commenters, that creditor and the original creditor
                often will be the same. Relatedly, some commenters suggested that,
                because the validation information will include the names of the
                itemization-date creditor and the current creditor, debt collectors
                should be permitted to omit the statement informing consumers of their
                right to request original-creditor information if the original creditor
                is the same as either of those creditors.\270\
                ---------------------------------------------------------------------------
                 \269\ See the ``Model Validation Notice'' discussion in the
                section-by-section analysis of Sec. 1006.34(d)(2) for additional
                details about how the statement required by Sec. 1006.34(c)(3)(ii)
                is disclosed on the model validation notice.
                 \270\ As an alternative to complying with Sec.
                1006.34(c)(3)(ii), an industry trade group commenter recommended
                that debt collectors be permitted to proactively disclose the
                original-creditor information that a consumer would receive in
                response to an FDCPA section 809(b) request. This comment is
                addressed in the section-by-section analysis of Sec. 1006.38.
                ---------------------------------------------------------------------------
                 Some commenters recommended that the Bureau modify proposed Sec.
                1006.34(c)(3)(ii) to omit the validation period end date and the
                collections pause disclosures. These comments were substantially
                similar to comments discussed in the section-by-section analysis of
                Sec. 1006.34(c)(3)(i).
                 After considering the feedback, the Bureau has determined to
                finalize Sec. 1006.34(c)(3)(ii). FDCPA section 809(a)(5) expressly
                requires debt collectors to include in the validation information a
                statement that, upon the consumer's written request within 30 days
                after receipt of the validation information, the debt collector will
                provide the consumer with the name and address of the original
                creditor, if different from the current creditor. The Bureau proposed
                Sec. 1006.34(c)(3)(ii) to implement that requirement and to clarify
                the content of the disclosures for debt collectors. The Bureau did not
                propose an exception to this disclosure requirement if the original
                creditor and the current creditor are the same and therefore does not
                have information regarding the costs or benefits of finalizing such an
                exception. To the extent that commenters were concerned about the
                burden of responding to original-creditor information requests when the
                original creditor and the current creditor are the same, the Bureau is
                finalizing a special rule for that scenario in Sec.
                1006.38(c)(2).\271\ For these reasons, the Bureau is finalizing Sec.
                1006.34(c)(3)(ii) as proposed, with minor wording changes to clarify
                the content of the required disclosure, including by specifying that
                the consumer must notify the debt collector in writing ``on or before''
                the end date of the validation period, as opposed to ``before'' the end
                of the validation period, as proposed.\272\
                ---------------------------------------------------------------------------
                 \271\ See the section-by-section analysis of Sec.
                1006.38(c)(2).
                 \272\ The model validation notice uses the term ``by'' instead
                of ``on or before'' for plain language purposes.
                ---------------------------------------------------------------------------
                 The Bureau declines to omit the validation period end date and the
                collections pause disclosures from Sec. 1006.34(c)(3)(ii) for the same
                reasons discussed in the section-by-section analysis of Sec.
                1006.34(c)(3)(i).
                34(c)(3)(iii)
                 FDCPA section 809(a)(3) requires a debt collector to disclose to a
                consumer that, unless the consumer disputes the validity of the debt
                within 30 days of receipt of the validation information, the debt
                collector will assume the debt to be valid.\273\ The Bureau proposed
                Sec. 1006.34(c)(3)(iii) to provide that validation information
                includes a statement that specifies the end date of the validation
                period and states that, unless the consumer contacts the debt collector
                to dispute the validity of the debt, or any portion of the debt, before
                the end of the validation period, the debt collector will assume that
                the debt is valid.\274\
                ---------------------------------------------------------------------------
                 \273\ 15 U.S.C. 1692g(a)(3).
                 \274\ 84 FR 23274, 23343-44, 23404 (May 21, 2019).
                ---------------------------------------------------------------------------
                 At the time of the proposal, courts in various jurisdictions had
                reached different conclusions about whether FDCPA section 809(a)(3)
                requires debt collectors to recognize oral disputes about the validity
                of a debt.\275\ These differing decisions principally arose from the
                fact that, whereas FDCPA section 809(a)(4) and (5) explicitly state
                that a consumer must notify a debt collector in writing, FDCPA section
                809(a)(3) does not refer to a writing requirement. In the absence of an
                express writing requirement in FDCPA section 809(a)(3), the majority of
                circuit courts that considered the issue had determined that a
                consumer's oral dispute triggers certain FDCPA protections, including,
                for example, FDCPA section 810's payment application requirement.\276\
                Consistent with this majority position, and pursuant to its authority
                to implement and interpret FDCPA section 809(a)(3) as well as its
                authority under Dodd-Frank Act section 1032(a), the Bureau proposed to
                interpret FDCPA section 809(a)(3) to allow oral disputes.\277\
                ---------------------------------------------------------------------------
                 \275\ Compare Clark v. Absolute Collection Serv., Inc., 741 F.3d
                487, 490 (4th Cir. 2014) (per curiam) (holding that oral disputes
                trigger certain FDCPA protections, including under FDCPA section
                809(a)(3)), Hooks v. Forman, Holt, Eliades & Ravin, LLC, 717 F.3d
                282, 286 (2d Cir. 2013) (same), and Camacho v. Bridgeport Fin. Inc.,
                430 F.3d 1078, 1082 (9th Cir. 2005) (same), with Graziano v.
                Harrison, 950 F.2d 107, 112 (3d Cir. 1991) (``[A] dispute, to be
                effective, must be in writing.'').
                 \276\ FDCPA section 810 is implemented by Sec. 1006.30(c). See
                85 FR 76734, 76843 (Nov. 30, 2020); see also Camacho, 430 F.3d at
                1081-82 (holding that oral disputes trigger certain FDCPA
                protections, including under FDCPA sections 807(8) and 810).
                 \277\ After the proposal was published, the circuit split was
                resolved. In Riccio v. Sentry Credit, Inc., the Third Circuit
                sitting en banc overruled its prior decision and determined that
                FDCPA section 809(a)(3) does not require a dispute to be in writing.
                Riccio v. Sentry Credit, Inc., 954 F.3d 582, 594 (3d Cir. 2020) (en
                banc) (``In short, we conclude that debt collection notices sent
                under Sec. 1692g need not require that disputes be expressed in
                writing. In doing so, we overrule Graziano's contrary holding.'').
                ---------------------------------------------------------------------------
                 Industry commenters, industry trade group commenters, and a group
                of academic commenters supported the Bureau's proposed interpretation
                that FDCPA section 809(a)(3) permits
                [[Page 5812]]
                consumers to dispute the validity of a debt orally or in writing.
                 Several industry and industry trade group commenters expressed
                concerns about how proposed Sec. 1006.34(c)(3)(iii) was disclosed on
                the proposed model validation notice, perceiving a tension between the
                regulatory text and the proposed model notice text. Specifically,
                whereas the proposed model validation notice stated that a consumer may
                ``call or write'' to dispute all or part of the debt, proposed Sec.
                1006.34(c)(3)(iii) did not specify the manner in which a consumer must
                contact the debt collector and instead used the general term
                ``contact.''
                 As proposed, the Bureau determines that FDCPA section 809(a)(3)
                permits both oral and written disputes. The Bureau agrees with every
                circuit court that has addressed this issue and interprets the absence
                of a reference to a writing requirement in FDCPA section 809(a)(3) to
                mean that a writing is not required. Further, commenters overall
                supported this interpretation.
                 The Bureau declines to modify how Sec. 1006.34(c)(3)(iii) is
                phrased on the model validation notice. The Bureau developed the phrase
                ``call or write'' for comprehension purposes. The model notice's
                language is intended to be plain language and consumer-friendly and was
                validated through multiple rounds of qualitative and quantitative
                consumer testing.\278\ Regulatory text and the model notice language
                reflecting that regulatory text need not be identical in every case.
                For instance, if consumers may not understand a requirement as
                described in regulatory text, it is appropriate to express that
                requirement in plain language in consumer disclosures.\279\
                ---------------------------------------------------------------------------
                 \278\ See part III.C.
                 \279\ See the ``Model Validation Notice'' discussion in the
                section-by-section analysis of Sec. 1006.34(d)(2) for additional
                details about how the statement required by Sec. 1006.34(c)(3)(iii)
                is disclosed on the model validation notice.
                ---------------------------------------------------------------------------
                 For these reasons, the Bureau is finalizing Sec.
                1006.34(c)(3)(iii) as proposed, with minor wording changes to clarify
                the content of the required disclosure, including by specifying that
                the consumer must notify the debt collector in writing ``on or before''
                the end of the validation period, rather than ``before'' the end of the
                validation period, as proposed.\280\
                ---------------------------------------------------------------------------
                 \280\ The model validation notice uses the term ``by'' instead
                of ``on or before'' for plain language purposes.
                ---------------------------------------------------------------------------
                34(c)(3)(iv)
                 Dodd-Frank Act section 1032(a) permits the Bureau to 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. To enhance consumer understanding of protections
                available during the debt collection process, and pursuant to its
                authority under Dodd-Frank Act section 1032(a), the Bureau proposed
                Sec. 1006.34(c)(3)(iv) to provide that, if a debt collector is
                collecting a consumer financial product or service debt, as defined in
                Sec. 1006.2(f), then validation information includes a statement that
                informs the consumer that additional information regarding consumer
                rights in debt collection is available on the Bureau's website at
                https://www.consumerfinance.gov.
                 Commenters generally agreed that consumers would benefit from
                information about additional protections available to consumers
                experiencing debt collection. However, commenters disagreed about the
                best way to provide that information.
                 A large number of consumer advocate and academic commenters
                recommended that, rather than a statement that additional information
                is available on the Bureau's website, the Bureau should require debt
                collectors to provide consumers, along with the validation notice, a
                reference document describing consumer protections in debt collection,
                similar to the document that the Bureau developed prior to the SBREFA
                process.\281\ Commenters stated that a reference document would be more
                useful to consumers than a statement appearing on a validation notice.
                Further, some such commenters stated that proposed Sec.
                1006.34(c)(3)(iv) would not help consumers without internet access who
                are unable to visit the Bureau's website.
                ---------------------------------------------------------------------------
                 \281\ For additional detail about information that the Bureau
                considered including in the reference document, see appendix G of
                the Small Business Review Panel Outline, supra note 39.
                ---------------------------------------------------------------------------
                 Consumer advocate commenters and a group of academics also stated
                that, if the Bureau does not require a reference document, the Bureau
                should revise proposed Sec. 1006.34(c)(3)(iv) to require debt
                collectors to include a web address that directs consumers to a Bureau
                page dedicated to consumer protections in debt collection, instead of
                to the Bureau's general website landing page.\282\ Other commenters
                stated that requiring consumers to click on a hyperlink if the
                validation notice is delivered electronically would create procedural
                hurdles that reduce consumer follow through and would pose security
                risks to consumers.
                ---------------------------------------------------------------------------
                 \282\ Also, in response to proposed Sec. 1006.34(d)(4)(ii), a
                consumer advocate commenter recommended that the Bureau permit debt
                collectors to embed a hyperlink that directs consumers to the
                Bureau's website address described in proposed Sec.
                1006.34(c)(3)(iv). As discussed in the section-by-section analysis
                of Sec. 1006.34(d)(4)(ii), the Bureau is adopting this
                recommendation to permit debt collectors to include a hyperlink
                without losing the safe harbor in Sec. 1006.34(d)(2).
                ---------------------------------------------------------------------------
                 At least one industry trade group commenter disagreed and supported
                proposed Sec. 1006.34(c)(3)(iv) on the grounds that including a
                reference document with the validation notice would overwhelm
                consumers.
                 For the reasons discussed below, the Bureau is finalizing Sec.
                1006.34(c)(3)(iv) as proposed with a revision in response to feedback.
                 The Bureau declines to require debt collectors to provide consumers
                a reference document describing consumer protections in debt
                collection. Because the Bureau did not propose such a requirement, the
                Bureau did not receive robust feedback in response to the proposal
                about what such a required form should look like and how a requirement
                to provide it might operate. Further, the Bureau expects that most
                consumers will receive the disclosure referring to the Bureau's website
                and will be able to access the website; most consumers use the internet
                and have experience navigating to websites.\283\
                ---------------------------------------------------------------------------
                 \283\ For example, a Pew Research Center study in 2019 found
                that 90 percent of U.S. adults use the internet. See Pew Research
                Ctr., Internet/Broadband Fact Sheet, https://www.pewresearch.org/internet/fact-sheet/internet-broadband/#who-uses-the-internet (last
                visited Dec. 1, 2020).
                ---------------------------------------------------------------------------
                 The Bureau determines that consumers would benefit from being
                directed to a page dedicated to consumer protections in debt collection
                instead of the Bureau's website landing page. Accordingly, the Bureau
                is modifying Sec. 1006.34(c)(3)(iv) to specifically reference the web
                page www.cfpb.gov/debt-collection instead of the Bureau's general
                landing page. The Bureau is also making a conforming change to how the
                statement described in Sec. 1006.34(c)(3)(iv) is disclosed on the
                model validation notice.
                 The Bureau determines that consumers will not face significant
                security risks when accessing the Bureau's website. The vast majority
                of validation notices today are delivered by mail, so an active
                hyperlink is not possible. In the case of electronic communications,
                the Bureau recognizes that active hyperlinks can present security
                concerns to consumers, including, among other things, phishing
                [[Page 5813]]
                risks.\284\ But the Bureau is not requiring debt collectors to include
                an active hyperlink to the Bureau's website in validation notices. In
                other words, even if the validation information is provided
                electronically, Sec. 1006.34(c)(3)(iv) only requires that the text
                ``www.cfpb.gov/debt-collection'' be displayed in the information. As
                discussed in the section-by-section analysis of Sec.
                1006.34(d)(4)(ii), a debt collector is permitted, but not required, to
                include an active hyperlink to the Bureau's website. This is because
                hyperlinks are a common feature of electronic commercial
                communications. A validation notice that includes a hyperlink to the
                Bureau's website may be safe and convenient for a consumer. This would
                particularly be the case if the debt collector had prior contact with
                the consumer and the consumer recognizes that the validation notice was
                sent by a familiar source. If a consumer is unfamiliar with the debt
                collector or otherwise has concerns about clicking on an active
                hyperlink, the consumer could choose, rather than clicking on the
                hyperlink, to navigate independently to the Bureau's website to obtain
                more information about consumer protections in debt collection.
                ---------------------------------------------------------------------------
                 \284\ See, e.g., Fed. Trade Comm'n, How to Recognize and Avoid
                Phishing Scams (May 2019), https://www.consumer.ftc.gov/articles/how-recognize-and-avoid-phishing-scams (last visited Dec. 1, 2020).
                ---------------------------------------------------------------------------
                 Accordingly, the Bureau is finalizing Sec. 1006.34(c)(3)(iv) to
                provide that, if a debt collector is collecting debt related to a
                consumer financial product or service as defined in Sec. 1006.2(f),
                validation information includes a statement that informs the consumer
                that additional information regarding consumer protections in debt
                collection is available on the Bureau's website at www.cfpb.gov/debt-collection.
                34(c)(3)(v)
                 Proposed Sec. 1006.34(c)(4) provided that validation information
                includes information that a consumer can use to take certain actions,
                including disputing a debt or requesting original-creditor
                information.\285\ As discussed in the section-by-section analysis of
                Sec. 1006.34(c)(3)(i) and (ii), FDCPA section 809(b) provides that
                consumers must notify a debt collector ``in writing'' to dispute a debt
                or request original-creditor information. Under Sec. 1006.38, this
                writing requirement is satisfied if a consumer provides a dispute or
                request for original-creditor information to the debt collector using a
                medium of electronic communication through which a debt collector
                accepts electronic communications from consumers, such as an email
                address or a website portal.\286\ Thus, debt collectors are required to
                give legal effect to consumer disputes or requests for original-
                creditor information submitted electronically only if a debt collector
                chooses to accept electronic communications from consumers. The Bureau
                proposed Sec. 1006.34(c)(3)(v) to provide that validation information
                includes a statement explaining how a consumer can take the actions
                described in proposed Sec. 1006.34(c)(4) and (d)(3), as applicable,
                electronically, if the debt collector sends a validation notice
                electronically.
                ---------------------------------------------------------------------------
                 \285\ Proposed Sec. 1006.34(c)(4) set forth required consumer-
                response information. Proposed Sec. 1006.34(d)(3)(iii)(B) and
                (vi)(B) set forth certain other consumer-response information
                related to payment requests and requests for Spanish-language
                validation notices.
                 \286\ See the section-by-section analysis of Sec. 1006.38 and
                comment 38-1.
                ---------------------------------------------------------------------------
                 Proposed comment 34(c)(3)(v)-1 explained that a debt collector may
                provide the information described in Sec. 1006.34(c)(3)(v) by
                including the statements, ``We accept disputes electronically,'' using
                that phrase or a substantially similar phrase, followed by an email
                address or website portal that a consumer can use to take the action
                described in Sec. 1006.34(c)(4)(i), and ``We accept original-creditor
                information requests electronically,'' using that phrase or a
                substantially similar phrase, followed by an email address or website
                portal that a consumer can use to take the action described in Sec.
                1006.34(c)(4)(ii).\287\ Proposed comment 34(c)(3)(v)-1 also clarified
                that, if a debt collector accepts electronic communications from
                consumers through more than one medium, such as by email and through a
                website portal, the debt collector is only required to provide
                information regarding one of these media but may provide information
                about additional media.
                ---------------------------------------------------------------------------
                 \287\ On the model validation notice, this phrase appears as
                ``We accept such requests electronically.'' This wording deviates
                from the regulatory text due to space considerations and the context
                of surrounding disclosures.
                ---------------------------------------------------------------------------
                 An industry commenter and an industry trade group commenter
                supported proposed Sec. 1006.34(c)(3)(v) because it would inform
                consumers about alternative methods to contact debt collectors and
                would increase the likelihood that consumers would engage with debt
                collectors. However, another industry commenter objected to the
                proposal because, the commenter argued, allowing consumers to exercise
                verification rights electronically would encourage consumers to submit
                verification requests for the purpose of delaying or avoiding paying a
                debt.
                 The Bureau determines that requiring debt collectors who provide
                validation notices electronically to include statements on the
                validation notice explaining how consumers can dispute the debt or
                request original-creditor information electronically will benefit
                consumers by facilitating their ability to exercise those verification
                rights electronically. The Bureau agrees that such disclosures will
                increase the likelihood of engagement between consumers and debt
                collectors but does not agree that they will encourage consumers to
                submit disputes or original-creditor-information requests to delay or
                avoid paying the debt. As discussed in the section-by-section analysis
                of Sec. 1006.34(c)(3)(i), commenters have not provided evidence
                demonstrating that a significant number of consumers exercise their
                verification rights with the principal purpose of avoiding paying debts
                that they owe. Absent such evidence, the Bureau declines to conclude
                that consumers will exercise verification rights for this purpose.
                 Accordingly, the Bureau is finalizing Sec. 1006.34(c)(3)(v) and
                its related commentary largely as proposed, except that the final rule
                does not require debt collectors who provide validation notices
                electronically to include statements stating how consumers can take the
                actions described in Sec. 1006.34(d)(3) (i.e., responding to a payment
                prompt (Sec. 1006.34(d)(3)(iii)) or requesting a Spanish-language
                translation (Sec. 1006.34(d)(3)(vi))) electronically.
                 The Bureau notes that Sec. 1006.34(d)(3)(vi)(A) affirmatively
                permits a debt collector to include supplemental information in Spanish
                specifying how a consumer may request a Spanish-language validation
                notice, and such information could include how the consumer may do so
                electronically. In addition, as discussed at the outset of the section-
                by-section analysis of Sec. 1006.34, the Bureau is not finalizing the
                proposed requirement that all validation notices must be substantially
                similar to the model validation notice in order to avoid violating the
                rule. Therefore, under the final rule, a debt collector who chooses to
                include either or both of the optional payment disclosures in Sec.
                1006.34(d)(3)(iii) is not prohibited by Regulation F from including a
                statement about how the consumer can make a payment electronically
                (although including such a statement will take the debt collector out
                of the safe harbor in Sec. 1006.34(d)(2)). The Bureau is
                [[Page 5814]]
                finalizing Sec. 1006.34(c)(3)(v) pursuant to its authority to
                interpret FDCPA section 809(a) and (b), as well as its authority under
                Dodd-Frank Act section 1032(a).
                34(c)(3)(vi)
                 The Bureau proposed Sec. 1006.34(c)(3)(vi) to provide that, for a
                validation notice delivered in the body of an email pursuant to
                procedures set forth in the proposal, validation information includes
                the opt-out statement required by Sec. 1006.6(e).\288\ Proposed
                comment 34(c)(3)(vi)-1 clarified certain details, including that the
                requirement would not apply in the case of validation notices delivered
                by hyperlink and that electronic delivery of a validation notice is not
                rendered ineffective if a consumer opts out of future electronic
                communications pursuant to Sec. 1006.6(e).
                ---------------------------------------------------------------------------
                 \288\ As finalized in the November 2020 Final Rule, Sec.
                1006.6(e) requires a debt collector who communicates or attempts to
                communicate with a consumer electronically in connection with the
                collection of a debt using a specific email address, telephone
                number for text messages, or other electronic-medium address to
                include in such communication or attempt to communicate a clear and
                conspicuous statement describing a reasonable and simple method by
                which the consumer can opt out of further electronic communications
                or attempts to communicate by the debt collector to that address or
                telephone number. See 85 FR 76734, 76890 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 Although no commenters objected to proposed Sec.
                1006.34(c)(3)(vi), the Bureau is not finalizing it. The Bureau has
                determined that it is not necessary to require debt collectors to
                include the Sec. 1006.6(e) opt-out instructions on validation notices
                sent electronically because Sec. 1006.6(e) itself already requires
                those instructions in every electronic communication or communication
                attempt, which will includes every electronic communication
                transmitting a validation notice. Thus, Sec. 1006.34(c)(3)(vi) would
                be redundant.
                 A debt collector who sends a validation notice electronically may
                provide the Sec. 1006.6(e) disclosure in the electronic communication
                outside of the validation notice. A debt collector who provides the
                model validation notice electronically will not lose the safe harbor
                described in Sec. 1006.34(d)(2) by including the Sec. 1006.6(e)
                disclosure in the electronic communication outside the model notice.
                Accordingly, the Bureau determines that the Sec. 1006.6(e) opt-out
                disclosure is not necessary to include as validation information.
                Although the Bureau is not finalizing proposed Sec. 1006.34(c)(3)(vi),
                the Bureau reaffirms the clarification in proposed comment
                34(c)(3)(vi)-1 that electronic delivery of a validation notice is not
                rendered ineffective merely because a consumer opts out of future
                electronic communications pursuant to the instructions in Sec.
                1006.6(e).
                34(c)(4) Consumer-Response Information
                 FDCPA section 809(b) contains certain requirements that a debt
                collector must satisfy if a consumer exercises the consumer's right to
                dispute the validity of the debt or request the name and address of the
                original creditor. If a consumer disputes a debt in writing within 30
                days of receiving the validation information, a debt collector must
                stop collection of the debt until the debt collector obtains
                verification of the debt or a copy of a judgment against the consumer
                and mails it to the consumer. Similarly, if a consumer requests the
                name and address of the original creditor in writing within 30 days of
                receiving the validation information, FDCPA section 809(b) requires the
                debt collector to cease collection of the debt until the debt collector
                obtains and mails such information to the consumer. FDCPA section
                809(b) also prohibits a debt collector, during the 30-day period
                consumers have to dispute a debt or request information about the
                original creditor, from engaging in collection activities and
                communications that overshadow, or are inconsistent with, the
                disclosure of the right to dispute the debt or request original-
                creditor information, which the Bureau collectively refers to as
                ``verification rights.''
                 The Bureau proposed Sec. 1006.34(c)(4) to require a consumer-
                response information section to help consumers exercise their FDCPA
                section 809(b) verification rights.\289\ Specifically, proposed Sec.
                1006.34(c)(4) provided that required validation information includes
                certain consumer-response information situated next to prompts that
                consumers could use to indicate that they want to take action or make a
                request. The proposed information, which is discussed in the section-
                by-section analysis of Sec. 1006.34(c)(4)(i) through (iii), included
                statements describing certain actions that a consumer could take,
                including submitting a dispute, identifying the reason for the dispute,
                providing additional detail about the dispute, and requesting original-
                creditor information.\290\ Proposed Sec. 1006.34(c)(4) provided that
                the consumer-response information section must be segregated from the
                validation information described in Sec. 1006.34(c)(1) through (3) and
                from any optional information included pursuant to proposed Sec.
                1006.34(d)(3)(i), (ii), (iv), or (v) and, if the validation information
                is provided in writing or electronically, located at the bottom of the
                notice and under the headings, ``How do you want to respond?'' and
                ``Check all that apply:''. As shown on the proposed model validation
                notice, the consumer-response information section appeared as a tear-
                off portion of the form. Proposed comment 34(c)(4)-1 clarified that, if
                the validation information is provided in writing or electronically, a
                prompt described in Sec. 1006.34(c)(4) may be formatted as a checkbox,
                as shown on the model validation notice.
                ---------------------------------------------------------------------------
                 \289\ 84 FR 23275, 23404 (May 21, 2019).
                 \290\ As discussed in the section-by-section analysis of Sec.
                1006.34(d)(3), proposed Sec. 1006.34(d)(3)(iii)(B) and (vi)(B)
                provided that a debt collector also could include a payment
                disclosure and Spanish-language validation notice request disclosure
                as consumer-response information.
                ---------------------------------------------------------------------------
                 A group of academic commenters expressed general support for
                proposed Sec. 1006.34(c)(4). However, some industry commenters
                objected to the proposed consumer-response information section.
                According to a depository institution, the proposed consumer- response
                information formatted as a tear-off is an obsolete approach because
                physical mail is increasingly less relevant as consumers prefer
                electronic communications. An industry commenter stated that the
                proposed consumer-response information section would encourage
                consumers to communicate through mail, which is more expensive and
                time-intensive than other communication methods, such as email.
                 Several commenters raised concerns about proposed Sec.
                1006.34(c)(4)'s use of the heading ``How do you want to respond?'' A
                group of State Attorneys General and at least one industry commenter
                stated that consumers may incorrectly infer from this phrase that they
                must use the consumer-response information section to respond to a debt
                collector. Some commenters suggested that this phrase created the false
                impression that consumers must engage with the debt collector, even if
                they prefer not to. To address this concern, consumer advocate
                commenters and a group of State Attorneys General recommended that the
                consumer-response information section include ``Do Nothing'' as a
                response option.
                 Some industry trade group commenters objected to proposed Sec.
                1006.34(c)(4) being formatted for use with a return envelope. According
                to these commenters, some debt collectors do not include return
                envelopes with
                [[Page 5815]]
                validation notices and instituting such a practice would entail
                significant costs. However, a consumer group commenter disagreed and
                stated that the Bureau should require debt collectors to include a
                return envelope with prepaid postage to facilitate use of the proposed
                consumer-response information section.
                 After considering comments, the Bureau is adopting Sec.
                1006.34(c)(4) with minor wording changes to conform to changes in Sec.
                1006.34(d).
                 The Bureau acknowledges that electronic communications are
                increasingly prevalent in society at large; however, most debt
                collectors do not presently communicate with consumers electronically,
                particularly to provide validation notices.\291\ Further, many
                consumers still prefer to communicate with debt collectors via mail
                instead of email or other electronic media.\292\ Given communication
                practices in the debt collection industry and consumer preferences, the
                Bureau determines that formatting the model validation notice consumer-
                response information section as a tear-off so that a consumer can
                return that portion of the form by mail if the consumer so chooses will
                benefit both debt collectors and consumers. Thus, if debt collectors
                opt not to format the consumer-response information section as a tear-
                off, the Sec. 1006.34(d)(2) safe harbor will not apply to their
                validation notices.
                ---------------------------------------------------------------------------
                 \291\ See 85 FR 76734, 76852 (Nov. 30, 2020).
                 \292\ According to the CFPB Debt Collection Consumer Survey, 71
                percent of consumers preferred to be contacted by a debt collector
                by mail. Only 12 percent of consumers preferred email. Bureau of
                Consumer Fin. Prot., Consumer Experience with Debt Collection:
                Findings from CFPB's Survey of Consumer Views on Debt, at 29-30
                (Jan. 12, 2017), http://files.consumerfinance.gov/f/documents/201701_cfpb_Debt-Collection-Survey-Report.pdf (CFPB Debt Collection
                Consumer Survey).
                ---------------------------------------------------------------------------
                 The Bureau concludes that the heading ``How do you want to
                respond?'' likely will not lead consumers to believe that they must
                respond to the debt collector or use the consumer-response information
                section to do so. Consumer testing indicated that consumers paid
                relatively little attention to this heading.\293\ Further, consumers
                generally grasped the consequences of not responding to a validation
                notice.\294\ These findings suggest that the heading will not induce
                otherwise unwilling consumers to engage with debt collectors. This
                conclusion is bolstered by findings from the Bureau's most recent
                qualitative consumer testing. The Bureau's consumer testing suggests
                that consumers understand that they have the option of not engaging
                with a debt collector in response to a validation notice.\295\ This
                testing also indicates that consumers understand that, if they choose
                to communicate with a debt collector, they do not have to use the
                consumer-response information section to do so.\296\ The Bureau
                therefore determines that it is unnecessary to include a ``Do Nothing''
                response option, as some commenters suggested.
                ---------------------------------------------------------------------------
                 \293\ ``The `You Have Rights' and `How do you want to respond to
                this notice?' sections had a comparatively low number of fixations
                (i.e., a testing participant's eyes resting on a piece of
                information) compared to other parts of the notice. These two
                sections were often discussed during the interview as being
                important so the fewer number of fixations suggests that this
                information might have been easy to read and comprehend.
                Participants also commented that these sections only needed to be
                scanned, further suggesting that fewer fixations on this section
                might have been due to ease of processing the information rather
                than a disinterest in the information. See FMG Usability Report,
                supra note 28, at 7.
                 \294\ See id. at 83-84.
                 \295\ When asked about whether they were legally required
                respond to the model validation notice, approximately 90 percent of
                participants reported that they were not. See November 2020
                Qualitative Testing Report, supra note 34, at 11.
                 \296\ During testing, participants generally understood that
                they could dispute the debt by telephone, electronically, or writing
                with or without the ``tear-off.'' See id. at 15.
                ---------------------------------------------------------------------------
                 The consumer-response information section should be formatted for
                use with a return envelope. The fact that the consumer-response
                information established by Sec. 1006.34(c)(4) is formatted on the
                model validation notice for use with a return envelope does not require
                debt collectors to include return envelopes with validation notices,
                even if they use the model notice.
                 Accordingly, the Bureau is finalizing Sec. 1006.34(c)(4) with
                minor wording changes to conform to changes in Sec. 1006.34(d). The
                Bureau also is finalizing Sec. 1006.34(c)(4)(i) through (iii) and
                their related commentary with certain modifications that are discussed
                in the section-by-section analysis below.
                 The Bureau is finalizing Sec. 1006.34(c)(4) pursuant to its
                authority under FDCPA section 814(d) to prescribe rules with respect to
                the collection of debts by debt collectors and, as described more fully
                below, its authority to implement and interpret FDCPA section 809. The
                Bureau is also finalizing Sec. 1006.34(c)(4) pursuant to its authority
                under section 1032(a) of the Dodd-Frank Act, on the basis that the
                information in Sec. 1006.34(c)(4)(i) through (iii) informs consumers
                how to exercise their rights under FDCPA section 809(b) and therefore
                is a feature of debt collection. Requiring disclosure of consumer-
                response information will help to ensure that the features of debt
                collection are fully, accurately, and effectively disclosed to
                consumers, such that consumers may better understand the costs,
                benefits and risks associated with debt collection.
                34(c)(4)(i) Dispute Prompts
                 FDCPA section 809(a)(4) requires a debt collector to disclose to
                consumers their right under FDCPA section 809(b) to dispute the
                validity of the debt within 30 days after receipt of the validation
                notice.\297\ Proposed Sec. 1006.34(c)(4)(i) provided that consumer-
                response information includes statements, situated next to prompts,
                that the consumer can use to dispute the validity of a debt and to
                specify a reason for that dispute.\298\ Proposed Sec.
                1006.34(c)(4)(i), which was designed to work in tandem with Sec.
                1006.34(c)(3)(i),\299\ provided that consumer-response information
                includes the following four statements, listed in the following order,
                using the following phrasing or substantially similar phrasing, each
                next to a prompt: ``I want to dispute the debt because I think:'';
                ``This is not my debt.''; ``The amount is wrong.''; and ``Other:
                (please describe on reverse or attach additional information).''
                ---------------------------------------------------------------------------
                 \297\ 15 U.S.C. 1692g(a)(4).
                 \298\ 84 FR 23274, 23404-05 (May 21, 2019).
                 \299\ As finalized, Sec. 1006.34(c)(3)(i) provides that
                validation information includes the date the debt collector will
                consider the end date of the validation period and a statement that,
                if the consumer notifies the debt collector in writing on or before
                that date that the debt, or any portion of the debt, is disputed,
                the debt collector must cease collection of the debt, or the
                disputed portion of the debt, until the debt collector sends the
                consumer either the verification of the debt or a copy of a
                judgment.
                ---------------------------------------------------------------------------
                 A group of academic commenters and some consumer advocate
                commenters supported the dispute prompts described in proposed Sec.
                1006.34(c)(4)(i). The academic commenters stated that the prompts would
                facilitate consumer disputes because consumers are accustomed to using
                forms with prompts, such as drop-down menus in online transactions.
                According to these commenters, the Bureau should facilitate consumer
                disputes given the low consumer literacy levels in the United States--
                particularly among consumers with limited English proficiency (LEP
                consumers)--and the FDCPA's least-sophisticated-consumer standard.\300\
                These commenters stated
                [[Page 5816]]
                that facilitating disputes will also benefit industry because consumer
                disputes may lead to questionable or invalid debts being removed from
                the market.
                ---------------------------------------------------------------------------
                 \300\ See, e.g., Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d
                Cir. 2008) (``We use the `least sophisticated debtor' standard in
                order to effectuate the basic purpose of the FDCPA: to protect all
                consumers, the gullible as well as the shrewd.'') (citations and
                some internal quotation marks omitted); Clomon v. Jackson, 988 F.2d
                1314, 1319 (2d Cir. 1993) (``To serve the purposes of the consumer-
                protection laws, courts have attempted to articulate a standard for
                evaluating deceptiveness that does not rely on assumptions about the
                `average' or `normal' consumer. This effort is grounded, quite
                sensibly, in the assumption that consumers of below-average
                sophistication or intelligence are especially vulnerable to
                fraudulent schemes. The least-sophisticated-consumer standard
                protects these consumers in a variety of ways.'').
                ---------------------------------------------------------------------------
                 Other commenters objected to proposed Sec. 1006.34(c)(4)(i).
                Industry trade group commenters stated that the proposed dispute
                prompts would increase dispute volume and, consequently, debt
                collectors would incur additional costs responding to disputes.
                Industry commenters stated that higher dispute volumes would overwhelm
                debt collectors, making it difficult to identify and process valid
                disputes. Industry and industry trade group commenters stated that the
                proposed dispute prompts would lead consumers to believe that they had
                to dispute the debt, even if they recognized the debt as valid.
                Industry and industry trade groups argued that streamlining the dispute
                process would encourage frivolous disputes. One industry trade group
                stated that requiring a lawyer engaged in debt collection to include
                the proposed dispute prompts on a validation notice would constitute
                providing legal advice to unrepresented persons, which is a violation
                of attorney rules of professional conduct.
                 Industry and industry trade group commenters stated the proposed
                dispute prompts would not solicit enough information for debt
                collectors to evaluate disputes. According to commenters, the proposed
                dispute prompts are too general and would result in generic disputes
                that would increase compliance costs, frustrate dispute investigation,
                undermine consumer communication, and increase litigation risk. To
                address these concerns, commenters recommended modifications to
                proposed Sec. 1006.34(c)(4)(i). Some commenters suggested that the
                validation notice provide additional space where a consumer could
                include additional dispute detail, update contact information, or
                provide communication preferences. Other commenters recommended
                replacing the proposed dispute prompts with narrative instructions that
                solicit dispute detail and supporting documentation.
                 As discussed in the section-by-section analysis of Sec.
                1006.34(c)(2)(i), commenters stated that some debt collectors receive
                payments and other correspondence, including disputes, at separate
                addresses. Industry commenters stated that proposed Sec.
                1006.34(c)(4)(i) would effectively combine a dispute form with a
                payment coupon. According to commenters, a consumer's dispute may not
                be processed in a timely fashion if a consumer returns a consumer-
                response information form with a dispute to a dedicated payment
                address.
                 Several consumer advocate commenters recommended combining the
                proposed dispute prompts into a single prompt. According to these
                commenters, a single dispute prompt would be appropriate because the
                FDCPA does not require a consumer to specify a reason for a dispute and
                a consumer may make unintentional admissions against their interest by
                providing details.
                 Some commenters suggested additional dispute-related prompts.
                Consumer advocate commenters recommended prompts for debts discharged
                in bankruptcy, debts resulting from identity theft, and debts that were
                previously paid or settled. Industry commenters urged the Bureau to add
                a general account inquiry prompt. According to one industry commenter,
                consumers with an account inquiry may perceive that they have no
                alternative but to select a dispute prompt if proposed Sec.
                1006.34(c)(4)(i) does not include a general account inquiry prompt.
                 An industry commenter asked for additional guidance about how the
                proposed dispute prompts should be formatted when validation
                information is provided on a website.
                 Consistent with the rationale discussed in the proposal and for the
                following reasons, the Bureau is adopting proposed Sec.
                1006.34(c)(4)(i).
                 The Bureau determines that Sec. 1006.34(c)(4)(i) will help
                consumers exercise their FDCPA section 809 dispute rights, in part
                because prompts are a common feature in written and electronic
                communications and most consumers are familiar with the concept. The
                Bureau determines that facilitating consumer disputes under FDCPA
                section 809 is beneficial, particularly for less sophisticated
                consumers. Further, to the extent consumer disputes help remove invalid
                debts from circulation, Sec. 1006.34(c)(4)(i) will improve the
                efficiency of debt markets.
                 It is also not clear that finalizing the dispute prompts will
                result in a significant increase in consumer disputes compared to
                current dispute rates. Section 1006.34(c)(2) will require debt
                collectors to disclose more information about the debt and will help
                consumers recognize debts they owe. Thus, Sec. 1006.34(c)(2) may
                reduce the number of disputes arising from lack of consumer
                recognition.
                 The Bureau disagrees that Sec. 1006.34(c)(4)(i) will make it more
                difficult for debt collectors to identify and process valid disputes.
                As noted above, Sec. 1006.34(c)(2) should reduce the number of
                disputes arising from lack of consumer recognition. Therefore, the
                disputes debt collectors receive will be more likely to reflect
                problems with the underlying debt. Further, Sec. 1006.34(c)(4)(i)'s
                dispute prompts--including Sec. 1006.34(c)(4)(i)(D)'s free-form
                dispute prompt--may help consumers articulate and provide more detailed
                information about the nature of their disputes. Thus, debt collectors
                may better understand the nature of a consumer's dispute and be able to
                respond more efficiently than if consumers had provided generic
                disputes.
                 Further, dispute prompts likely will not lead consumers to believe
                that they must dispute the debt. The Bureau's consumer testing
                indicates that consumers who receive a validation notice understand
                that they are not required to dispute a debt.\301\ Further, the Bureau
                disagrees that streamlining the dispute process will significantly
                increase the frequency of frivolous disputes. As discussed in the
                section-by-section analysis of Sec. 1006.34(c)(3)(i) and (v), debt
                collectors have not provided evidence that supports the premise that a
                significant number of consumers exercise their FDCPA section 809
                verification rights solely to evade or avoid paying debts that they
                owe. Absent such evidence, the Bureau declines to conclude that
                consumers will dispute for such purposes.
                ---------------------------------------------------------------------------
                 \301\ During one round of testing, approximately 50 percent of
                participants stated that they would attempt to ``confirm'' a debt in
                response to receiving a validation notice. Participants stated that
                they would do so by, for example, contacting either the creditor or
                the debt collector. Participants did not report that they would
                dispute solely for the purposes of confirming the details of the
                debt. See November 2020 Qualitative Testing Report, supra note 34,
                at 11.
                ---------------------------------------------------------------------------
                 The Bureau determines that requiring debt collectors who are
                attorneys to include dispute prompts in the consumer-response
                information will not cause those debt collectors to violate the
                professional rule of conduct against providing legal advice to an
                unrepresented person.\302\ The FDCPA
                [[Page 5817]]
                requires all debt collectors, including debt collectors who are
                attorneys, to include in the validation information statements relating
                to the consumer's right to dispute the debt. The dispute prompt merely
                provides consumers a simple way to exercise that right if the consumer
                so chooses; it does not advise the consumer whether to do so. In
                addition, the commenter that raised this concern cited no case law,
                legal interpretation, or comparable evidence to support the proposition
                that including the dispute prompt will be problematic.
                ---------------------------------------------------------------------------
                 \302\ See Am. Bar Ass'n, Model Rules of Professional Conduct,
                Rule 4.3: Dealing with Unrepresented Person https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_4_3_dealing_with_unrepresented_person/ (last visited Dec. 2,
                2020).
                ---------------------------------------------------------------------------
                 The Bureau is not modifying Sec. 1006.34(c)(4)(i) to provide
                additional space for consumers to provide dispute details or to replace
                the dispute prompts with narrative instructions. As discussed above,
                the Bureau finds that it is unlikely that Sec. 1006.34(c)(4)(i) will
                increase generic dispute volume. On the contrary, the dispute prompts--
                including the free-form dispute prompt in Sec. 1006.34(c)(4)(i)(D)--
                will provide debt collectors with more detailed dispute information
                than they receive in many cases today. Further, the free-form dispute
                prompt informs consumers that they can provide additional information
                on the reverse of the consumer-response-information section (which is
                formatted as a tear-off on the model validation notice) or on a
                separate page. Thus, there is no need to provide additional space for
                dispute detail on the validation notice itself.
                 Section 1006.34(c)(4)(i) will not lead to disputes being
                misdirected to dedicated payment addresses. As discussed in the
                section-by-section analysis of Sec. 1006.34(c)(4)(iii), the debt
                collector must disclose in the consumer-response information section
                the same mailing address disclosed pursuant to Sec. 1006.34(c)(2)(i),
                which is the mailing address where the debt collector accepts disputes
                and requests for original-creditor information.
                 The Bureau declines to structure Sec. 1006.34(c)(4)(i) as a single
                dispute prompt. As discussed above, the dispute prompts are designed to
                help consumers articulate, and debt collectors better understand, the
                nature of a consumer's dispute and respond more efficiently than if
                consumers had provided generic disputes. Reformulating Sec.
                1006.34(c)(4)(i) as a single prompt would undermine this goal.
                Meanwhile, the dispute prompts described in Sec. 1006.34(c)(4)(i) do
                not contain individualized information that could reasonably result in
                a consumer making an unintentional admission against their interest.
                 The Bureau declines to adopt additional dispute-related prompts.
                Additional prompts for debts discharged in bankruptcy, debts resulting
                from identity theft, and debts that were previously paid or settled
                are, in the aggregate, not feasible and would likely overwhelm
                consumers. Further, the Bureau believes the dispute prompts in Sec.
                1006.34(c)(4)(i)(B) (this is not my debt) and (C) (the amount is wrong)
                essentially capture these scenarios.
                 The Bureau also declines to add a general account inquiry prompt
                distinct from the dispute prompt, as suggested by some commenters who
                argued that consumers would use the dispute prompts to obtain general
                information. The Bureau's testing has shown that consumers generally
                understand that their response options are not limited to selecting a
                dispute prompt and that disputing the debt is not the appropriate
                method to raise a general question about the account.\303\
                ---------------------------------------------------------------------------
                 \303\ During usability testing, when participants were asked
                what they could do if they did not think they owed the debt, ``all
                participants understood that they had options for contacting the
                debt collector to dispute the debt,'' which included calling and
                writing. FMG Usability Report, supra note 28, at 48. See also
                November 2020 Qualitative Testing Report, supra note 34, at 11
                (discussion in ``Response to the model validation notice'' section).
                ---------------------------------------------------------------------------
                 The Bureau declines to provide additional guidance about formatting
                the dispute prompts if validation information is provided on a website.
                As discussed in the November 2020 Final Rule, the Bureau did not
                finalize several proposed interventions related to electronic delivery
                of required notices, including proposed alternative procedures for
                providing the validation information on a secure website (proposed
                Sec. 1006.42(c)(2)(ii)).\304\ Because the Bureau is not addressing
                electronic delivery more broadly, the Bureau declines here to provide
                guidance about disclosing validation information on websites. However,
                as discussed in the section-by-section analysis of Sec. 1006.34(d)(2),
                in contrast to the proposal, debt collectors are not required to use
                the model validation notice or a substantially similar form.
                ---------------------------------------------------------------------------
                 \304\ 85 FR 76734, 76850-55 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 Accordingly, the Bureau is finalizing proposed Sec.
                1006.34(c)(4)(i) pursuant to its authority to implement and interpret
                FDCPA section 809, as well as its authority under Dodd-Frank Act
                section 1032(a).
                34(c)(4)(ii) Original-Creditor Information Prompt
                 FDCPA section 809(a)(5) requires a debt collector to disclose to
                consumers their right under FDCPA section 809(b) to request the name
                and address of the original creditor, if different from the current
                creditor.\305\ Proposed Sec. 1006.34(c)(4)(ii) provided that consumer-
                response information includes the statement, ``I want you to send me
                the name and address of the original creditor,'' using that phrase or a
                substantially similar phrase, next to a prompt the consumer could use
                to request original-creditor information.\306\ Proposed Sec.
                1006.34(c)(4)(ii) was intended to work in tandem with proposed Sec.
                1006.34(c)(3)(ii).\307\ The Bureau received no comments specifically
                addressing proposed Sec. 1006.34(c)(4)(ii) and is finalizing it as
                proposed.
                ---------------------------------------------------------------------------
                 \305\ 15 U.S.C. 1692g(a)(5).
                 \306\ 84 FR 23274, 23405 (May 21, 2019).
                 \307\ As finalized, Sec. 1006.34(c)(3)(ii) provides that
                validation information includes the date that the debt collector
                will consider the end date of the validation period and a statement
                that, if the consumer requests in writing on or before that date the
                name and address of the original creditor, the debt collector must
                cease collection of the debt until the debt collector sends the
                consumer the name and address of the original creditor, if different
                from the current creditor.
                ---------------------------------------------------------------------------
                34(c)(4)(iii)
                 FDCPA section 809(b) assumes that a consumer has the ability to
                write to a debt collector to exercise the consumer's verification
                rights.\308\ Requiring a debt collector to include mailing addresses
                for the consumer and the debt collector, along with the consumer-
                response information described in Sec. 1006.34(c)(4)(i) and (ii), may
                facilitate a consumer's ability to exercise the consumer's verification
                rights. The Bureau proposed Sec. 1006.34(c)(4)(iii) to provide that
                consumer-response information includes mailing addresses for the
                consumer and the debt collector.\309\
                ---------------------------------------------------------------------------
                 \308\ See 15 U.S.C. 1692g(b).
                 \309\ 84 FR 23274, 23405 (May 21, 2019).
                ---------------------------------------------------------------------------
                 An industry trade group stated that some debt collectors use
                vendors to receive and process mail from consumers. According to this
                commenter, the Bureau should permit a debt collector to disclose the
                address at which a debt collector receives mail, even if that address
                is not the debt collector's physical address.
                 The Bureau is finalizing Sec. 1006.34(c)(4)(iii) with a clarifying
                revision that addresses the commenter's request regarding letter vendor
                mailing addresses. The Bureau is revising Sec. 1006.34(c)(4)(iii) to
                provide that the mailing addresses disclosed for the consumer and the
                debt collector in the consumer-response information must include the
                debt collector's and the
                [[Page 5818]]
                consumer's names and mailing addresses as disclosed pursuant to Sec.
                1006.34(c)(2)(i) and (ii). In turn, the Bureau notes that final Sec.
                1006.34(c)(2)(i) and comment 34(c)(2)(i)-2 permit debt collectors to
                disclose a vendor's mailing address, if that is an address at which the
                debt collector accepts disputes and requests for original-creditor
                information. Thus, under the final rule, a debt collector may include a
                vendor's address in the consumer-response information if that is the
                address that the debt collector discloses pursuant to Sec.
                1006.34(c)(2)(i).
                 The Bureau notes that final Sec. 1006.34(c)(2)(i) and comment
                34(c)(2)(i)-1 permit a debt collector to disclose its trade name or
                DBA, instead of its legal name. Thus, under the final rule, a debt
                collector must disclose its trade name or DBA in the consumer-response
                information if that is the name that the debt collector discloses
                pursuant to Sec. 1006.34(c)(2)(i).
                34(c)(5) Special Rule for Certain Residential Mortgage Debt
                 FDCPA section 809(a)(1) requires a debt collector to disclose to
                consumers the amount of the debt.\310\ As discussed in the section-by-
                section analysis of Sec. 1006.34(c)(2)(vi) through (viii), the Bureau
                interprets FDCPA section 809(a)(1) to require debt collectors to
                disclose three pieces of itemization-related information: The
                itemization date; the amount of the debt on the itemization date; and
                an itemization of the debt reflecting interest, fees, payments, and
                credits since the itemization date.
                ---------------------------------------------------------------------------
                 \310\ 15 U.S.C. 1692g(a)(1).
                ---------------------------------------------------------------------------
                 For certain residential mortgage debt covered by TILA, as
                implemented by Regulation Z, 12 CFR 1026, 12 CFR 1026.41(b) generally
                requires that a periodic statement be delivered or placed in the mail
                within a reasonably prompt time after the payment due date or the end
                of any courtesy period provided for the previous billing cycle. The
                Bureau understands that most residential mortgage debt is subject to
                this requirement, although exceptions exist.\311\ The Bureau further
                understands that a consumer is provided with such a periodic statement
                every billing cycle, even if a loan is transferred between servicers.
                Pursuant to 12 CFR 1026.41(d)(3), such a periodic statement must
                include a past payment breakdown, which shows the total of all payments
                received since the last statement, including a breakdown showing the
                amount, if any, that was applied to principal, interest, escrow, fees,
                and charges, and the amount, if any, sent to any suspense or unapplied
                funds account. The proposal stated that these periodic statement
                disclosures may be functionally equivalent to, and as useful for the
                consumer as, the information described in proposed Sec.
                1006.34(c)(2)(vii) through (ix).\312\
                ---------------------------------------------------------------------------
                 \311\ The periodic statement requirement pursuant to 12 CFR
                1026.41(b) does not apply to open-end consumer credit transactions,
                such as a home equity line of credit. See 12 CFR 1026.41(a)(1).
                Pursuant to 12 CFR 1026.41(e), certain types of transactions are
                exempt from Sec. 1026.41(b)'s periodic statement requirement,
                including reverse mortgages, timeshare plans, certain charged-off
                mortgage loans, mortgage loans with certain consumers in bankruptcy,
                and fixed-rate mortgage loans where a servicer provides the consumer
                with a coupon book for payment. Further, small servicers as defined
                by 12 CFR 1026.41(e)(4)(ii) are exempt from the periodic statement
                requirement.
                 \312\ 84 FR 23274, 23348 (May 21, 2019).
                ---------------------------------------------------------------------------
                 Proposed Sec. 1006.34(c)(5) therefore provided that, for debts
                subject to Regulation Z, 12 CFR 1026.41, a debt collector need not
                provide the validation information described in Sec.
                1006.34(c)(2)(vii) through (ix) if the debt collector provided the
                consumer, at the same time as the validation notice, a copy of the most
                recent periodic statement provided to the consumer under 12 CFR
                1026.41(b), and referred to that periodic statement in the validation
                notice. Proposed comment 34(c)(5)-1 provided examples clarifying how
                debt collectors could comply with Sec. 1006.34(c)(5). Consistent with
                the proposal's rationale, and for the reasons discussed below, the
                Bureau is adopting Sec. 1006.34(c)(5) and its related commentary with
                a substantive modification and a clarification.
                 Some commenters recommended that the Bureau expand proposed Sec.
                1006.34(c)(5) to cover additional debt types. An industry trade group
                commenter stated that the Bureau should revise proposed Sec.
                1006.34(c)(5) to apply to all residential mortgage debt, including to
                transactions that are exempt from Sec. 1026.41(b)'s periodic statement
                requirement, such as mortgage loans with certain consumers in
                bankruptcy. As discussed in detail in the section-by-section analysis
                of Sec. 1006.34(c)(2)(viii), the Bureau received feedback that its
                proposed itemization would be incompatible with the account
                characteristics of debts in bankruptcy. Thus, this commenter suggested
                that the Bureau should revise proposed Sec. 1006.34(c)(5) to permit a
                debt collector to reference the consumer's bankruptcy case and the
                filed or pending proof of claim instead of providing the itemization-
                related disclosures required by Sec. 1006.34(c)(2). Other industry
                trade group commenters variously recommended that the special rule
                extend to reverse mortgages structured as open-end credit, home-equity
                lines of credit, and credit cards.
                 A consumer advocate commenter recommended that the Bureau revise
                proposed Sec. 1006.34(c)(5) to apply only to debts that are currently
                subject to Regulation Z, 12 CFR 1026.41, to reduce the likelihood that
                a debt collector provides an outdated periodic statement. According to
                the commenter, TILA coverage is fluid and a significant amount of time
                can elapse between when the creditor provides a last periodic statement
                and when the debt collector provides a validation notice. This
                commenter recommended that the Bureau revise proposed Sec.
                1006.34(c)(5) to provide that the previous periodic statement must have
                been provided no more than 31 days before the validation notice is
                sent. The commenter also recommended that, if any entity other than the
                current servicer provided the most recent periodic statement, the debt
                collector must conduct a reasonable investigation to verify the
                accuracy of the prior entity's periodic statement or prepare its own
                periodic statement.
                 The Bureau declines to expand Sec. 1006.34(c)(5) to cover
                additional debt types. For certain residential mortgage debt, the final
                rule permits debt collectors to provide a periodic statement that was
                provided under 12 CFR 1026.41(d)(3) in lieu of the information
                described in final Sec. 1006.34(c)(2)(vi) through (viii) because those
                periodic statement disclosures are functionally equivalent to, and as
                useful for the consumer as, that itemization information. This special
                rule is not appropriate for the additional debt types recommended by
                commenters because those debt types are not subject to prescriptive
                disclosure regimes, such as Regulation Z. The Bureau doubts that
                disclosures used for those other debt types relate to information that
                is functionally equivalent to, or as useful as, the information Sec.
                1006.34(c)(2)(vi) through (viii) requires. For instance, mortgage loans
                with certain consumers in bankruptcy are exempt from Sec. 1026.41(b)'s
                periodic statement requirement.\313\ With respect to debts in
                bankruptcy in general, the Bankruptcy Code does not prescribe
                disclosure requirements for proofs of claim that are comparable to
                Regulation Z, 12 CFR 1026.41(d)(3). As discussed in the section-by-
                section analysis of Sec. 1006.34(c)(2)(ix), reverse mortgages are not
                subject to prescriptive regulatory requirements for periodic
                statements. The periodic statement requirement in 12 CFR 1026.41(b)
                does not cover open-end consumer credit transactions,
                [[Page 5819]]
                including home-equity lines of credit.\314\ With respect to credit card
                debt, no special accommodation is necessary as debt collectors can
                readily disclose the itemization information pursuant to Sec.
                1006.34(c)(2)(vi) through (viii).
                ---------------------------------------------------------------------------
                 \313\ See 12 CFR 1026.41(e).
                 \314\ See 12 CFR 1026.41(a)(1).
                ---------------------------------------------------------------------------
                 The Bureau determines that Sec. 1006.34(c)(5) should apply only to
                debts that are currently subject to Regulation Z, 12 CFR 1026.41.
                Modifying the proposal to this effect is appropriate to reduce the
                likelihood that a debt collector provides an outdated periodic
                statement, which may not provide information that is functionally
                equivalent to, or as useful as, the information described in Sec.
                1006.34(c)(2)(vi) through (viii). The Bureau therefore is revising
                proposed Sec. 1006.34(c)(5) and its related commentary to provide that
                the special rule only applies to residential mortgage debt if a
                periodic statement is required under Regulation Z, 12 CFR 1026.41, at
                the time a debt collector provides the validation notice.\315\
                ---------------------------------------------------------------------------
                 \315\ Under Sec. 1006.34(d)(2)(ii), a debt collector who uses
                the model validation notice and who also uses the special rule for
                certain residential mortgage debt under Sec. 1006.34(c)(5) receives
                a safe harbor for use of the model notice except with respect to the
                disclosures that appear on the separate page.
                ---------------------------------------------------------------------------
                 Accordingly, the Bureau is finalizing Sec. 1006.34(c)(5) as
                described above and is finalizing comment 34(c)(5)-1 with minor
                revisions for clarity and consistency with provisions of the final
                rule.
                34(d) Form of Validation Information
                34(d)(1) In General
                 The Bureau proposed Sec. 1006.34(d)(1)(i) to require that the
                validation information described in Sec. 1006.34(c) be conveyed in a
                clear and conspicuous manner. The Bureau reasoned that FDCPA section
                809(a)'s required disclosures would be ineffective unless a debt
                collector disclosed them in a manner that was readily understandable to
                consumers.\316\ The Bureau received no comments specifically addressing
                proposed Sec. 1006.34(d)(1)(i). The Bureau therefore is finalizing it
                largely as proposed but renumbered as Sec. 1006.34(d)(1) \317\ and
                with a wording change solely for consistency with final Sec.
                1006.34(c). The Bureau adopts Sec. 1006.34(d)(1) to implement and
                interpret FDCPA section 809(a) and pursuant to its authority under
                FDCPA section 814(d) to prescribe rules with respect to the collection
                of debts by debt collectors. The Bureau also adopts Sec. 1006.34(d)(1)
                pursuant to its authority under section 1032(a) of the Dodd-Frank Act
                to prescribe rules to ensure that the features of consumer financial
                products and services are disclosed fully, accurately, and effectively.
                The Bureau finalizes this requirement on the basis that validation
                information is a feature of debt collection and this information must
                be readily understandable to be effectively and accurately disclosed.
                ---------------------------------------------------------------------------
                 \316\ 84 FR 23274, 23348 (May 21, 2019). Section 1006.34(b)(1)
                defines clear and conspicuous, and the Bureau responded to comments
                on that definition in the section-by-section analysis of Sec.
                1006.34(b)(1).
                 \317\ As discussed under the heading Proposed Provision Not
                Finalized in this section-by-section analysis, the Bureau is not
                finalizing proposed Sec. 1006.34(d)(1)(ii) and therefore is
                finalizing proposed Sec. 1006.34(d)(1)(i) as Sec. 1006.34(d)(1).
                ---------------------------------------------------------------------------
                Proposed Provision Not Finalized
                 As noted at the outset of the section-by-section analysis of Sec.
                1006.34, the Bureau proposed that debt collectors could use the model
                validation notice to comply with the disclosure requirements proposed
                in Sec. 1006.34(a)(1)(i) and (d)(1).\318\ In turn, the Bureau proposed
                Sec. 1006.34(d)(1)(ii) to require that, if provided in a validation
                notice, the content, format, and placement of the validation
                information in Sec. 1006.34(c) and the optional disclosures in Sec.
                1006.34(d)(3) must be substantially similar to the model validation
                notice. Proposed comment 34(d)(1)(ii)-1 explained that a debt collector
                could make certain changes as long as the resulting disclosures were
                substantially similar to the model validation notice, and it provided
                an example of a change that debt collectors may make to the validation
                notice if the consumer is deceased.
                ---------------------------------------------------------------------------
                 \318\ As discussed in the section-by-section analysis of Sec.
                1006.34(d)(1), the Bureau proposed Sec. 1006.34(d)(1)(i) to require
                that required validation information be provided in a clear and
                conspicuous manner.
                ---------------------------------------------------------------------------
                 While some industry, industry trade group, and consumer advocate
                commenters supported proposed Sec. 1006.34(d)(1)(ii), other industry
                and industry trade group commenters raised concerns that the proposed
                model validation notice would not accommodate all debt types and debt
                collection practices, suggesting that some debt collectors therefore
                would be unable to comply with proposed Sec. 1006.34(d)(1)(ii). At
                least two commenters, including a debt buyer specializing in medical
                debt, stated that the proposed model validation notice was not well-
                suited for non-financial debts, such as medical debts. A number of
                commenters objected to the proposal because it would not allow debt
                collectors to combine multiple debts in a single validation notice or
                place multiple validation notices in one envelope. Commenters asked the
                Bureau to modify proposed Sec. 1006.34(d)(1)(ii) to provide debt
                collectors more flexibility to customize validation notices to
                accommodate their business practices and the types of debts they
                collect.
                 As discussed in the section-by-section analysis of Sec.
                1006.34(d)(2), the Bureau has determined that a model validation notice
                will benefit consumers and industry. However, based in part on feedback
                from commenters, the Bureau also has determined that proposed Sec.
                1006.34(d)(1)(ii) was overly prescriptive. Proposed Sec.
                1006.34(d)(1)(ii) would have required any validation notice provided by
                a debt collector to be substantially similar to the model validation
                notice. Such a requirement could cause some debt collectors to face
                undue compliance challenges depending on their business practices and
                the types of debts they collect.
                 For this reason, the Bureau is not finalizing proposed Sec.
                1006.34(d)(1)(ii) and its related commentary. Instead, as discussed in
                the section-by-section analysis of Sec. 1006.34(d)(2), the Bureau is
                adopting a more flexible framework in which debt collectors need not
                use either the model validation notice, specified variations of the
                model notice, or a substantially similar form, but debt collectors who
                do so will receive a safe harbor for compliance with the information
                and form requirements of Sec. 1006.34(c) and (d)(1).\319\ This
                flexible framework is more consistent with model form safe harbors in
                other consumer financial regulations.\320\ The Bureau determines that
                this new framework will accommodate industry without significantly
                increasing risks to consumers because the Bureau believes it is likely
                that, if possible, debt collectors will use the model validation
                notice, specified variations of the model notice, or a substantially
                similar form to receive the compliance safe harbor. The Bureau notes
                that a debt collector who provides the validation information in a form
                that is not substantially similar either to the model validation notice
                or to a specified variation of the model notice also is subject to the
                FDCPA section 807 prohibition on false or misleading representations
                and the FDCPA section 809(b) prohibition on overshadowing.
                ---------------------------------------------------------------------------
                 \319\ The Bureau is relocating and repurposing some of the
                proposed text of Sec. 1006.34(d)(1)(ii) and comment 34(d)(1)(ii)-1
                to Sec. 1006.34(d)(2). See the section-by-section analysis of Sec.
                1006.34(d)(2).
                 \320\ 15 U.S.C. 1601 et seq.
                ---------------------------------------------------------------------------
                [[Page 5820]]
                34(d)(2) Safe Harbor
                 As discussed, the Bureau proposed Sec. 1006.34(d)(2) to provide,
                pursuant to its authority under Dodd-Frank Act section 1032(b), that a
                debt collector who uses the model validation complies with the
                disclosure requirements of Sec. 1006.34(a)(1)(i) and (d)(1).\321\
                Proposed comment 34(d)(2)-1 provided certain details regarding use of
                the model validation notice. Under proposed Sec. 1006.34(d)(2) and as
                explained in proposed comment 34(d)(2)-1, although use of the model
                validation notice was not required, debt collectors would have received
                a safe harbor for compliance only if they used the model validation
                notice. Under proposed Sec. 1006.34(d)(2), debt collectors would not
                have received a safe harbor if they used a form that was substantially
                similar to the model validation notice.
                ---------------------------------------------------------------------------
                 \321\ 84 FR 23274, 23405 (May 21, 2019). As discussed elsewhere
                in part V, proposed Sec. 1006.34(a)(1)(i) provided that debt
                collectors must send validation notices containing the information
                described in proposed Sec. 1006.34(c) to consumers in a manner
                permitted by Sec. 1006.42 (i.e., in a manner reasonably expected to
                provide actual notice and in a form that the consumer may keep and
                access later). And proposed Sec. 1006.34(d)(1) provided that debt
                collectors must provide such validation information clearly and
                conspicuously.
                ---------------------------------------------------------------------------
                 As discussed below, the Bureau is finalizing proposed Sec.
                1006.34(d)(2) and comment 34(d)(2)-1 with significant revisions to,
                among other things, provide that debt collectors may obtain a safe
                harbor for compliance with the validation information disclosure
                requirements by using either the model validation notice, specified
                variations of the model notice, or a substantially similar form. The
                Bureau is finalizing new commentary to provide additional details
                regarding the revised safe harbor framework.
                 Industry and industry trade group commenters overall supported
                providing a safe harbor to debt collectors who use the model validation
                notice. An industry and an industry trade group commenter stated that a
                safe harbor would reduce frivolous litigation and compliance costs. An
                industry commenter stated that not requiring debt collectors to use the
                model validation notice would help to ensure that debt collectors can
                provide validation notices in a manner consistent with their business
                practices and the debt types they collect.
                 Some industry commenters asked the Bureau to specify what optional
                disclosures could be added to the model notice. A number of industry
                and industry trade group commenters also asked the Bureau to further
                clarify what changes debt collectors could make to the model validation
                notice and still receive the safe harbor.
                 Relatedly, some industry and industry trade group commenters asked
                the Bureau to clarify the meaning of ``substantially similar,'' and two
                industry trade group commenters recommended that the Bureau adopt
                Regulation Z's definition of substantially similar. Some industry and
                industry trade group commenters recommended that the Bureau expand
                Sec. 1006.34(d)(2) to provide that debt collectors who use the model
                validation notice comply with FDCPA section 807's prohibition on false
                or misleading statements and FDCPA section 809(b)'s overshadowing
                prohibition.\322\
                ---------------------------------------------------------------------------
                 \322\ See 15 U.S.C. 1692e; see also 15 U.S.C. 1692g(b) (``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.'').
                ---------------------------------------------------------------------------
                 A group of consumer advocate commenters stated that proposed Sec.
                1006.34(d)(2) was too broad. Specifically, according to the commenter,
                the safe harbor's cross-reference to Sec. 1006.34(a)(1)(i) was
                overbroad because simply using the model validation notice does not
                mean that the debt collector sent the validation notice in an initial
                communication or within five days of the initial communication as
                required by Sec. 1006.34(a)(1)(i). This commenter recommended that the
                Bureau remove the reference to Sec. 1006.34(a)(1)(i) from Sec.
                1006.34(d)(2).
                 After considering this feedback, and to clarify each of the ways in
                which a debt collector may receive a safe harbor for compliance with
                the final rule's validation information disclosure requirements, the
                Bureau is finalizing Sec. 1006.34(d)(2) and its related commentary
                with significant revisions, as follows.
                34(d)(2)(i) In General
                 First, the Bureau is finalizing Sec. 1006.34(d)(2)(i) to provide
                that, as proposed, a debt collector who uses the model validation
                notice receives a safe harbor for compliance with the final rule's
                validation information disclosure requirements. The Bureau determines
                that a safe harbor is appropriate because the model validation notice
                will effectively disclose information required by Sec. 1006.34(c), and
                the safe harbor will incentivize debt collectors to use the model
                notice.
                 The Bureau agrees that the Sec. 1006.34(d)(2) safe harbor should
                not cover delivery of the validation notice. The Bureau recognizes the
                risk that a debt collector could deliver the model validation notice in
                an ineffective manner and that, as a result, the notice would be
                delayed or never received by the consumer. The Bureau does not intend
                Sec. 1006.34(d)(2) to provide a safe harbor in such a scenario. For
                this reason, the Bureau is finalizing Sec. 1006.34(d)(2)(i) to specify
                that the safe harbor for use of the model notice covers only compliance
                with the information and form requirements of final Sec. 1006.34(c)
                and (d)(1).
                 In response to comments requesting clarity about the use of
                optional disclosures on the model notice, the Bureau is finalizing
                Sec. 1006.34(d)(2)(i) to squarely address how the safe harbor applies
                with respect to the Sec. 1006.34(d)(3) optional disclosures.\323\
                First, the Bureau clarifies, as was intended in the proposal, that a
                debt collector may include any or all of the Sec. 1006.34(d)(3)
                optional disclosures without losing the safe harbor pursuant to Sec.
                1006.34(d)(2). Specifically, final Sec. 1006.34(d)(2)(i) provides that
                the model validation notice contains the validation information
                required by Sec. 1006.34(c) and certain optional disclosures permitted
                by Sec. 1006.34(d)(3). Section 1006.34(d)(2)(i) further provides that
                a debt collector who uses the model validation notice complies with the
                information and form requirements of Sec. 1006.34(c) and (d)(1),
                including if the debt collector: Omits any or all of the optional
                disclosures shown on the model notice (see Sec. 1006.34(d)(2)(i)(A));
                or adds any or all of the optional disclosures described in Sec.
                1006.34(d)(3) that are not shown on the model notice (see Sec.
                1006.34(d)(2)(i)(B)), provided that any such optional disclosures are
                no more prominent than any of the required validation information.\324\
                ---------------------------------------------------------------------------
                 \323\ Proposed Sec. 1006.34(d)(3) specified that a debt
                collector who used the model validation notice could include any of
                the optional disclosures along with the validation information
                without losing the Sec. 1006.34(d)(2) safe harbor for compliance.
                 \324\ The model validation notice includes the following
                optional disclosures permitted by Sec. 1006.34(d)(3), each of which
                is described in more detail in the section-by-section analysis
                below: (1) Debt collector telephone contact information (see Sec.
                1006.34(d)(3)(i)); (2) reference code (see Sec. 1006.34(d)(3)(ii));
                (3) payment disclosures (see Sec. 1006.34(d)(3)(iii)); (4) a
                statement referring to disclosures made under applicable law on the
                reverse of the validation notice (see Sec. 1006.34(d)(3)(iv)(A));
                (5) debt collector's website (see Sec. 1006.34(d)(3)(v)(A)); (6)
                statement explaining how a consumer can dispute the debt or request
                original-creditor information electronically (see Sec.
                1006.34(d)(3)(v)(B)); (7) Spanish-language translation disclosures
                (see Sec. 1006.34(d)(3)(vi)); (8) merchant brand information (see
                Sec. 1006.34(d)(3)(vii)); and (9) for debt not related to a
                consumer financial product or service, the information specified in
                Sec. 1006.34(c)(2)(iii) or (c)(3)(iv) (i.e., name of the creditor
                to whom the debt was owed on the itemization date and Bureau's debt
                collection website, respectively) (see Sec. 1006.34(d)(3)(viii)).
                The model validation notice does not include the following optional
                disclosures permitted by Sec. 1006.34(d)(3): (1) Time-barred debt
                disclosures made under applicable law on the front of the validation
                notice (see Sec. 1006.34(d)(3)(iv)(B)); (2) debt collector email
                address (see Sec. 1006.34(d)(3)(v)(A)); and (3) affinity brand or
                facility name information (but, as noted above, merchant brand
                information is shown on the model notice in the same location) (see
                Sec. 1006.34(d)(3)(vii)).
                ---------------------------------------------------------------------------
                [[Page 5821]]
                 The requirement that any Sec. 1006.34(d)(3) optional disclosures
                that are added to the model validation notice be no more prominent than
                any of the validation information is designed to ensure that any such
                optional disclosures do not overload consumers with information or
                distract them from the required validation information. A debt
                collector who chooses to include one or more of the Sec. 1006.34(d)(3)
                optional disclosures that do not appear on the model validation notice,
                but who violates the no-more-prominent requirement, loses the safe
                harbor under Sec. 1006.34(d)(2) and may violate Sec. 1006.34
                depending on the facts and circumstances.
                 As discussed in the section-by-section analysis of Sec.
                1006.34(c)(1), a consumer advocate commenter asked the Bureau to
                clarify what version of the FDCPA section 807(11) disclosure should
                appear on the validation notice: The longer, initial disclosure
                described in Sec. 1006.18(e)(1) or the shorter, subsequent disclosure
                described in Sec. 1006.18(e)(2). The model validation notice includes
                the disclosure required by Sec. 1006.18(e)(1). The Bureau is adopting
                new comment 34(d)(2)(i)-1 to clarify that a debt collector who uses the
                model notice to provide a validation notice as described in Sec.
                1006.34(a)(1)(i)(B)--i.e., a debt collector who provides the validation
                notice within five days of the initial communication--may replace the
                disclosure required by Sec. 1006.18(e)(1) with the disclosure required
                by Sec. 1006.18(e)(2) without losing the safe harbor provided by use
                of the model notice. Comment 34(d)(2)(i)-1 also refers to comment
                34(c)(1)-1 for further guidance related to providing the disclosure
                required by Sec. 1006.18(e) on a validation notice.
                 The Bureau declines to extend the Sec. 1006.34(d)(2) safe harbor
                to cover compliance with FDCPA section 807's prohibition on false or
                misleading statements. A debt collector who uses the model validation
                notice is still capable of making false or misleading statements to
                consumers in the notice. For example, a debt collector using the model
                validation notice could include false or misleading information about
                the debt, such as an inflated current amount of the debt.
                 However, the Bureau agrees that debt collectors who use the model
                validation notice should have a safe harbor for compliance with FDCPA
                section 809(b)'s overshadowing prohibition. The Bureau provides a safe
                harbor to that effect in Sec. 1006.38(b). The section-by-section
                analysis of Sec. 1006.38(b) discusses this change in further detail.
                34(d)(2)(ii) Certain Disclosures on a Separate Page
                 To conform with modifications in other sections of the Rule that
                permit debt collectors to make certain itemization-related disclosures
                on separate pages, the Bureau is finalizing new Sec.
                1006.34(d)(2)(ii). As discussed in the section-by-section analysis of
                Sec. 1006.34(c)(2)(viii), when disclosing the itemization of the
                current amount of the debt, a debt collector has the option of
                disclosing that itemization on a separate page. As discussed in the
                section-by-section analysis of Sec. 1006.34(c)(5), the final rule
                establishes a special rule for certain residential mortgage debt that
                permits a debt collector, subject to certain conditions, to provide a
                periodic statement under Regulation Z, 12 CFR 1026.41, instead of the
                itemization-related validation information required by Sec.
                1006.34(c)(2)(vi) through (viii).
                 Section 1006.34(d)(2)(ii) establishes how these provisions interact
                with the safe harbor provided by use of the model notice. Specifically,
                Sec. 1006.34(d)(2)(ii) establishes that a debt collector who uses the
                model validation notice and makes certain disclosures on a separate
                page pursuant to Sec. 1006.34(c)(2)(viii) or (5) may still receive a
                safe harbor for use of the model notice except with respect to the
                disclosures that appear on the separate page.
                34(d)(2)(iii) Substantially Similar Form
                 As discussed in the section-by-section analysis of Sec.
                1006.34(d)(1), the Bureau has determined that debt collectors should
                receive a safe harbor for the information and form requirements of
                Sec. 1006.34(c) and (d)(1) if they use a form that is substantially
                similar to the model validation notice. The Bureau determines that, so
                long as a form is substantially similar to the model notice, the
                validation information disclosures will remain effective; the Bureau
                therefore is finalizing Sec. 1006.34(d)(2) to provide this flexibility
                for debt collectors.
                 For this reason, final Sec. 1006.34(d)(2)(iii) provides that a
                debt collector who uses the model validation notice as described in
                Sec. 1006.34(d)(2)(i) or (ii) may make changes to the form and retain
                a safe harbor for compliance with the information and form requirements
                of Sec. 1006.34(c) and (d)(1), provided that the form remains
                substantially similar to the model notice. (As discussed elsewhere in
                this Notice, a debt collector may comply with the requirements in Sec.
                1006.34(c) and (d)(1) without using the model validation notice.)
                 Final comment 34(d)(2)(iii)-1 provides details regarding the
                meaning of substantially similar, as requested by commenters, including
                examples of permissible changes. The Bureau believes that these are
                differences that may be useful to debt collectors and consumers and
                will not increase the risk of consumer harm.
                 One permissible change relates to deceased consumers. Comment
                34(d)(2)(iii)-1 incorporates proposed comment 34(d)(1)(ii)-1, which
                discussed changes that debt collectors could make if the consumer were
                deceased. The Bureau proposed comment 34(d)(1)(ii)-1 to explain that a
                debt collector may make certain changes to the content, format, and
                placement of the validation information described in Sec. 1006.34(c)
                as long as the resulting disclosures are substantially similar to the
                model notice. Proposed comment 34(d)(1)(ii)-1 also provided an example
                of a change that debt collectors may make to the model validation
                notice if the consumer is deceased.
                 The Bureau explained that, although the model validation notice
                will contain the name of the deceased consumer, some persons who are
                authorized to act on behalf of the deceased consumer's estate may be
                misled by the use of second person pronouns such as ``you'' in the
                validation notice. For example, the proposed model validation notice
                stated that ``you owe'' the debt collector. While nothing in the
                proposal would have prohibited a debt collector from including a cover
                letter to explain the nature of the validation notice, proposed comment
                34(d)(1)(ii)-1 also clarified that a debt collector could modify
                inapplicable language in the validation notice that could suggest that
                the recipient of the notice was liable for the debt. For example, if a
                debt collector sent a validation notice to a person authorized to act
                on behalf of the deceased consumer's estate, and if that person was not
                liable for the debt, the debt collector could use the deceased
                consumer's name instead of ``you.''
                [[Page 5822]]
                 The Bureau received a few comments on proposed comment
                34(d)(1)(ii)-1. One trade group commenter recommended that the Bureau
                allow debt collectors to replace second-person pronouns with references
                to the estate, such as ``the estate's bill.'' A group of consumer
                advocates stated that, although the comment's example would be
                appropriate in certain circumstances, the Bureau should provide an
                entirely separate model validation notice for decedent debt because,
                these commenters believed, debt collectors would be unlikely to diverge
                from the model notice. Two trade group commenters also asked the Bureau
                to create a second model validation notice for decedent debt.
                 The Bureau is incorporating proposed comment 34(d)(1)(ii)-1 into
                comment 34(d)(2)(iii)-1, which clarifies that a debt collector may make
                changes to the model validation notice and retain the safe harbor
                provided by use of the model notice. Because the example regarding
                decedent debt is illustrative, nothing in comment 34(d)(2)(iii)-1
                prohibits a debt collector from making other substantially similar
                modifications, such as referring to the estate rather than ``you,''
                while still retaining the safe harbor. As explained elsewhere in this
                section-by-section analysis, the Bureau declines to create separate
                model forms for certain types of debt. The Bureau has modified the
                model-form-safe-harbor framework under Sec. 1006.34(d)(2) to afford
                debt collectors more flexibility to customize validation information to
                accommodate their business practices and the types of debts they
                collect. Within identified limits, debt collectors may make changes to
                the model validation notice and still meet the standard for a safe
                harbor under Sec. 1006.34(d)(2).
                 Comment 34(d)(2)(iii)-1 also includes four new examples of other
                permissible changes: Relocating the consumer-response information
                required by Sec. 1006.34(c)(4) to facilitate mailing; adding barcodes
                or QR codes, as long as the inclusion of such items does not violate
                Sec. 1006.38(b); adding the date the form is generated; and embedding
                hyperlinks, if delivering the form electronically, which was proposed
                in comment 34(d)(2)-1.
                 The Bureau clarifies that, if a debt collector includes disclosures
                other than (1) the required validation information, (2) any optional
                disclosures described in Sec. 1006.34(d)(3), or (3) any disclosures
                that, if included, still leave the form substantially similar in
                substance, clarity, and meaningful sequence to the model notice, then
                the safe harbor does not apply with respect to the entirety of the
                validation notice. Except as described in Sec. 1006.34(d)(2)(ii), the
                Bureau has determined not to apply the safe harbor on a partial (i.e.,
                disclosure-by-disclosure) basis because it is not clear how disclosures
                other than those referenced above would interact with the validation
                information.\325\ Final comment 34(d)(2)-1 clarifies that a debt
                collector who provides a validation notice that is neither a notice
                described in Sec. 1006.34(d)(2)(i) or (ii), nor a substantially
                similar notice as described in Sec. 1006.34(d)(2)(iii), does not
                receive a safe harbor for compliance with the information and form
                requirements of Sec. 1006.34(c) and (d)(1). The Bureau notes that a
                debt collector who adds disclosures to the model validation notice that
                are not referenced above nevertheless may be able to comply with the
                requirements in Sec. 1006.34(c) and (d)(1), Sec. 1006.38(b)(1), and
                other requirements of the FDCPA and this final rule.
                ---------------------------------------------------------------------------
                 \325\ As described in Sec. 1006.34(d)(2)(ii), a debt collector
                who includes certain itemization-related disclosures on a separate
                page in the same communication with the validation notice, and who
                includes on the front of the notice the required statement referring
                to those disclosures, receives a safe harbor for compliance with the
                information and form requirements of Sec. 1006.34(c) and (d)(1)
                except with respect to the disclosures that appear on the separate
                page.
                ---------------------------------------------------------------------------
                Model Validation Notice
                 While the majority of industry commenters who commented on the
                topic supported the idea of a model form, some criticized the design of
                the proposed model validation notice. At least two industry commenters
                stated that the proposed model notice contained too much content and
                would overwhelm consumers. One commenter criticized the proposed model
                notice for departing from the prevailing industry design for validation
                notices. A number of identical or nearly identical comments suggested
                that consumers would confuse the proposed model notice for a government
                document, such as an IRS notice, but did not explain what in particular
                about the model notice they believed would cause such consumer
                confusion.
                 The Bureau's findings do not support the conclusions that the model
                notice contains too much content or will overwhelm consumers. The model
                validation notice was developed and validated over multiple rounds of
                consumer testing that support its efficacy and comprehensibility. The
                fact that the model validation notice departs from prevailing industry
                design is intended. As the proposal noted, many validation notices used
                today are confusing and lack sufficient information to help consumers
                recognize their debts or exercise their FDCPA verification rights.\326\
                With the model validation notice, the Bureau has developed an improved
                validation notice that benefits both consumers and debt collectors. In
                quantitative testing, the model validation notice consistently
                performed better than or equal to a ``status quo'' notice designed to
                resemble validation notices that some debt collectors use today.\327\
                The Bureau also disagrees that the model validation notice resembles a
                government document; the form clearly discloses that it is from a debt
                collector, not the government.
                ---------------------------------------------------------------------------
                 \326\ See 84 FR 23274, 23338 (May 21, 2019).
                 \327\ CFPB Quantitative Testing Report, supra note 31, at 13-16.
                ---------------------------------------------------------------------------
                 A number of consumer advocate and academic commenters asserted that
                the proposed model notice was not adequately tested. Some of these
                commenters stated that the Bureau's testing included too few
                participants to generate valid conclusions about the proposed model
                notice's efficacy or to evaluate the comprehension of consumers,
                particularly of the least sophisticated consumers. For instance, a
                consumer advocate commenter expressed concern that only 60 consumers
                were included in the cognitive and usability testing rounds.\328\
                Likewise, an academic commenter stated that the Bureau's consumer
                testing focused too heavily on observing what testing participants
                looked at on the model notice (based on the use of eye tracking
                techniques) at the expense of testing participants' comprehension of
                the notice. Another commenter stated that the Bureau should have tested
                more diverse groups, including consumers with limited English
                proficiency, students, older consumers, and consumers from more diverse
                socioeconomic backgrounds. Some consumer advocate and academic
                commenters recommended that the Bureau field test the proposed model
                notice with consumers with real debts. A consumer advocate expressed
                concern about the performance of certain aspects of the proposed model
                notice in quantitative testing, noting in particular that approximately
                40 percent of respondents who received the model notice failed to
                identify the correct entity the consumer should pay.\329\
                ---------------------------------------------------------------------------
                 \328\ See FMG Summary Report, supra note 29, at 5-7.
                 \329\ Several comments in response to the May 2019 proposal also
                criticized the consumer testing as being outdated because, when that
                proposal was published, the most recent testing had occurred in
                2016. However, the Bureau does not find any reason to believe that
                consumer understanding of the model notice has changed since 2016,
                and the commenters did not provide any evidence to support such a
                claim. Moreover, since the May 2019 proposal, the Bureau has
                conducted two additional testing rounds.
                ---------------------------------------------------------------------------
                [[Page 5823]]
                 The Bureau disagrees that the model notice was not adequately
                tested. The model validation notice was developed and validated over
                multiple rounds of testing between 2014 and 2020, and the Bureau
                determines that these multiple rounds of testing were sufficient to
                assess the model validation notice's efficacy and comprehensibility.
                Further, the Bureau disagrees that its testing focused on eye-tracking
                at the expense of comprehension testing as consumer comprehension of
                the model validation notice was assessed in three rounds of testing.
                The Bureau's testing used eye-tracking in conjunction with consumer
                responses to inform its conclusions.
                 The Bureau disagrees that it did not sample sufficiently diverse
                groups. The Bureau selected respondents with the goal of developing
                diverse testing pools that would serve as a proxy for the population at
                large. For example, in one round of usability testing, participants
                reflected a range of demographic characteristics broken down by race
                and ethnicity, household income, education level, and employment
                status.\330\ With respect to criticism that the Bureau did not ``field
                test'' the model validation notice, testing the form with consumers
                with real debts would have been impractical. Regarding comments that
                the model validation notice did not perform well during the
                quantitative testing round, the Bureau disagrees. As noted above, in
                that testing round, the model validation notice consistently performed
                better than or equal to the status quo notice, including on the
                question of to whom the consumer should send a payment.\331\
                ---------------------------------------------------------------------------
                 \330\ FMG Usability Report, supra note 28, at 85-87.
                 \331\ In response to the question ``According to the notice, if
                Person A wanted to make a payment on the debt, who should he or she
                sent the payment to?'' approximately 60 percent of consumers who
                received the model validation notice answered correctly compared to
                approximately 40 percent of consumers who received a status quo
                notice. CFPB Quantitative Testing Report, supra note 31, at 14.
                ---------------------------------------------------------------------------
                 Commenters provided feedback on specific aspects of the proposed
                validation notice, including the notice's disclosure of the FDCPA
                section 809(a)(4) dispute right. As discussed, Sec. 1006.34(c)(3)(i),
                which implements FDCPA section 809(a)(4), requires debt collectors to:
                (1) Disclose the date the debt collector will consider the end date of
                the validation period; and (2) state that, if the consumer notifies the
                debt collector in writing on or before that date that the debt, or any
                portion of the debt, is disputed, the debt collector must cease
                collection of the debt, or the disputed portion of the debt, until the
                debt collector sends the consumer either verification of the debt or a
                copy of a judgment. The proposed model notice showed this disclosure
                as: ``Call or write to us by November 12, 2019, to dispute all or part
                of the debt . . . . If you write to us by November 12, 2019, we must
                stop collection on any amount you dispute until we send you information
                that shows you owe the debt.''
                 Some commenters criticized the phrase ``shows you owe the debt.''
                Industry and industry trade group commenters stated that ``shows you
                owe the debt'' would require debt collectors to prove that consumers
                owe the debt. According to these commenters, this would modify the
                verification standard established by FDCPA section 809 and expose debt
                collectors to increased litigation risk.\332\ Thus, these commenters
                recommended that the Bureau revise the proposed model notice to mirror
                the FDCPA's statutory text.\333\ In contrast, a group of academic
                commenters stated that the verification standard established by case
                law is more robust than the phrase ``shows you owe the debt''
                suggests.\334\ These commenters expressed concerns that the proposed
                model notice would diminish the FDCPA's verification standard.
                ---------------------------------------------------------------------------
                 \332\ An industry commenter stated that courts define
                verification narrowly and have not imposed a duty upon debt
                collectors to establish that a debt is owed. See Walton v. EOS CCA,
                885 F.3d 1024, 1027-28 (7th Cir. 2018) (``The verification assures
                the consumer that the creditor actually made the demand the debt
                collector said it did and equips the consumer to evaluate the
                validity of the creditor's claim. It would be both burdensome and
                significantly beyond the Act's purpose to interpret Sec. 1692g as
                requiring a debt collector to undertake an investigation into
                whether the creditor is actually entitled to the money it seeks.'');
                Haddad v. Alexander, Zelmanski, Danner & Fioritto, 758 F.3d 777 (6th
                Cir. 2014); Dunham v. Portfolio Recovery Assocs., 663 F.3d 997, 1003
                (8th Cir. 2001) (citing Chaudhry v. Gallerizzo, 174 F.3d 394 (4th
                Cir. 1999)).
                 \333\ For instance, one commenter recommended that the model
                notice should state ``verifies the amount of the debt claimed''
                instead of ``shows you owe the debt.''
                 \334\ In Haddad, the court wrote that a verifying debt collector
                ``should provide the date and nature of the transaction that led to
                the debt, such as a purchase on a particular date, a missed rental
                payment for a specific month, a fee for a particular service
                provided at a specified time, or a fine for a particular offense
                assessed on a certain date.'' 758 F.3d at 786.
                ---------------------------------------------------------------------------
                 The Bureau is not changing the final model validation notice's
                disclosure of the FDCPA section 809(a)(4) dispute right. The Bureau
                does not intend to modify FDCPA section 809's verification standard and
                disagrees that the phrase ``shows you owe the debt'' has that effect.
                ``Shows you owe the debt'' is a plain-language phrase that the Bureau
                is adopting to improve consumer understanding. This rulemaking does not
                interpret what constitutes verification under FDCPA section 809.
                 The Bureau received comments on the model notice's description of
                the dispute rights under FDCPA section 809(a)(3) and (4). Under FDCPA
                section 809(a)(3), disputes can be made orally or in writing, which the
                proposed model notice showed in part as: ``Call or write to us by
                November 12, 2019, to dispute all or part of the debt.'' However, under
                FDCPA section 809(a)(4) and (b), requests for verification must be made
                in writing to have effect under the statute.\335\ An academic commenter
                and at least two consumer advocates expressed concern that the proposed
                model notice's description of these dispute rights was too nuanced, and
                consumers would not understand that they must write to request
                verification. To address this concern, a commenter recommended that the
                Bureau revise the model notice to state, ``Call us to dispute. But if
                you do call, we may not be required to send information that shows you
                owe the debt.'' \336\ An industry trade group expressed uncertainty
                about why the proposed model notice used the phrase ``call or write''
                as opposed to ``write'' in different sentences.
                ---------------------------------------------------------------------------
                 \335\ While FDCPA section 809 requires a debt collector to honor
                only written verification requests, the Bureau understands that some
                debt collectors honor both written and non-written verification
                requests. Nothing in the FDCPA, the November 2020 Final Rule, or
                this rule prevents such debt collectors from continuing to do so.
                 \336\ This recommendation is based on phrasing that the Bureau
                adopted for usability testing. As noted in the usability testing
                report, consumers who reviewed validation notices using this
                phrasing ``exhibited less confusion'' about the distinction between
                how a debt collector would be required to respond when receiving a
                dispute in writing or by telephone. See FMG Usability Report, supra
                note 28, at 55-56.
                ---------------------------------------------------------------------------
                 The Bureau acknowledges that the dispute rights under FDCPA section
                809(a)(3) and (4) may not be intuitive to some consumers. Nevertheless,
                the Bureau settled on the current phrasing in the model validation
                notice to emphasize the validation period end date as opposed to the
                actions--i.e., calling or writing--that a consumer may take. In
                general, the model validation notice has tested well. The Bureau is
                concerned that revising or adding content to clarify the consequences
                of writing versus calling may undermine the overall efficacy of the
                form. Further, this clarification would be unnecessary in many cases.
                The Bureau expects that many consumers will visit the Bureau's website
                for more detailed information
                [[Page 5824]]
                regarding consumer protections in debt collection.\337\ However, to
                provide further clarity, the Bureau has reformatted how these dispute
                rights appear on the model validation notice. Specifically, the dispute
                rights now appear in separate bullets with bolded text for
                comprehension purposes.
                ---------------------------------------------------------------------------
                 \337\ If the debt collector is collecting debt related to a
                consumer financial product or service as defined in Sec.
                1006.34.2(f), a statement that informs the consumer that additional
                information regarding consumer protections in debt collection is
                available on the Bureau's website is required under Sec.
                1006.34(c)(3)(iv). If the debt collector is collecting debt other
                than debt related to a consumer financial product or service, such a
                statement is optional under Sec. 1006.34(d)(3)(viii).
                ---------------------------------------------------------------------------
                 Commenters provided feedback on the proposed model validation
                notice's original-creditor-information request disclosure pursuant to
                FDCPA section 809(a)(5). Section 1006.34(c)(3)(ii), which implements
                this provision, requires debt collectors to disclose the date the debt
                collector will consider the end date of the validation period and a
                statement that, if the consumer requests in writing on or before that
                date the name and address of the original creditor, the debt collector
                must cease collection of the debt until the debt collector sends the
                consumer the name and address of the original creditor, if different
                from the current creditor. The proposed model notice showed this
                disclosure as: ``Write to ask for the name and address of the original
                creditor. If you write by November 12, 2019, we will stop collection
                until we send you that information.'' An industry commenter stated
                that, by omitting the phrase ``if different from the current
                creditor,'' the proposed model notice would compel debt collectors to
                respond to original-creditor-information requests, even if the current
                creditor is the original creditor. A consumer advocate supported the
                omission, arguing that debt collectors should be required to respond to
                all original-creditor-information requests, even if the current
                creditor and the original creditor are the same.
                 The Bureau concludes that the model validation notice should
                include the statutory phrase ``if different from the current creditor''
                when disclosing the original-creditor-information request right. Thus,
                as finalized, the model validation notice includes the phrase ``if
                different from the current creditor.'' Further, as discussed below, the
                Bureau is finalizing new Sec. 1006.38(c)(2), which sets forth an
                alternative procedure that a debt collector may use to respond to a
                consumer's request for original-creditor information when the original
                creditor is the same as the current creditor.
                 Commenters recommended two other modifications to the proposed
                model notice. To emphasize the distinction between the debt collector
                and the creditor, an industry trade group commenter suggested that the
                Bureau revise the proposed model notice to emphasize that ``North South
                Group is a debt collector, not a creditor.'' Another industry trade
                group stated that the model notice should incorporate account
                information into the mini-Miranda disclosure, which would frontload
                information that would help consumers recognize alleged debts and
                thereby reduce the number of disputes debt collectors receive. An
                industry trade group commenter stated that the proposed model notice is
                not properly formatted for standard mailing envelopes. According to the
                commenter, Sec. 1006.34(c)(4)'s consumer-response information section
                will not fit a standard glassine window return envelope.
                 The Bureau declines other recommendations to modify the model
                validation notice. The Bureau declines to specify that North South
                Group is ``not a creditor,'' as consumer testing indicates that
                consumers generally have a functional understanding that North South
                Group is a debt collector.\338\ The Bureau declines to modify the debt
                collection disclosure required by FDCPA section 807(11) and Sec.
                1006.18(e) as finalized in the November 2020 Final Rule. The Bureau
                concludes that combining this statutory disclosure with account
                information would undermine its clarity and purpose. The Bureau
                declines to modify the model notice in response to feedback that the
                form is not properly formatted for standard mailing envelopes. Comment
                34(d)(2)(iii)-1 clarifies that debt collectors may relocate the
                consumer-response information required by Sec. 1006.34(c)(4) to
                facilitate mailing without losing the safe harbor provided by Sec.
                1006.34(d)(2). Thus, the Bureau determines that debt collectors will be
                able to format the form for mailing.
                ---------------------------------------------------------------------------
                 \338\ During November 2020 usability testing, 98 percent of
                participants correctly identified North South Group as the correct
                party to send payments to. Further, participants generally
                understood that they could dispute the debt with North South Group.
                See November 2020 Qualitative Testing Report, supra note 34, at 15.
                ---------------------------------------------------------------------------
                 Various commenters requested that the Bureau publish additional
                model validation notices to address specific scenarios. Several
                consumer advocate commenters urged the Bureau to translate the model
                notice into other languages, including Spanish. An industry trade group
                commenter recommended that the Bureau develop a model notice that debt
                collectors could use with consumers who are not obligated on the debt,
                such as heirs, successors in interest, and consumers whose debts were
                discharged in bankruptcy. An industry commenter recommended that the
                Bureau create a model notice that omits all optional disclosures.
                 The Bureau declines to create additional model validation notice
                forms. As discussed earlier in this section-by-section analysis, the
                Bureau has modified the model-form-safe-harbor framework under Sec.
                1006.34(d)(2) to afford debt collectors more flexibility to customize
                validation information to accommodate their business practices and the
                types of debts they collect. Within identified limits, debt collectors
                may make changes to the model validation notice and still meet the
                standard for a safe harbor under Sec. 1006.34(d)(2).
                 The Bureau is making an additional change to the model validation
                notice in response to testing. The statement required by Sec.
                1006.34(c)(3)(iv) informs the consumer that additional information
                regarding consumer protections in debt collection is available on the
                Bureau's website. The Bureau's most recent consumer testing indicated
                that a small number of participants who used the model validation
                notice were uncertain about where to find more information about
                consumers' protections in debt collection.\339\ In response to this
                finding, the Bureau is modifying how the statement required by Sec.
                1006.34(c)(3)(iv) appears on the model validation notice to further
                emphasize this disclosure and the Bureau's website address.
                ---------------------------------------------------------------------------
                 \339\ During the most recent round of qualitative testing, a few
                participants stated that they were unsure how to learn more about
                debt collection in general. For example, one participant was unable
                to find the statement required by Sec. 1006.34(c)(3)(iv) on the
                model notice. See November 2020 Qualitative Testing Report, supra
                note 34, at 13.
                ---------------------------------------------------------------------------
                34(d)(3) Optional Disclosures
                 Proposed Sec. 1006.34(d)(3) provided that a debt collector could
                include the optional information described in Sec. 1006.34(d)(3)(i)
                through (vi) when providing the validation information. The Bureau
                received no comments specifically addressing the language in proposed
                Sec. 1006.34(d)(3). Commenters did suggest a variety of optional
                disclosures to add to Sec. 1006.34(d)(3), such as barcodes or QR
                codes, the date a validation notice was created and sent, disclosures
                required by government creditors, and a disclosure notifying the
                consumer if the debt collector will
                [[Page 5825]]
                record telephone calls. Some of these suggested disclosures are
                permissible changes to the model notice under Sec. 1006.34(d)(2)(iii)
                \340\ or optional disclosures under Sec. 1006.34(d)(3), and debt
                collectors can choose to make other suggested disclosures without safe
                harbor protection.
                ---------------------------------------------------------------------------
                 \340\ See comment 34(d)(2)(iii)-1 (examples of permissible
                changes to the model notice include (1) adding barcodes or QR codes
                as long as their inclusion does not violate Sec. 1006.38(b), and
                (2) adding the date the form is generated).
                ---------------------------------------------------------------------------
                 The Bureau is finalizing Sec. 1006.34(d)(3) largely as proposed
                but with minor technical revisions for clarity and with one substantive
                revision to clarify that a debt collector who includes any of the
                optional disclosures receives the safe harbor described in Sec.
                1006.34(d)(2), provided that the debt collector otherwise uses the
                model validation notice or a variation of the model notice as described
                in Sec. 1006.34(d)(2). This revision harmonizes Sec. 1006.34(d)(3)
                with certain revisions to Sec. 1006.34(d)(2) in the final rule.\341\
                ---------------------------------------------------------------------------
                 \341\ See the section-by-section analysis of Sec.
                1006.34(d)(2)(i), particularly the discussion of new Sec.
                1006.34(d)(2)(i)(A) and (B), which refers to the optional
                disclosures.
                ---------------------------------------------------------------------------
                 The Bureau is finalizing Sec. 1006.34(d)(3) and the related
                provisions of Sec. 1006.34(d)(2), including each of the optional
                disclosures that Sec. 1006.34(d)(3) permits debt collectors to
                provide, to implement and interpret FDCPA section 809(a) and (b) and
                pursuant to its FDCPA section 814(d) authority to prescribe rules with
                respect to the collection of debts by debt collectors. The Bureau also
                is finalizing Sec. 1006.34(d)(3) and the optional disclosures pursuant
                to its authority under section 1032(a) of the Dodd-Frank Act to
                prescribe rules to ensure that the features of consumer financial
                products and services are disclosed fully, accurately, and effectively.
                34(d)(3)(i) Telephone Contact Information
                 Proposed Sec. 1006.34(d)(3)(i) provided that a debt collector
                could include, along with the validation information, the debt
                collector's telephone contact information, including telephone number
                and the times that the debt collector accepts consumer telephone calls.
                 Two industry trade group commenters supported permitting debt
                collectors to disclose telephone contact information, with one such
                commenter noting that it would facilitate communication with consumers,
                and the other noting that some State laws require debt collectors to
                disclose telephone contact information. A group of consumer advocate
                commenters recommended that the Bureau make telephone contact
                information a mandatory disclosure.
                 The Bureau determines that debt collectors should be permitted to
                include their telephone contact information along with the validation
                information. Section 1006.34(d)(3)(i) will accommodate debt collectors
                who choose to communicate with consumers by telephone or who are
                required to disclose telephone contact information by applicable State
                law. The Bureau declines to make telephone contact information a
                mandatory disclosure because, while many debt collectors likely will
                provide telephone contact information, either by choice or because of a
                State-law requirement, some debt collectors may not need or want to do
                so. In such cases, consumers can use other contact information required
                in the validation information to contact the debt collector. For these
                reasons, the Bureau is finalizing Sec. 1006.34(d)(3)(i) largely as
                proposed, except that the Bureau is finalizing the clarification that
                telephone contact information may include, for example, a telephone
                number as well as the times that the debt collector accepts consumer
                telephone calls, as new comment 34(d)(3)(i)-1, rather than in the
                regulation text as proposed.
                34(d)(3)(ii) Reference Code
                 Many debt collectors include reference codes on validation notices
                for administrative purposes. The Bureau proposed Sec.
                1006.34(d)(3)(ii) to accommodate this practice by permitting a debt
                collector to include, along with the validation information, a number
                or code that the debt collector uses to identify the debt or the
                consumer. One industry commenter asked the Bureau to create a safe
                harbor for debt collectors to use an account number as a reference
                code, if that number is labeled as a reference code. The Bureau
                determines that creating such a safe harbor is unnecessary because debt
                collectors may use any number they choose as a reference code.\342\ The
                Bureau therefore is finalizing Sec. 1006.34(d)(3)(ii) as proposed.
                ---------------------------------------------------------------------------
                 \342\ Although Sec. 1006.34(d)(3)(ii) permits debt collectors
                to use any number they choose as a reference code, debt collectors
                may be prohibited from using certain numbers by other applicable
                laws, such as privacy or data security rules or regulations.
                ---------------------------------------------------------------------------
                34(d)(3)(iii) Payment Disclosures
                 The Bureau proposed in Sec. 1006.34(d)(3)(iii) to allow debt
                collectors to include certain payment disclosures along with the
                validation information, provided that such disclosures were no more
                prominent than any of the validation information. Proposed Sec.
                1006.34(d)(3)(iii)(A) provided that a debt collector could include in
                the validation notice the statement ``Contact us about your payment
                options,'' using that phrase or a substantially similar phrase.
                Proposed Sec. 1006.34(d)(3)(iii)(B) provided that a debt collector
                could include in the consumer-response information section described in
                proposed Sec. 1006.34(c)(4) the statement, ``I enclosed this amount,''
                using that phrase or a substantially similar phrase, payment
                instructions after that statement, and a prompt for a consumer to write
                in a payment amount. As discussed below, the Bureau is finalizing Sec.
                1006.34(d)(3)(iii) largely as proposed, but with certain revisions for
                clarity and consistency with other provisions in the final rule.
                 Industry and industry trade group commenters supported permitting
                debt collectors to include optional payment disclosures. One industry
                trade group stated that the proposed optional payment disclosures were
                appropriate because they would not violate FDCPA section 809(b)'s
                overshadowing prohibition.
                 Consumer advocate commenters generally objected to proposed Sec.
                1006.34(d)(3)(iii). A number of these commenters stated that consumers
                may perceive the payment disclosures as threatening, may misconstrue
                the disclosures as stating that consumers must make a payment to
                exercise their FDCPA dispute right, or may be confused about whether a
                payment is in their interest. Some commenters stated that the proposed
                disclosures could lead consumers to make payments that they might not
                otherwise have made, which some commenters noted could cause consumers
                to inadvertently revive previously time-barred debts. These commenters
                asked the Bureau not to finalize proposed Sec. 1006.34(d)(3)(iii).
                 Some commenters suggested revisions to the proposed optional
                payment disclosures. Industry and industry trade group commenters
                recommended that the Bureau make the proposed optional payment
                disclosures more prominent. For example, some commenters suggested that
                the proposed optional payment disclosures be placed at the top of the
                consumer-response information section. An industry commenter
                recommended that the model validation notice include additional
                optional payment disclosures. Industry trade group commenters
                recommended that the Bureau permit debt collectors to include
                [[Page 5826]]
                instructions about how a consumer could make a payment by telephone,
                website, or alternative payment methods, such as debit card or ACH.
                Based on the concerns noted above about potential consumer
                misunderstanding of the payment disclosures, a group of consumer
                advocate commenters urged the Bureau to amend the validation notice to
                segregate the payment disclosures from the other disclosures and to
                eliminate the payment prompt on the consumer response form.
                 For the reasons discussed in the proposal, the Bureau determines
                that the proposed optional payment disclosures facilitate payments that
                may benefit both consumers and debt collectors. For consumers who
                recognize and choose to repay all or part of a debt, payment
                disclosures may make the transaction more efficient and convenient. In
                addition, for consumers who determine that they owe a debt but may not
                be ready to repay all of it at that time, payment disclosures may
                facilitate a discussion that can lead to repayment, settlement, or a
                payment plan.\343\ The Bureau also has determined that the optional
                payment disclosures do not overshadow, and are not inconsistent with,
                consumers' verification rights pursuant to FDCPA section 809(b).\344\
                ---------------------------------------------------------------------------
                 \343\ See 84 FR 23274, 23350 (May 21, 2019).
                 \344\ For example, during consumer testing, participants
                reported a variety of actions they thought they could take, and
                approximately 50 percent of respondents said they would confirm the
                debt is accurate before responding. Similarly, participants who
                received the model validation notice, which included the optional
                payment disclosures, generally understood from the notice how they
                could dispute the debt. See November 2020 Qualitative Testing
                Report, supra note 34, at 11, 15.
                ---------------------------------------------------------------------------
                 Further, the Bureau's testing found that the model validation
                notice, which was tested with the optional payment disclosures, was not
                threatening or intimidating.\345\ The Bureau disagrees that consumers
                will believe mistakenly that they must make a payment to exercise their
                verification rights. As the proposal noted, consumer testing indicates
                that consumers who encounter a payment disclosure on a validation
                notice understand that a payment is not required to dispute a
                debt.\346\ The Bureau determines that inclusion of the neutral, non-
                threatening optional payment disclosures will not confuse consumers
                about whether making a payment is in their best interest. For the same
                reasons, the Bureau declines the suggestion to segregate the payment
                disclosures from the other disclosures and to eliminate the payment
                prompt on the consumer response form.
                ---------------------------------------------------------------------------
                 \345\ Participants with prior debt collection experience
                observed that the model notice was ``different'' than other
                validation notices they had received because the notice did not
                include threatening or intimidating language. See November 2020
                Qualitative Testing Report, supra note 34, at 10.
                 \346\ FMG Usability Report, supra note 28, at 59-61.
                ---------------------------------------------------------------------------
                 The Bureau declines recommendations to permit debt collectors to
                emphasize or highlight the payment option disclosures. Making the
                payment disclosures more prominent, as some industry commenters
                suggested, would reduce the efficacy of the model validation notice and
                risk overshadowing the validation information in violation of FDCPA
                section 809(b). The Bureau also determines that the optional payment
                disclosures in Sec. 1006.34(d)(3)(iii)(A) and (B) are sufficient to
                facilitate payments \347\ and that additional prominence for the
                payment disclosures is not justified. The Bureau also declines to
                permit debt collectors to include specific instructions about other
                payment methods. Section 1006.34(d)(3)(iii)(A) permits debt collectors
                to invite consumers to contact them about payment options, and debt
                collectors have the ability to provide information about alternative
                payment methods in subsequent communications.
                ---------------------------------------------------------------------------
                 \347\ During usability testing, participants expressed an
                understanding that one purpose of the model validation notice was to
                solicit payment on a debt. When asked about their payment options
                based on the model validation notice, approximately 80 percent of
                participants stated that they would contact the debt collector by
                telephone, website, email, or write to explore payment options. See
                November 2020 Qualitative Testing Report, supra note 34, at 10,12.
                ---------------------------------------------------------------------------
                 For these reasons, this Bureau is finalizing Sec.
                1006.34(d)(3)(iii) largely as proposed but with several revisions for
                clarity and for consistency with other provisions in the final rule.
                First, the Bureau is deleting the sentences that specified that the
                optional payment disclosures in both Sec. 1006.34(d)(3)(iii)(A) and
                (B) must be no more prominent than any of the validation information.
                These deleted sentences are unnecessary in view of revisions to the
                final rule in Sec. 1006.34(d)(2) that apply to all of the optional
                disclosures, which makes the deleted sentences redundant.\348\ In
                addition, the Bureau is adding language to clarify that a debt
                collector may choose to include either of the optional payment
                disclosures, or both of them. Lastly, the Bureau is finalizing Sec.
                1006.34(d)(3)(iii)(B) to clarify that the optional payment disclosure
                must appear ``below'' (rather than merely ``with'') the consumer-
                response information required by Sec. 1006.34(c)(4)(i) and (ii).
                ---------------------------------------------------------------------------
                 \348\ Final Sec. 1006.34(d)(2)(i) states that certain optional
                disclosures permitted by Sec. 1006.34(d)(3) are contained on the
                model notice; those optional disclosures satisfy the requirement to
                be no more prominent than any validation information. Final Sec.
                1006.34(d)(2)(i)(B) also permits inclusion of the optional
                disclosures described by Sec. 1006.34(d)(3) that are not included
                on the model notice so long as they are no more prominent than any
                validation information; see the section-by-section analysis of Sec.
                1006.34(d)(2)(i) for more detail.
                ---------------------------------------------------------------------------
                 Accordingly, final Sec. 1006.34(d)(3)(iii) provides that debt
                collectors may include either or both of the following payment
                disclosures: (1) The statement, ``Contact us about your payment
                options,'' using that phrase or a substantially similar phrase; and (2)
                below the consumer-response information required by Sec.
                1006.34(c)(4)(i) and (ii), the statement, ``I enclosed this amount,''
                using that phrase or a substantially similar phrase, payment
                instructions after that statement, and a prompt.
                34(d)(3)(iv) Disclosures Under Applicable Law
                 Some States require specific disclosures to appear on validation
                notices. To enable debt collectors to comply with both Sec.
                1006.34(a)(1) and disclosure requirements under other applicable law,
                the Bureau proposed Sec. 1006.34(d)(3)(iv) to permit a debt collector
                to include, on the front of the validation notice, a statement that
                other disclosures required by applicable law appear on the reverse of
                the form and, on the reverse of the validation notice, any such legally
                required disclosures. Proposed comment 34(d)(3)(iv)-1 provided examples
                of disclosure requirements that proposed Sec. 1006.34(d)(3)(iv) would
                cover, including disclosures required by State statutes or regulations
                and disclosures required by judicial opinions or orders. For the
                reasons discussed below, the Bureau is adopting proposed Sec.
                1006.34(d)(3)(iv) with revisions, including the addition of new
                regulatory text subsections and commentary.
                 A number of industry and industry trade group commenters stated
                that the Bureau's proposal regarding disclosures required by other
                applicable law would either conflict with or not accommodate such
                disclosures. Commenters stated that some States require disclosures to
                appear on the front of a validation notice.\349\ To address such
                concerns,
                [[Page 5827]]
                commenters recommended that the Bureau allow debt collectors to include
                required State law disclosures on the front of the validation notice.
                One commenter, an industry trade group, urged the Bureau to allow for
                formatting flexibility for such State law disclosures while still
                affording safe harbor protection. At least one commenter suggested that
                the Bureau preempt State laws that require disclosures on the front of
                a validation notice.
                ---------------------------------------------------------------------------
                 \349\ Although these commenters cited various State laws
                requiring disclosures, they primarily referred to State laws
                requiring time-barred debt disclosures and revival disclosures. For
                example, one industry trade group commenter noted that
                Massachusetts, New Mexico, and New York State and City require
                disclosures about time-barred debt and revival that specifically or
                practically must appear on the front page of the validation notice.
                ---------------------------------------------------------------------------
                 The Bureau determines that, particularly with the changes to the
                model validation notice discussed in the section-by-section analysis,
                final Sec. 1006.34(d)(3)(iv) generally will accommodate disclosures
                required by other applicable law.\350\ As noted above, a few States
                require time-barred debt disclosures to appear on the front of a
                validation notice; time-barred debt disclosures are discussed further
                below. The Bureau is not aware that States specifically require any
                other disclosures to appear on the front of the validation notice; as
                such, the Bureau concludes that disclosures specifically required by
                applicable law, other than in those few instances relating to time-
                barred debt, can be accommodated on the reverse of the validation
                notice. The Bureau also is not aware of font size, prominence, or
                placement requirements established by State or other applicable law
                that final Sec. 1006.34(d)(3)(iv) will not accommodate, as discussed
                further below. Further, the statement that Sec. 1006.34(d)(3)(iv)
                permits on the front of a validation notice is consistent with State
                laws that require statements on the front of the notice.\351\ The
                Bureau will continue to monitor whether disclosures required by other
                applicable law are inconsistent or conflict with Sec. 1006.34 or
                Regulation F generally, and if such an inconsistency or conflict is
                identified, the Bureau will endeavor to take action to address it. The
                Bureau also reiterates that, unlike the proposal, the final rule does
                not require the validation notice to be substantially similar to the
                model validation notice; thus, if Sec. 1006.34(d)(3)(iv) does not
                accommodate a disclosure required under State or other applicable law,
                then debt collectors can provide such a disclosure without necessarily
                violating the rule, but they would lose the Sec. 1006.34(d)(2) safe
                harbor.
                ---------------------------------------------------------------------------
                 \350\ As discussed in the section-by-section analysis of Sec.
                1006.34(d)(2), the final rule permits a debt collector who uses the
                model validation notice, specified variations of the model notice,
                or a substantially similar form to receive a safe harbor. Moreover,
                as discussed below in this section-by-section analysis of Sec.
                1006.34(d)(3)(iv), the Bureau is modifying how the statement
                required by Sec. 1006.34(d)(3)(iv) is disclosed on the model
                validation notice to mirror language on a disclosure required under
                Wisconsin law.
                 \351\ See, e.g., Colo. Rev. Stat. sec. 12-14-105(3)(c) (``In its
                initial written communication to a consumer, a collection agency
                shall include the following statement: `For information about the
                Colorado Fair Debt Collection Practices Act, see
                www.ago.state.co.us/cadc/cadcmain.cfm.' If the notification is
                placed on the back of the written communication, there shall be a
                statement on the front notifying the consumer of such fact.''); Wis.
                Admin. Code DFI-Bkg sec. 74.13 (``Unless the initial communication
                is written and contains the following notice or the debtor has paid
                the debt, a licensee shall send the debtor the following notice
                within 5 days after the initial communication with a debtor: `This
                collection agency is licensed by the Division of Banking in the
                Wisconsin Department of Financial Institutions, www.wdfi.org.' . . .
                here the notice required by sub. (1) is printed on the reverse side
                of any collection notice or validation sent by the licensee, the
                front of such notice shall bear the following statement in not less
                than 8 point type: ``Notice: See Reverse Side for Important
                Information.'').
                ---------------------------------------------------------------------------
                 The Bureau has revised Sec. 1006.34(d)(3)(iv) in response to
                feedback and for clarity. Final Sec. 1006.34(d)(3)(iv)(A) provides
                that the debt collector may include, on the reverse of the validation
                notice, any disclosures that are specifically required by, or that
                provide safe harbors under, applicable law and, if any such disclosures
                are included, a statement on the front of the validation notice
                referring to those disclosures. Final comment 34(d)(3)(iv)(A)-1
                clarifies that disclosures permitted by Sec. 1006.34(d)(3)(iv)(A)
                include, for example, specific disclosures required by Federal, State,
                or municipal statutes or regulations, and specific disclosures required
                by judicial or administrative decisions or orders, including
                administrative consent orders. The comment also describes how such
                disclosures could include, for example, time-barred debt disclosures
                and disclosures that the current amount of the debt may increase or
                vary due to interest, fees, or other charges, provided that such
                disclosures are specifically required by applicable law.
                 The Bureau has revised Sec. 1006.34(d)(3)(iv) and its accompanying
                commentary from the proposal to clarify the disclosures that are
                permitted by Sec. 1006.34(d)(3)(iv). Specifically, the revisions
                clarify that the provision applies if a debt collector must comply with
                a specific disclosure requirement under Federal, State, or local law,
                or under a judicial or administrative decision or order. As such, the
                Bureau emphasizes that this provision is not intended to capture
                circumstances in which a debt collector is not providing a disclosure
                that is required under a specific law, decision, or order, but rather
                the debt collector is providing a disclosure to try to comply with a
                more general legal requirement. For example, if the debt collector were
                to add language to the validation notice to try to avoid a finding of
                an unfair, deceptive, or abusive practice under Dodd-Frank Act section
                1031 or the FDCPA, that is not an optional disclosure covered by Sec.
                1006.34(d)(3)(iv). Debt collectors are not precluded from making such
                disclosures, but they will not receive the safe harbor under Sec.
                1006.34(d)(2).
                 The Bureau has made modifications to the final rule, moreover, to
                provide additional flexibility with respect to time-barred debt
                disclosures, in response to feedback to the proposal. Under new Sec.
                1006.34(d)(3)(iv)(B),\352\ if a debt collector is collecting time-
                barred debt, the debt collector may include on the front of the
                validation notice any time-barred debt disclosure that is specifically
                required by, or that provides a safe harbor under, applicable law,
                provided that applicable law specifies the content of the
                disclosure.\353\ New comment 34(d)(3)(iv)(B)-1 clarifies that, for
                example, if applicable State law requires a debt collector who is
                collecting time-barred debt to disclose to the consumer that the law
                limits how long a consumer can be sued on a debt and that the debt
                collector cannot or will not sue the consumer to collect it, the debt
                collector may include that disclosure on the front of the validation
                notice. New comment 34(d)(3)(iv)(B)-1 also includes a cross-reference
                to the definition of time-barred debt under Sec. 1006.26(a)(2) and
                clarifies that, for purposes of Sec. 1006.34(d)(3)(iv)(B), time-barred
                debt disclosures may include disclosures about revival of debt
                collectors' right to bring a legal action to enforce the debt. The
                Bureau concludes that providing additional flexibility to debt
                collectors to make these optional disclosures either on the front or
                reverse of the validation notice is warranted in view of circumstances
                in which it may be difficult to discern under applicable State or local
                law whether time-barred debt disclosures must appear on the front of a
                validation notice. Moreover, the Bureau is finalizing Sec.
                1006.34(d)(3)(iv)(B) in view of the
                [[Page 5828]]
                Bureau's decision not to finalize a requirement for debt collectors to
                provide disclosures relating to time-barred debt or revival laws,
                described in more detail in the section-by-section analysis of Sec.
                1006.26.
                ---------------------------------------------------------------------------
                 \352\ To permit this additional flexibility for time-barred debt
                disclosures as distinguished from other disclosures made under
                applicable law, the final rule has re-numbered proposed Sec.
                1006.34(d)(3)(iv), which would have specified that the applicable
                law disclosures are placed on the reverse side of the validation
                notice only, as Sec. 1006.34(d)(3)(iv)(A).
                 \353\ As with other disclosures required by or providing safe
                harbors under applicable law, debt collectors can also make the
                time-barred debt disclosures on the reverse of the validation notice
                pursuant to Sec. 1006.34(d)(3)(iv)(A). See comment 34(d)(3)(iv)(A)-
                1, which gives an example of a time-barred debt disclosure as a
                disclosure permitted by Sec. 1006.34(d)(3)(iv)(A).
                ---------------------------------------------------------------------------
                 The Bureau received feedback about modifying the scope of proposed
                Sec. 1006.34(d)(3)(iv). An industry trade group commenter stated that
                the Bureau should limit Sec. 1006.34(d)(3)(iv) to State laws and
                exclude disclosures required by judicial decisions or orders. According
                to the commenter, courts should not be permitted to dictate non-
                standard disclosures that would limit the efficacy of the model
                validation notice and result in validation notices that vary by
                jurisdiction. This commenter asserted that permitting courts to vary
                the model validation notice would be inconsistent with the framework in
                other consumer financial laws and regulations, such as TILA and
                Regulation Z, which do not permit courts to add disclosures to model
                forms. A group of consumer advocate commenters asked the Bureau to
                prohibit debt collectors from including disclosures that are permitted,
                but not required, by applicable law, because including all possible
                disclosures would overwhelm consumers. On the other hand, an industry
                trade group commenter asked the Bureau to allow debt collectors to
                include such disclosures.
                 The Bureau determines that Sec. 1006.34(d)(3)(iv) should cover
                disclosures required pursuant to judicial or administrative decisions
                or orders, including administrative consent orders. Permitting
                disclosures required by judicial or administrative decisions or orders
                to appear, like any State-law-required disclosures, on the reverse of a
                validation notice will neither undermine the efficacy of the model
                validation notice nor create validation notices that significantly vary
                by jurisdiction, other than on the reverse of the notice. Further, the
                Bureau concludes that permitting judicially mandated disclosures to
                appear on validation notices is not inconsistent with other consumer
                financial laws, as some commenters suggested. For instance, the Bureau
                understands that nothing in TILA and its implementing Regulation Z
                prohibit, as those commenters appeared to believe, creditors from
                making disclosures required pursuant to judicial orders or decisions.
                As noted above, final comment 34(d)(3)(iv)(A)-1 clarifies that the
                disclosures permitted by Sec. 1006.34(d)(3)(iv) include specific
                disclosures required by judicial decisions or orders.
                 In response to feedback, the Bureau also is finalizing Sec.
                1006.34(d)(3)(iv)(A) and comment 34(d)(3)(iv)(A)-1 to permit debt
                collectors to include disclosures that provide safe harbors under
                applicable law without losing the safe harbor for compliance under
                Sec. 1006.34(d)(2). Such disclosures can mitigate legal risks for debt
                collectors and reduce the potential for consumer harm.\354\ On the
                other hand, the Bureau declines to allow debt collectors to include
                disclosures on the validation notice that are merely permitted by other
                applicable law and still retain the safe harbor.\355\ Such disclosures
                may be irrelevant to consumers, and their inclusion on the validation
                notice may overwhelm consumers or overshadow more relevant disclosures.
                Nevertheless, as noted elsewhere, a debt collector who included such a
                disclosure would not necessarily violate Regulation F; that debt
                collector would, however, be outside the safe harbor for compliance.
                ---------------------------------------------------------------------------
                 \354\ Avila, 817 F.3d at 76 (adopting the safe harbor approach
                for debt collectors disclosing the amount of the debt when the
                balance may increase due to interest and fees adopted in Miller v.
                McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, LLC, 214 F.3d 872,
                876 (7th Cir. 2000)).
                 \355\ As discussed earlier in this section-by-section analysis,
                Sec. 1006.34(d)(3)(iv) has been revised in the final rule to
                clarify that the optional disclosures are those that are
                ``specifically'' required by applicable law or that provide a safe
                harbor under applicable law.
                ---------------------------------------------------------------------------
                 Some commenters suggested that the Bureau revise the text and
                placement of the Sec. 1006.34(d)(3)(iv) disclosure that appeared on
                the model validation notice. An industry trade group commenter noted
                that Wisconsin law allows disclosures on the reverse of the notice but
                requires the statement, ``Notice: See Reverse Side for Important
                Information.'' A group of consumer advocate commenters suggested that
                disclosures required by applicable law should be separately labeled as
                ``Disclosures Required by Your State'' and ``Disclosures Required by
                Local Federal Courts.''
                 Relatedly, some commenters noted that some State laws include
                specific prominence or font size requirements for validation notice
                disclosures. A comment letter from two associations of State regulatory
                agencies expressed concerns that proposed Sec. 1006.34(d)(3)(iv), as
                disclosed on the model validation notice, was not sufficiently
                prominent. In particular, these commenters objected that the statement
                about disclosures required by applicable law appeared below the Sec.
                1006.34(d)(3)(iii)(A) payment disclosure.
                 In response to feedback, the Bureau is including a new comment
                34(d)(3)(iv)(A)-2 to clarify how the disclosure described in Sec.
                1006.34(d)(3)(iv)(A) may appear depending on the delivery mechanism.
                The comment clarifies that, if a debt collector includes disclosures
                pursuant to Sec. 1006.34(d)(3)(iv)(A), the debt collector must include
                a statement on the front of the validation notice referring to those
                disclosures; and a debt collector may comply with the requirement to
                refer to the disclosures by including on the front of the validation
                notice the statement, ``Notice: See reverse side for important
                information,'' or a substantially similar statement. The comment
                further notes that if, as permitted by comment 34(d)(3)(iv)(A)-1, a
                debt collector places the disclosures below the content of the
                validation notice, the debt collector may comply with the requirement
                to refer to the disclosures by stating, ``Notice: See below for
                important information,'' or a substantially similar statement.
                 In response to feedback, the Bureau is also modifying how the
                statement required by Sec. 1006.34(d)(3)(iv) is disclosed on the model
                validation notice. Specifically, the Sec. 1006.34(d)(3)(iv) statement
                appears on the final model notice as: ``Notice: See Reverse Side for
                Important Information.'' \356\ The Bureau finds that this phrase is
                clearer, more conspicuous, and more likely to encourage consumer action
                than the proposed phrase, ``Review state law disclosures on reverse
                side, if applicable.'' Finally, the Bureau declines the suggestion to
                require debt collectors to label which disclosures are included
                pursuant to State law and which are included pursuant to judicial
                orders and decisions. That distinction likely makes little practical
                difference to consumers.
                ---------------------------------------------------------------------------
                 \356\ The Bureau based this statement on a Wisconsin disclosure
                requirement. See Wis. Admin. Code DFI-Bkg sec. 74.13.
                ---------------------------------------------------------------------------
                 The Bureau also determines that the Sec. 1006.34(d)(3)(iv)
                disclosure should be more prominent than in the proposed model
                validation notice, in part to account for the fact noted by some
                commenters that disclosures required by other applicable law may have
                prominence requirements, including clear and conspicuous requirements.
                The Bureau therefore has modified the model validation notice to
                further emphasize the Sec. 1006.34(d)(3)(iv) disclosure. Specifically,
                in contrast to the proposed model validation notice, on which the
                disclosure appeared in regular font in the middle of a list of other
                disclosures, the disclosure appears on the final model validation
                notice
                [[Page 5829]]
                underlined and in bold font and separated from other disclosures.
                 Commenters sought additional guidance about what constitutes the
                ``reverse side'' of the validation notice. Two industry trade group
                commenters recommended that the Bureau interpret ``reverse side'' as
                synonymous with ``next page'' to allow debt collectors to use a second
                page to provide disclosures required by other applicable law.
                Relatedly, one commenter stated that requiring a debt collector to
                print on both sides of a validation notice would increase costs. Two
                associations of State regulatory agencies asked the Bureau to clarify
                where State law disclosures should be placed on validation notices
                delivered electronically, since disclosures delivered electronically
                will not have a reverse side.
                 The Bureau recognizes that the meaning of ``on the reverse'' may
                vary by delivery method and format and that clarification is warranted,
                particularly as to validation notices delivered electronically. As
                such, the Bureau is adopting new comment 34(d)(3)(iv)(A)-1, which
                clarifies, in relevant part, that if a debt collector provides a
                validation notice in the body of an email, the debt collector may, in
                lieu of including the disclosures permitted by Sec.
                1006.34(d)(3)(iv)(A) on the reverse of the validation notice, include
                them in the same communication below the content of the validation
                notice. Furthermore, as discussed above, comment 34(d)(3)(iv)(A)-2
                notes that, if a debt collector places the disclosures below the
                content of the validation notice, the debt collector may comply with
                the requirement to refer to the disclosures by including the statement,
                ``Notice: See below for important information,'' or a substantially
                similar statement. These commentary provisions, therefore, address
                circumstances in which the validation notice is delivered in the body
                of an email.
                 The Bureau declines to permit debt collectors to place disclosures
                required by other applicable law on a second page while maintaining the
                Sec. 1006.34(d)(2) safe harbor, as some commenters requested. In Sec.
                1006.34(d)(2)(ii), the Bureau specifies two narrow circumstances in
                which debt collectors are permitted to include validation information
                on a second page because such information, presented on a second page,
                is likely to benefit consumers.\357\ And, in both cases, if a debt
                collector includes the disclosures on a second page, the debt collector
                loses the Sec. 1006.34(d)(2) safe harbor with respect to the second
                page. The Bureau determines that it is unwarranted to provide a safe
                harbor that would be more expansive both in scope and protection than
                the other targeted exceptions to debt collectors providing other
                applicable law disclosures on a second page. The Bureau notes that debt
                collectors may include such disclosures on a second page without
                necessarily violating the rule.
                ---------------------------------------------------------------------------
                 \357\ Final Sec. 1006.34(d)(2)(ii) allows a second page for
                debt collectors to provide information that would otherwise be
                provided in a relatively abbreviated itemization of the debt (i.e.,
                itemization on a second page and for the special rule regarding
                certain residential mortgage debt). This narrow exception allows the
                debt collector to potentially provide significantly more information
                to the consumer on a second page.
                ---------------------------------------------------------------------------
                 The Bureau is making one additional change not in response to
                comments. Section 1006.34(d)(3)(iv)(A) provides, in relevant part, that
                disclosures made under Sec. 1006.34(d)(3)(iv) must not appear directly
                on the reverse of the consumer-response information required by Sec.
                1006.34(c)(4), which appears on the front of the notice. This revision
                is included to ensure that debt collectors who choose to make the
                optional disclosures under Sec. 1006.34(d)(3)(iv) do not provide the
                disclosures in a place where the disclosures would be returned with the
                consumer-response information.
                 The Bureau notes that if, as permitted by Sec. 1006.34(d)(3)(iv),
                a debt collector includes on the front of a validation notice the
                required statement regarding disclosures under other applicable law
                (i.e., ``Notice: See reverse side for important information''), the
                debt collector must actually place such disclosures on the reverse.
                Conversely, a debt collector may not include disclosures under other
                applicable law on the reverse of a validation notice without including
                the statement about those disclosures on the front of the validation
                notice. The Bureau intended this effect when it proposed Sec.
                1006.34(d)(3)(iv) and notes it here for clarity.
                 Accordingly, the Bureau is finalizing Sec. 1006.34(d)(3)(iv) and
                its related commentary with both substantive revisions and minor
                wording changes.
                34(d)(3)(v) Information About Electronic Communications
                 Proposed Sec. 1006.34(d)(3)(v) provided that debt collectors could
                include certain information about electronic communications along with
                the validation information. First, proposed Sec. 1006.34(d)(3)(v)(A)
                provided that a debt collector could include the debt collector's
                website and email address. Second, proposed Sec. 1006.34(d)(3)(v)(B)
                provided that a debt collector could include, for validation
                information not provided electronically, the statement described in
                Sec. 1006.34(c)(3)(v) explaining how a consumer could take the actions
                described in Sec. 1006.34(c)(4) and Sec. 1006.34(d)(3)
                electronically.\358\ One industry commenter supported proposed Sec.
                1006.34(d)(3)(v), and the Bureau is finalizing it as proposed, with
                technical revisions to reflect conforming changes to final Sec.
                1006.34(c)(3)(v). For example, final Sec. 1006.34(d)(3)(v)(B) no
                longer contains a reference to Sec. 1006.34(d)(3) because final Sec.
                1006.34(c)(3)(v) itself no longer refers to Sec. 1006.34(d)(3).\359\
                ---------------------------------------------------------------------------
                 \358\ Proposed Sec. 1006.34(c)(3)(v) provided that such a
                statement was required validation information for validation notices
                provided electronically.
                 \359\ As discussed in the section-by-section analysis of Sec.
                1006.34(c)(3)(v), the final rule does not require debt collectors
                who provide validation notices electronically to include statements
                explaining how consumers can take the actions described in Sec.
                1006.34(d)(3) electronically.
                ---------------------------------------------------------------------------
                34(d)(3)(vi) Spanish-Language Translation Disclosures
                 Proposed Sec. 1006.34(d)(3)(vi) provided that a debt collector
                could include, along with the validation information, optional Spanish-
                language disclosures that consumers could use to request a Spanish-
                language validation notice. The proposal stated that Spanish-speaking
                LEP consumers may benefit from a Spanish-language disclosure informing
                them of their ability to request a Spanish-language translation, if a
                debt collector chooses to make such a translation available.\360\ The
                proposal stated that debt collectors may wish to provide validation
                information in Spanish, as doing so may facilitate their communications
                with consumers.
                ---------------------------------------------------------------------------
                 \360\ Spanish speakers represent the second-largest language
                group in the United States after English speakers. As of 2016, 40
                million residents in the United States ages five and older spoke
                Spanish at home. See U.S. Census Bureau, Profile America for Facts
                for Features CB17-FF.17: Hispanic Heritage Month 2017, at 4 (Oct.
                17, 2017), https://www.census.gov/newsroom/facts-for-features/2017/hispanic-heritage.html.
                ---------------------------------------------------------------------------
                 Consumer advocate commenters generally supported permitting debt
                collectors to provide certain Spanish-language disclosures along with
                the validation information. Some consumer advocate commenters
                recommended that the Bureau also require debt collectors to provide the
                disclosures described in proposed Sec. 1006.34(d)(3)(vi). A group of
                consumer advocate commenters urged the Bureau to require a debt
                collector to send a translated validation notice if the debt collector
                receives a request from a consumer seeking information in the
                [[Page 5830]]
                consumer's preferred language, including a request received using the
                proposed tear off portion of the validation notice.
                 An industry commenter supported proposed Sec. 1006.34(d)(3)(vi) on
                the understanding that the Spanish-language disclosures would be
                optional. According to the commenter, requiring debt collectors to
                provide foreign language disclosures would entail significant costs. An
                industry commenter and an industry trade group commenter asked the
                Bureau to clarify whether providing the proposed Sec.
                1006.34(d)(3)(vi) disclosures would obligate a debt collector to
                provide future communications in Spanish to the consumer. Some
                commenters raised questions about whether the validation period would
                be paused when a consumer requests a Spanish-language translation of
                the validation notice and then restart when it is received, with a
                local government commenter supporting such a revision in the final
                rule.
                 The Bureau declines to make the Spanish-language disclosures
                described in Sec. 1006.34(d)(3)(vi) mandatory. A requirement to
                provide the Sec. 1006.34(d)(3)(vi) disclosures, standing alone, would
                not be overly burdensome because the translation language is precisely
                described in the regulation and is also included on the model
                validation notice. However, the content of those disclosures means that
                mandating them would effectively compel debt collectors to provide
                translated validation notices to certain consumers (i.e., consumers who
                respond to the Sec. 1006.34(d)(3)(vi) disclosures by requesting a
                Spanish-language validation notice).\361\ As discussed in the proposal,
                the Bureau did not propose to require debt collectors to provide
                translated validation notices because of the associated costs of such a
                requirement,\362\ and the Bureau is declining to finalize such a
                requirement in this final rule.\363\
                ---------------------------------------------------------------------------
                 \361\ 15 U.S.C. 1692e.
                 \362\ 84 FR 23274, 23352 (May 21, 2019).
                 \363\ See the section-by-section analysis of Sec. 1006.34(e).
                ---------------------------------------------------------------------------
                 A debt collector who provides the optional disclosure described in
                Sec. 1006.34(d)(3)(vi) must honor a consumer's request for a
                translated validation notice or risk violating FDCPA section 807.
                However, the proposal did not expressly state that the debt collector
                would be obligated to provide the Spanish-language translation of the
                validation notice in this circumstance. The proposal only implied such
                an obligation. To make the rule clearer, the Bureau is finalizing a new
                Sec. 1006.34(e)(2), which provides that a debt collector who includes
                in the validation information either or both of the optional
                disclosures described in Sec. 1006.34(d)(3)(vi), and who thereafter
                receives a request from the consumer for a Spanish-language validation
                notice, must provide the consumer a validation notice completely and
                accurately translated into Spanish.\364\ The Bureau clarifies that,
                other than with respect to Sec. 1006.34(e)(2), nothing in the rule
                obligates a debt collector to provide future communications in Spanish
                solely because the debt collector provided a disclosure described in
                Sec. 1006.34(d)(3)(vi) in Spanish.
                ---------------------------------------------------------------------------
                 \364\ Id.
                ---------------------------------------------------------------------------
                 Regarding the commenters who asked for clarification about, or
                supported, restarting the validation period when the consumer requests
                a Spanish-language validation notice, the Bureau declines to mandate
                such a change but notes that debt collectors who voluntarily restart
                the validation period after providing a copy of the Spanish-language
                validation notice following the consumer's request do not violate the
                FDCPA or Regulation F.
                 For these reasons, the Bureau is finalizing Sec. 1006.34(d)(3)(vi)
                largely as proposed but with a revision to clarify that a debt
                collector may include either of the optional Spanish-language
                translation disclosures, or both of them.
                34(d)(3)(vi)(A)
                 Proposed Sec. 1006.34(d)(3)(vi)(A) provided that a debt collector
                could include a statement in Spanish informing a consumer that the
                consumer could request a Spanish-language validation notice.
                Specifically, the Bureau proposed in Sec. 1006.34(d)(3)(vi)(A) to
                permit the statement, ``P[oacute]ngase en contacto con nosotros para
                solicitar una copia de este formulario en espa[ntilde]ol,'' using that
                phrase or a substantially similar phrase in Spanish. In English, this
                phrase means, ``You may contact us to request a copy of this form in
                Spanish.'' The proposal clarified that a debt collector who provided
                this optional disclosure could also include supplemental information in
                Spanish specifying how a consumer could request a Spanish-language
                validation notice. Proposed comment 34(d)(3)(vi)(A)-1 explained that,
                for example, a debt collector could provide a statement in Spanish that
                a consumer could request a Spanish-language validation notice by
                telephone or email.
                 Consumer advocate commenters supported the Spanish-language
                disclosure described in proposed Sec. 1006.34(d)(3)(vi)(A). The Bureau
                received no other comments specifically addressing the disclosure.
                Accordingly, the Bureau is finalizing Sec. 1006.34(d)(3)(vi)(A) and
                its related commentary as proposed, with only minor wording changes.
                34(d)(3)(vi)(B)
                 Proposed Sec. 1006.34(d)(3)(vi)(B) provided that debt collectors
                could include in the consumer-response information section of the
                validation notice a statement in Spanish that a consumer could use to
                request a Spanish-language validation notice. Specifically, the Bureau
                proposed in Sec. 1006.34(d)(3)(vi)(B) to permit debt collectors to
                include the statement, ``Quiero esta forma en espa[ntilde]ol,'' using
                that phrase or a substantially similar phrase in Spanish. In English,
                this phrase means, ``I want this form in Spanish.'' Proposed Sec.
                1006.34(d)(3)(vi)(B) would have required this statement to be next to a
                prompt that the consumer could use to request a Spanish-language
                validation notice.
                 Consumer advocate commenters generally supported the Spanish-
                language disclosure described in proposed Sec. 1006.34(d)(3)(vi)(B).
                However, a group of consumer advocate commenters stated that the
                Spanish translation in proposed Sec. 1006.34(d)(3)(vi)(B) was
                inaccurate. Specifically, the commenters stated that the correct
                Spanish translation of ``form'' is ``formulario,'' not ``forma.'' The
                word ``forma'' appeared in both proposed Sec. 1006.34(d)(3)(vi)(B) and
                in the sample disclosure on the proposed model validation notice. The
                Bureau finds that ``formulario,'' not ``forma,'' is the correct Spanish
                translation of ``form.'' The Bureau also finds that, for gender
                agreement, Sec. 1006.34(d)(3)(vi)(B) should read ``este formulario,''
                not ``esta formulario.''
                 The Bureau is finalizing Sec. 1006.34(d)(3)(vi)(B), its related
                commentary, and the disclosure on the model validation notice as
                proposed, but with revisions to correct the translation errors and with
                other, minor wording changes for consistency with other provisions of
                the final rule.
                34(d)(3)(vii)
                 The Bureau proposed Sec. 1006.34(c)(2)(iii) to provide that the
                merchant brand, if any, associated with a credit card debt, to the
                extent available to the debt collector, is validation information that
                must be provided to the consumer. Proposed comment 34(c)(2)(iii)-1
                provided an example of
                [[Page 5831]]
                merchant brand information that the Bureau initially determined would
                be available to a debt collector and that, therefore, would be required
                on a validation notice.
                 For the reasons discussed below, the Bureau is not finalizing Sec.
                1006.34(c)(2)(iii) and its related commentary. Instead, the Bureau is
                restructuring and renumbering proposed Sec. 1006.34(c)(2)(iii) as a
                new optional disclosure under Sec. 1006.34(d)(3)(vii), which permits,
                but does not require, debt collectors to disclose the merchant brand,
                affinity brand, or facility name, if any, associated with the debt (and
                does not limit the optional disclosure to credit card debt).
                 Industry, industry trade group, and consumer advocate commenters
                uniformly agreed that, if available, merchant brand information may
                help consumers recognize debts. For example, consumer advocate
                commenters stated that, in the case of a store-branded credit card, a
                consumer may not associate the debt with the original creditor (often a
                bank) and may be more likely to recognize the merchant, whose name
                appears on the credit card. A group of consumer advocate commenters
                asserted that such information was important, impliedly suggesting that
                the Bureau require its disclosure as part of the validation
                information.
                 Although supportive of the proposed disclosure in principle, some
                industry trade group commenters asked the Bureau to clarify the
                circumstances in which merchant brand information would be deemed
                available. According to these commenters, whether merchant brand
                information is available may be unclear because it is not always
                identifiable in a consumer's file or a creditor may not have provided
                it. One industry trade group commenter stated that the proposed
                provision requiring disclosure of merchant brand information for credit
                cards as part of the validation information would better serve
                consumers and reduce compliance costs if the provision included broader
                categories than merchant brand names and was an optional, rather than
                mandatory, disclosure.
                 The Bureau received other comments about expanding the scope of
                proposed Sec. 1006.34(c)(2)(iii). An industry trade group commenter
                recommended that Sec. 1006.34(c)(2)(iii) also encompass affinity brand
                information (e.g., the name of a college). Other commenters recommended
                that debt collectors be permitted or required to disclose the facility
                name associated with a medical debt (e.g., the name of a hospital).
                According to commenters, a consumer may be more likely to recognize a
                facility where treatment was provided than the healthcare service
                provider that is the creditor. A group of consumer advocate commenters
                noted that increasingly a hospital name may act as a brand for an
                umbrella of service providers and thus should be treated in the same
                manner as a merchant brand.
                 The Bureau determines that merchant brand information may help
                consumers recognize debts. However, the Bureau agrees with the feedback
                that whether merchant brand information is available may not always be
                clear to a debt collector. This ambiguity is particularly likely with
                respect to debts that have been sold or transferred multiple times.
                Furthermore, not all creditors will have an associated merchant brand,
                at least one that is distinct from the creditor name.
                 Accordingly, in lieu of finalizing the requirement in proposed
                Sec. 1006.34(c)(2)(iii), the Bureau is adopting new Sec.
                1006.34(d)(3)(vii), which permits, rather than requires, debt
                collectors to disclose the merchant brand information, if any,
                associated with a debt. By making merchant brand an optional
                disclosure, the Bureau eliminates a source of potential ambiguity that
                could expose debt collectors to legal risk. In addition,
                notwithstanding this modification, the Bureau concludes that debt
                collectors will be incentivized to provide merchant brand information
                if it is available. Commenters uniformly agreed that merchant brand
                information helps consumers recognize debts.\365\ Thus, debt collectors
                likely will benefit from including merchant brand information if
                possible. Providing merchant brand information will also benefit
                consumers by allowing them to more easily identify debts, determine
                whether they owe them, and avoid the confusion resulting from seeing a
                validation notice with an unfamiliar name (which potentially leads to
                the consumer ignoring the notice).
                ---------------------------------------------------------------------------
                 \365\ See 84 FR 23274, 23340 (May 21, 2019) (citing the Bureau's
                consumer focus group findings that indicate consumers use merchant
                brands to recognize credit card debts).
                ---------------------------------------------------------------------------
                 The Bureau finds that affinity brand information and facility name
                information also may help consumers recognize debts they owe. Whereas a
                merchant brand can be generally understood as the labelling or branding
                of a commercial entity, such as a retail store, an affinity brand may
                reflect the labelling or branding of an entity that is not necessarily
                commercial but one with which the consumer has a relationship. For
                example, a higher education institution (e.g., ``College of Columbia'')
                or a charity may be associated with a consumer financial product (e.g.,
                a credit card provided by ``ABC Bank'') as an affinity brand. See
                comment 34(d)(3)(vii)-2. Moreover, facility name information (e.g.,
                ``ABC Hospital'') may prove more recognizable to consumers with respect
                to a medical debt than the name of, for example, the physicians group
                or laboratory that is the actual creditor (particularly if the consumer
                has one appointment or procedure at one facility that results in
                multiple bills from multiple providers). See comment 34(d)(3)(vii)-3.
                Thus, Sec. 1006.34(d)(3)(vii) also permits debt collectors to disclose
                an affinity brand or a facility name, if any, associated with a
                debt.\366\
                ---------------------------------------------------------------------------
                 \366\ Although Sec. 1006.34(d)(3)(vii) permits debt collectors
                to disclose the facility name associated with a medical debt along
                with the validation information, debt collectors may be prohibited
                from doing so by other applicable laws, such as healthcare privacy
                rules or regulations.
                ---------------------------------------------------------------------------
                 For these reasons, the Bureau is finalizing Sec.
                1006.34(d)(3)(vii) to provide that, along with the validation
                information, debt collectors may disclose the merchant brand, affinity
                brand, or facility name, if any, associated with a debt. The Bureau
                also is adopting new comments 34(d)(3)(vii)-1 through -3 to provide
                examples of a merchant brand, an affinity brand, and a facility name,
                respectively.
                34(d)(3)(viii)
                 The Bureau is finalizing Sec. 1006.34(d)(3)(viii) to provide that,
                although it is not required, a debt collector who is collecting debt
                not related to a consumer financial product or service may disclose
                certain additional information without losing the safe harbor provided
                by Sec. 1006.34(d)(2) (assuming the debt collector otherwise satisfies
                the conditions for the safe harbor). Specifically, Sec.
                1006.34(d)(3)(viii) provides that, if a debt collector is collecting
                debt other than debt related to a consumer financial product or service
                as defined in Sec. 1006.2(f), the debt collector may disclose: (1) The
                name of the creditor to whom the debt was owed on the itemization date
                (i.e., the information specified in Sec. 1006.34(c)(2)(iii)); or (2) a
                statement that informs the consumer that additional information
                regarding consumer protections in debt collection is available on the
                Bureau's website at www.cfpb.gov/debt-collection (i.e., the information
                specified in Sec. 1006.34(c)(3)(iv)). The Bureau determines that
                receipt of this
                [[Page 5832]]
                information may be helpful for consumers.
                34(d)(4) Validation Notices Delivered Electronically
                 As discussed in the proposal and in the November 2020 Final Rule,
                promoting electronic communications may benefit consumers and debt
                collectors.\367\ As also discussed in the proposal, allowing debt
                collectors to make certain formatting modifications to validation
                notices delivered electronically may help consumers exercise their
                verification rights under FDCPA section 809 and may facilitate a debt
                collector's ability to process and understand a consumer's response to
                such an electronically delivered validation notice. Proposed Sec.
                1006.34(d)(4) therefore provided several modifications, discussed in
                the section-by-section analysis of Sec. 1006.34(d)(4)(i) and (ii)
                below, that a debt collector could make, at its option, to the
                formatting of a validation notice delivered electronically.
                ---------------------------------------------------------------------------
                 \367\ See 84 FR 23274, 23351 (May 21, 2019); 85 FR 76734, 76755
                (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 An industry trade group commenter expressed support for proposed
                Sec. 1006.34(d)(4)'s facilitation of validation notices delivered
                electronically. The Bureau received no other comments specifically
                addressing proposed Sec. 1006.34(d). Accordingly, the Bureau is
                finalizing Sec. 1006.34(d)(4) with only minor wording changes.
                 The Bureau is finalizing Sec. 1006.34(d)(4) to implement and
                interpret FDCPA section 809(b) by establishing formatting requirements
                that facilitate the consumer's right to dispute a debt and request
                original-creditor information, and pursuant to its FDCPA section 814(d)
                authority to prescribe rules with respect to the collection of debts by
                debt collectors. The Bureau also is finalizing Sec. 1006.34(d)(4)
                pursuant to its authority under section 1032(a) of the Dodd-Frank Act
                to prescribe rules to ensure that the features of consumer financial
                products and services are disclosed fully, accurately, and effectively.
                34(d)(4)(i) Prompts
                 Proposed Sec. 1006.34(d)(4)(i) provided that a debt collector
                delivering a validation notice electronically pursuant to Sec. 1006.42
                could display any prompt required by Sec. 1006.34(c)(4)(i) or (ii) or
                (d)(3)(iii)(B) or (vi)(B) as a fillable field.\368\
                ---------------------------------------------------------------------------
                 \368\ 84 FR 23274, 23405 (May 21, 2019).
                ---------------------------------------------------------------------------
                 One industry trade group commenter supported proposed Sec.
                1006.34(d)(4)(i). According to the commenter, if a validation notice is
                delivered by email, a debt collector should be permitted to format the
                prompts in the consumer-response information section so that the debt
                collector receives an email if a consumer selects them. Another
                industry trade group commenter asked the Bureau to clarify whether a
                fillable field includes a checkbox.
                 A consumer advocate commenter raised concerns about permitting a
                debt collector to format the payment prompt described in Sec.
                1006.34(d)(3)(iii)(B) as a fillable field. According to the commenter,
                scammers could impersonate legitimate debt collectors and attempt to
                convince consumers to make payments on fraudulent debts using the
                payment prompts. The commenter urged the Bureau to evaluate the
                security risks associated with fillable payment prompts and consider
                other approaches.
                 The Bureau determines that allowing a debt collector to design a
                validation notice delivered electronically to include fillable prompts
                will benefit consumers and industry by making it easier for consumers
                to exercise their verification rights, make a payment, or request a
                Spanish-language translation of the notice. The Bureau does not find
                that permitting a debt collector to format the payment prompt described
                in Sec. 1006.34(d)(3)(iii)(B) as a fillable field entails substantial
                security risks. The Bureau acknowledges that, in general, electronic
                communications present certain security risks to consumers. However,
                the Bureau finds that these general risks do not justify preventing
                debt collectors from including in electronic communications common
                design modifications, such as prompts, that are convenient to
                consumers. Thus, the Bureau declines to limit the ability of legitimate
                debt collectors to include on validation notices a common design
                modification that will benefit consumers.\369\
                ---------------------------------------------------------------------------
                 \369\ With respect to the comment about whether a fillable field
                includes a checkbox, the Bureau confirms that a fillable field may
                appear as an unmarked checkbox that a consumer can select.
                ---------------------------------------------------------------------------
                 Accordingly, the Bureau is finalizing Sec. 1006.34(d)(4)(i)
                largely as proposed, with only minor wording changes for consistency
                with other provisions in the final rule.
                34(d)(4)(ii) Hyperlinks
                 Proposed Sec. 1006.34(d)(4)(ii) provided that a debt collector
                delivering a validation notice electronically could embed hyperlinks in
                the validation notice that, when clicked, would connect consumers to
                the debt collector's website or permit consumers to dispute a debt or
                request original-creditor information.
                 Industry trade group commenters supported proposed Sec.
                1006.34(d)(4)(ii). For example, a commenter stated that hyperlinks are
                an important feature used to reduce the complexity of email and text
                messages while allowing readers to access important information. A
                consumer advocate commenter recommended that the Bureau also permit
                debt collectors to embed a hyperlink that connects consumers to the
                Bureau's website address described in Sec. 1006.34(c)(3)(iv).
                 The Bureau determines that hyperlinks are a formatting modification
                that may benefit consumers and debt collectors if included in
                validation notices that are delivered electronically. And the Bureau
                agrees that debt collectors should be permitted to include a hyperlink
                that connects consumers to the Bureau's website address described in
                Sec. 1006.34(c)(3)(iv). Accordingly, the Bureau is finalizing Sec.
                1006.34(d)(4)(ii) to provide that debt collectors may embed hyperlinks
                that, when clicked, connect consumers to the debt collector's website,
                connect consumers to the Bureau's debt collection website as disclosed
                pursuant to Sec. 1006.34(c)(3)(iv), or permit consumers to dispute the
                debt or request original-creditor information.
                34(e) Translation Into Other Languages
                 The Bureau proposed Sec. 1006.34(e) to provide that a debt
                collector could send a consumer a validation notice completely and
                accurately translated into any language if the debt collector also sent
                an English-language validation notice that satisfied Sec.
                1006.34(a)(1). Proposed Sec. 1006.34(e) also provided that, if a debt
                collector already provided a consumer an English-language validation
                notice that satisfied Sec. 1006.34(a)(1) and subsequently provided the
                consumer a validation notice translated into any other language, the
                debt collector would not need to provide an additional copy of the
                English-language notice. Proposed comment 34(e)-1 clarified that the
                language of a validation notice obtained from the Bureau's website
                would be considered a complete and accurate translation, although debt
                collectors would be permitted to use other validation notice
                translations if they were accurate and complete.
                 Industry and industry trade group commenters supported proposed
                Sec. 1006.34(e) and its optional approach to providing validation
                notices translated into other languages. An industry trade group
                commenter stated that this approach was appropriate
                [[Page 5833]]
                because some debt collectors may not have the resources to conduct
                collections activities in languages other than English. Other industry
                trade group commenters stated that requiring debt collectors to provide
                validation notices in other languages would be burdensome and costly.
                An industry trade group commenter stated that, if a debt collector
                provided a validation notice in another language, a consumer would
                expect the debt collector to communicate in that language. According to
                this commenter, if the debt collector was unable to do so, this
                unfulfilled expectation would frustrate consumers and expose debt
                collectors to litigation risk.
                 Other commenters, including consumer advocates, legal aid
                providers, and faith groups, recommended that debt collectors be
                required to provide non-English validation notices to LEP consumers.
                According to these commenters, LEP consumers tend to experience poverty
                at much greater rates, face significant challenges navigating the debt
                collection process, and are often subject to harassment and deception.
                Commenters stated that English-language validation notices would not
                enable LEP consumers to understand their rights in debt collection or
                to take appropriate action if they did not believe that they owed a
                debt. Commenters cited demographic statistics showing the growing
                population of LEP consumers, particularly in certain localities. A
                consumer advocate commenter stated that case law suggests that a debt
                collector's failure to provide a non-English validation notice to an
                LEP consumer may violate the FDCPA.\370\
                ---------------------------------------------------------------------------
                 \370\ The commenter cited, for example, Evory v. RJM
                Acquisitions Funding LLC, 505 F.3d 769, 774 (7th Cir. 2007).
                However, the Bureau disagrees with the commenter's premise that this
                opinion and the others it cited imply a general requirement under
                the FDCPA to provide translated notices to all Spanish-speaking LEP
                consumers. The Bureau believes, instead, that those holdings were
                dependent on the facts of those cases. For example, Evory discussed
                in dicta a hypothetical in which a debt collector targeted
                vulnerable Spanish-speaking LEP consumers with English-language
                validation notices, 505 F.3d at 774, but that particular scenario
                involved targeting, which is beyond the scope of Sec. 1006.34(e).
                ---------------------------------------------------------------------------
                 To address these concerns, these commenters suggested various
                mandatory frameworks that would require debt collectors to provide
                translated validation notices to consumers. These suggested alternative
                frameworks included requiring debt collectors to provide a translated
                validation notice: (1) In Spanish and located on the back of every
                English-language validation notice; (2) with every English-language
                validation notice if the debt collector knows or should know the
                consumer has another language preference; (3) if the original
                transaction or the debt collector's prior communication was conducted
                in a foreign language; (4) upon a consumer's request; (5) if the debt
                collector received information in the file from the creditor or a prior
                debt collector indicating the consumer's non-English language
                preference; or (6) if and when the debt collector at a later point
                communicates with the consumer in a foreign language. In some cases,
                commenters framed these interventions as narrow or measured. A group of
                consumer advocates also urged the Bureau to make available on its
                website Spanish-translated validation notices as well as translations
                in the next seven most common languages spoken by LEP consumers in the
                United States.
                 The Bureau determines that LEP consumers may benefit from
                translated validation notices. Further, some debt collectors may want
                to provide translated validation notices to LEP consumers, if doing so
                is consistent with their business practices.
                 The Bureau, however, declines commenters' requests to require debt
                collectors to provide a Spanish-language translation to all consumers
                on the back of every English-language validation notice or a translated
                notice to consumers in other languages if the debt collector knows or
                should know the consumer has a different language preference. As
                discussed in the proposal,\371\ these types of mandatory approaches
                would result in significant, industry-wide costs on both an upfront
                (implementation) basis and an ongoing basis, especially for smaller
                debt collectors and in connection with translations of the validation
                notice in languages whose use is not prevalent in the United
                States.\372\ The Bureau acknowledges that some LEP consumers may
                experience particular challenges in the debt collection process.
                However, commenters did not provide information about the costs and
                benefits of requiring debt collectors to provide translated validation
                notices to all consumers, regardless of whether the consumer requests
                the translation, that persuades the Bureau that such mandatory
                requirements are justified. The Bureau, as stated above, recognizes the
                benefits of providing translated disclosures to consumers. However, the
                Bureau concludes that the approach in the proposal, supplemented by
                certain changes in the final rule, strikes a better balance than a
                mandatory requirement. The final rule permits debt collectors to
                provide disclosures carrying safe harbor protection that notify and
                encourage consumers to request a Spanish-language translation of the
                validation notice or additional information in Spanish, which can
                assist the largest group of LEP consumers in the United States by a
                wide margin compared to other languages. At the same time, the final
                rule does not require debt collectors to provide all consumers with
                translated validation notices, whether in Spanish or other languages,
                and irrespective of whether the consumers request it or speak a
                language that is uncommon among LEP consumers in the United States.
                ---------------------------------------------------------------------------
                 \371\ See also the section-by-section analysis of Sec.
                1006.34(d)(3)(vi).
                 \372\ See 84 FR 23274, 23352 (May 21, 2019).
                ---------------------------------------------------------------------------
                 Regarding the request by a group of consumer advocate commenters
                that the Bureau translate the validation notice into Spanish and seven
                other languages and deem the Bureau translations as complete and
                accurate, the Bureau plans to make available on its website, prior to
                the effective date of the final rule, a Spanish-language translation of
                the validation notice, and it will consider taking such action in the
                future with respect to one or more of the other languages cited by
                these commenters following implementation of the final rule.
                 The Bureau also declines to implement the other mandatory
                approaches suggested by consumer advocate, faith group, and legal aid
                provider commenters. As discussed above, these commenters suggested a
                variety of interventions, such as requiring the debt collector provide
                the translated notice in circumstances in which the consumer had
                expressed a language preference to a prior debt collector or the
                creditor and that preference is noted in the file for the debt, or in
                which, at a later point in the process, the consumer communicates in a
                foreign language.
                 The Bureau disagrees with some commenters' characterization of
                these interventions as targeted or narrow in scope, as each suggestion
                would entail a mandatory requirement with associated upfront and
                ongoing costs and complexity (which would be compounded if more than
                one or even all of these interventions were adopted collectively). In
                some cases, these suggested interventions are beyond the scope of the
                proposal. As to others, the Bureau concludes that the costs of such
                interventions to debt collectors, particularly smaller entities, would
                not outweigh the benefits to consumers because they would add undue
                complexity to the rule from an
                [[Page 5834]]
                operational, compliance, and supervisory perspective.
                 For these reasons, the Bureau declines to adopt a final rule that
                requires debt collectors to provide translated validation notices.
                Nevertheless, because the Bureau determines that, as discussed in the
                proposal, LEP consumers may benefit from receiving translated
                validation notices, the Bureau is finalizing Sec. 1006.34(e) to
                clarify how debt collectors may provide such notices if they choose.
                The Bureau is finalizing proposed Sec. 1006.34(e) as Sec.
                1006.34(e)(1), with certain revisions and organizational changes for
                clarity; no substantive change is intended. Furthermore, as discussed
                in the section-by-section analysis of Sec. 1006.34(d)(3)(vi), the
                Bureau is finalizing new Sec. 1006.34(e)(2) to provide that, if a debt
                collector includes in the validation information either or both of the
                optional disclosures notifying a consumer that the consumer can request
                a copy of the validation notice in Spanish, the debt collector must
                provide the consumer a Spanish-language validation notice if the
                consumer requests one. The Bureau intended this result in the proposal
                and is including Sec. 1006.34(e)(2) for clarity and in response to
                feedback. Finally, the Bureau is finalizing comment 34(e)-1 with
                revisions to conform to the revisions and organizational changes made
                to Sec. 1006.34(e); no substantive change is intended.
                Section 1006.38 Disputes and Requests for Original-Creditor Information
                 FDCPA section 809(b) requires debt collectors both to refrain from
                taking certain actions during the 30 days after the consumer receives
                the validation information or notice described in FDCPA section 809(a)
                (i.e., during the validation period) and to take certain actions if a
                consumer either disputes the debt in writing, or requests the name and
                address of the original creditor in writing, during the validation
                period. The Bureau proposed Sec. 1006.38 to implement and interpret
                FDCPA section 809(b) and (c), and the Bureau finalized the majority of
                proposed Sec. 1006.38 in the November 2020 Final Rule.\373\ The Bureau
                now is finalizing the remainder of proposed Sec. 1006.38 as follows.
                ---------------------------------------------------------------------------
                 \373\ 85 FR 76734, 74843-48, 76893 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                Comment 38-1
                 The Bureau proposed comment 38-2 (renumbered in the November 2020
                Final Rule as comment 38-1) to set forth examples of written and
                electronic communications consumers can use in disputing the debt or
                requesting the name and address of the original creditor.\374\ The
                second proposed example, proposed comment 38-2.ii, would have clarified
                that a consumer could return to the debt collector the consumer-
                response form that proposed Sec. 1006.34(c)(4)(i) would have required
                to appear on the validation notice and indicate on the form a dispute
                or request. The Bureau received no comments on proposed comment 38-
                2.ii.\375\ The Bureau did not finalize proposed comment 38-2.ii in the
                November 2020 Final Rule because the Bureau did not finalize Sec.
                1006.34 as part of that final rule. The Bureau now is finalizing
                comment 38-2.ii as proposed, renumbered as comment 38-1.ii, except that
                the Bureau is correcting a typographical error in the proposed comment
                such that the final comment cross references Sec. 1006.34(c)(4) rather
                than Sec. 1006.34(c)(4)(i).
                ---------------------------------------------------------------------------
                 \374\ 84 FR 23274, 23353 (May 21, 2019).
                 \375\ The Bureau addressed comments received on other aspects of
                proposed comment 38-2 in the November 2020 Final Rule. 85 FR 76734,
                76843-44 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                Comment 38-3
                 The Bureau proposed comment 38-1 (renumbered in this final rule as
                comment 38-3) to clarify the applicability of Sec. 1006.38 in the
                decedent debt context. Proposed comment 38-1 would have clarified that,
                if the consumer has not previously disputed the debt or requested the
                name and address of the original creditor, then a person who is
                authorized to act on behalf of the deceased consumer's estate operates
                as the consumer for purposes of Sec. 1006.38. Proposed comment 38-1
                also would have clarified that, if a person who is authorized to act on
                behalf of the deceased consumer's estate submits either a written
                request for original-creditor information or a written dispute to the
                debt collector during the validation period, then Sec. 1006.38(c) or
                (d)(2), respectively, would require the debt collector to cease
                collection of the debt until the debt collector has responded to that
                request or dispute.
                 For the reasons discussed in the section-by-section analysis of
                Sec. 1006.2(e), the Bureau is interpreting the term consumer to mean
                any natural person, whether living or deceased, who is obligated or
                allegedly obligated to pay any debt. And, pursuant to its authority
                under FDCPA section 814(d) to prescribe rules with respect to the
                collection of debts by debt collectors, the Bureau is adopting
                commentary clarifying how this definition operates in the decedent debt
                context, including debt collectors' obligations for providing the
                validation information and responding to disputes and requests for
                original-creditor information. Accordingly, the Bureau is finalizing
                comment 38-1 as proposed, renumbered as comment 38-3 in this final
                rule.
                38(a) Definitions
                38(a)(2) Validation Period
                 The Bureau proposed in Sec. 1006.38(a)(2) to provide that the term
                validation period as used in Sec. 1006.38 has the same meaning given
                to it in proposed Sec. 1006.34(b)(5).\376\ Because the Bureau did not
                finalize Sec. 1006.34 in the November 2020 Final Rule, the Bureau
                finalized the definition in Sec. 1006.38(a)(2) with revised wording to
                refer to the 30-day period described in FDCPA section 809 as defined by
                Regulation F.\377\ The Bureau noted that it might, as part of this
                final rule, revise the definition of validation period as finalized in
                the November 2020 Final Rule to cross-reference any definition of that
                term that the Bureau adopts in this final rule. As discussed in the
                section-by-section analysis of Sec. 1006.34(b)(5), the Bureau is
                finalizing the definition of validation period.\378\ Therefore, the
                Bureau is making a technical change revising Sec. 1006.38(a)(2), as
                finalized in the November 2020 Final Rule, to provide that the term
                validation period as used in Sec. 1006.38 has the same meaning given
                to it in Sec. 1006.34(b)(5).
                ---------------------------------------------------------------------------
                 \376\ 84 FR 23274, 23353 (May 21, 2019).
                 \377\ 85 FR 76734, 76844, 76893 (Nov. 30, 2020).
                 \378\ The Bureau addresses comments received regarding the
                definition of validation period in the section-by-section analysis
                of Sec. 1006.34(b)(5).
                ---------------------------------------------------------------------------
                38(b) Overshadowing of Rights To Dispute or Request Original-Creditor
                Information
                 FDCPA section 809(b) provides that, for 30 days after the consumer
                receives the validation information described in FDCPA section 809(a),
                a debt collector must not engage in collection activities or
                communications that overshadow or are inconsistent with the disclosure
                of the consumer's right to dispute the debt or request information
                about the original creditor.\379\ The Bureau proposed in
                [[Page 5835]]
                Sec. 1006.38(b) to implement this prohibition and generally restate
                the relevant statutory language, with only minor changes for style and
                clarity.\380\
                ---------------------------------------------------------------------------
                 \379\ This language was added to the FDCPA by the Financial
                Services Regulatory Relief Act of 2006, Public Law 109-351, sec.
                802(c), 120 Stat. 1966, 2006 (2006), after an FTC advisory opinion
                on the same subject. See Fed. Trade Comm'n, Advisory Opinion to
                American Collector's Ass'n (Mar. 31, 2000) (opining that the 30-day
                period set forth in FDCPA section 809(a) ``is a dispute period
                within which the consumer may insist that the debt collector verify
                the debt, and not a grace period within which collection efforts are
                prohibited'' but that ``[t]he collection agency must ensure,
                however, that its collection activity does not overshadow and is not
                inconsistent with the disclosure of the consumer's right to dispute
                the debt specified by [s]ection 809(a)'').
                 \380\ 84 FR 23274, 23353-54 (May 21, 2019).
                ---------------------------------------------------------------------------
                 As the Bureau discussed in the November 2020 Final Rule,\381\ the
                Bureau received a few substantive comments addressing proposed Sec.
                1006.38(b). Two industry commenters requested that the final rule
                define the term ``overshadowing.'' These commenters observed that debt
                collectors' communications of validation information almost always
                expressly advise the consumer of the right to dispute the debt and to
                request the name and address of the original creditor. These commenters
                asserted that overshadowing claims are nonetheless some of the most
                common allegations in FDCPA lawsuits. These commenters also requested
                clarity as to whether the safe harbor in proposed Sec. 1006.34(d)(2)
                for debt collectors who use the model validation notice also would
                provide a safe harbor for compliance with the overshadowing prohibition
                in proposed Sec. 1006.38(b). One industry commenter requested that the
                final rule clarify that credit reporting during the validation period
                does not constitute overshadowing.\382\
                ---------------------------------------------------------------------------
                 \381\ 85 FR 76734, 76844 (Nov. 30, 2020).
                 \382\ In addition, one industry commenter stated that it
                generally agreed with proposed Sec. 1006.38, and a group of
                consumer advocates that addressed proposed Sec. 1006.38(b) did not
                object to the proposal.
                ---------------------------------------------------------------------------
                 In the November 2020 Final Rule, the Bureau finalized proposed
                Sec. 1006.38(b) as Sec. 1006.38(b)(1) and reserved Sec.
                1006.38(b)(2).\383\ As noted above, proposed Sec. 1006.38(b) generally
                restated the relevant statutory language, with only minor changes for
                style and clarity, and Sec. 1006.38(b)(1) in the November 2020 Final
                Rule did the same. In the November 2020 Final Rule, the Bureau stated
                that it expected to address, as part of this final rule, the comments
                it received requesting further clarity about the safe harbor provided
                by Sec. 1006.34(d)(2), and the Bureau reserved Sec. 1006.38(b)(2) for
                that purpose.\384\
                ---------------------------------------------------------------------------
                 \383\ 85 FR 76734, 76844, 76893 (Nov. 30, 2020).
                 \384\ Id.
                ---------------------------------------------------------------------------
                 After considering the comments, the Bureau is finalizing in Sec.
                1006.38(b)(2) a safe harbor from the prohibition in Sec. 1006.38(b)(1)
                against overshadowing.\385\ Section 1006.38(b)(2) provides that a debt
                collector who uses Model Form B-1 in appendix B of this part in a
                manner described in Sec. 1006.34(d)(2) has not thereby violated Sec.
                1006.38(b)(1). Therefore, a debt collector who uses Model Form B-1 in
                appendix B to Regulation F, specified variations of the model notice,
                or a substantially similar form, has not thereby violated Sec.
                1006.38(b)(1). The safe harbor protects only the use of the model
                validation notice to comply with the information and form requirements
                of Sec. 1006.34(c) and (d)(1). If a debt collector uses the model
                validation notice as described in Sec. 1006.34(d)(2) and conducts
                other collection activities during the validation period, the debt
                collector does not receive a safe harbor for those other collection
                activities. A debt collector also does not receive a safe harbor for
                the manner in which a model validation notice is provided, such as the
                envelope in which a model validation notice is provided.
                ---------------------------------------------------------------------------
                 \385\ Accordingly, the heading for final Sec. 1006.38(b)(2)
                refers to the safe harbor, and the Bureau is revising: (1) The
                heading for Sec. 1006.38(b)(1) as finalized in the November 2020
                Final Rule to clarify that that paragraph relates to the
                overshadowing prohibition; and (2) Sec. 1006.38(b)(1) to omit a
                reference to the fact that the Bureau may provide in this part a
                safe harbor for debt collectors when they use certain Bureau-
                approved disclosures because the Bureau is providing that safe
                harbor in this final rule.
                ---------------------------------------------------------------------------
                 The Bureau declines to otherwise define the term ``overshadow'' or
                to clarify whether other collection activities during the validation
                period either violate or comply with the prohibition in final Sec.
                1006.38(b)(1). The Bureau finds that the safe harbor in Sec.
                1006.38(b)(2) provides sufficient clarity for debt collectors.
                38(c) Requests for Original-Creditor Information
                 FDCPA section 809(a)(5) states that the validation information a
                debt collector provides to a consumer must include a statement that,
                upon the consumer's written request within the 30-day validation
                period, the debt collector will provide the consumer with the name and
                address of the original creditor, if different from the current
                creditor. FDCPA section 809(b) provides that, if a consumer requests
                the name and address of the original creditor in writing within 30 days
                of receiving the validation information described in FDCPA section
                809(a), the debt collector must cease collection of the debt until the
                debt collector obtains and mails that information to the consumer. The
                Bureau proposed in Sec. 1006.38(c) to implement this prohibition and
                generally restate the relevant statutory language.
                 As the Bureau discussed in the November 2020 Final Rule, the Bureau
                received a number of comments addressing proposed Sec.
                1006.38(c).\386\ Three industry commenters requested that the final
                rule provide that, if a debt collector's communication of the
                validation information to a consumer identifies the original creditor,
                the debt collector need not give the consumer the option of requesting
                original-creditor information from the debt collector. These commenters
                stated that, if the original creditor has already been identified to a
                consumer, it would be confusing to the consumer to provide the option
                to request the name and address of the original creditor. Further, they
                stated, consumers could use unnecessary requests for original-creditor
                information as a tactic to delay or avoid collection. One industry
                commenter requested that the final rule clarify that a debt collector
                is not required to include original-creditor information in its
                communication of validation information to a consumer. This commenter
                stated that lawsuits are often filed alleging that a debt collector has
                violated the FDCPA by not identifying the original creditor in the
                validation information.
                ---------------------------------------------------------------------------
                 \386\ 85 FR 76734, 76844-45 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 Several commenters recommended that the Bureau define ``original
                creditor'' to mean the creditor at the time of charge off. According to
                an industry trade group, this definition would be consistent with other
                laws, including the Uniform Rules for New York State Trial Courts.\387\
                Other industry and industry trade group commenters stated that this
                definition would be appropriate for older debts because a consumer may
                no longer recognize the original creditor, particularly if an account
                has been sold. An industry trade group suggested that defining
                ``original creditor'' as the creditor at the time of charge off may
                resolve some compliance challenges in the retail installment sales
                context. According to the commenter, in retail installment sales, the
                original creditor is the retail seller, not the entity that ultimately
                buys the contract, and retail-seller information may not be readily
                available to the debt collector or helpful to the consumer.
                ---------------------------------------------------------------------------
                 \387\ ``Original creditor means the financial institution that
                owned the consumer credit account at the time the account was
                charged off, even if that financial institution did not originate
                the account. Charged-off consumer debt means a consumer debt that
                has been removed from an original creditor's books as an asset and
                treated as a loss or expense.'' 22 NYCRR 208.14-a(a)(2).
                ---------------------------------------------------------------------------
                 A group of consumer advocate commenters who addressed proposed
                Sec. 1006.38(c) generally noted the importance of original-creditor
                information to consumers in helping them recognize the debt in
                question. One commenter stated that the rule
                [[Page 5836]]
                should require debt collectors to identify the original creditor in the
                validation information.\388\
                ---------------------------------------------------------------------------
                 \388\ Consumer advocates also addressed the proposal's
                provisions regarding electronic delivery of original-creditor
                information (and other information) in proposed Sec. 1006.42. These
                comments regarding electronic delivery were addressed in the
                November 2020 Final Rule. Id. at 76848.
                ---------------------------------------------------------------------------
                 In the November 2020 Final Rule, the Bureau finalized proposed
                Sec. 1006.38(c) as Sec. 1006.38(c)(1) and reserved Sec.
                1006.38(c)(2).\389\ As noted above, proposed Sec. 1006.38(c) generally
                restated the relevant statutory language, and Sec. 1006.38(c)(1) in
                the November 2020 Final Rule did the same.\390\ In the November 2020
                Final Rule, the Bureau stated that it expected to address, as part of
                this final rule, how a debt collector may respond to a request for
                original-creditor information if the original creditor is the same as
                the current creditor, and the Bureau reserved Sec. 1006.38(c)(2) for
                that purpose.\391\ The Bureau also noted that it would respond in this
                final rule to the comments asking the Bureau to define the term
                original creditor.
                ---------------------------------------------------------------------------
                 \389\ Id. at 76893.
                 \390\ While this final rule republishes in Sec. 1006.38(c) some
                of the text of Sec. 1006.38(c)(1) as finalized in the November 2020
                Final Rule, this final rule makes no change to the substance of
                Sec. 1006.38(c)(1) from what the Bureau finalized in the November
                2020 Final Rule.
                 \391\ 85 FR 76734, 76845 n.557 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 The Bureau has determined that a debt collector's communication of
                the validation information must include disclosure of the option to
                request original-creditor information. As noted above, FDCPA section
                809(a)(5) states that the validation information must include ``a
                statement that, upon the consumer's written request within the thirty-
                day period, the debt collector will provide the consumer with the name
                and address of the original creditor, if different from the current
                creditor.'' \392\ Because FDCPA section 809(a) requires the validation
                information to include disclosure of the consumer's right to request
                original-creditor information, the Bureau finds that consumer confusion
                would result if the final rule were to permit a debt collector not to
                respond to a consumer's timely request for that information if the
                original creditor is the same as the current creditor. Further, FDCPA
                section 809(b) states that ``[a]ny 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.'' \393\
                The Bureau therefore has determined to require a debt collector to
                respond to a consumer's request for original-creditor information if
                the original creditor is the same as the current creditor.
                ---------------------------------------------------------------------------
                 \392\ 15 U.S.C. 1692g(a)(5).
                 \393\ 15 U.S.C. 1692g(b) (emphasis added).
                ---------------------------------------------------------------------------
                 However, the Bureau also has determined that FDCPA section
                809(a)(5) and (b) permits a debt collector to respond differently to
                the consumer's request for original-creditor information when the
                original creditor is the same as the current creditor. Specifically,
                the Bureau has determined that FDCPA section 809(b), when read together
                with FDCPA section 809(a)(5), requires the debt collector to provide
                the name and address of the original creditor to the consumer only if
                the original creditor is different from the current creditor.
                Accordingly, the Bureau is finalizing new Sec. 1006.38(c)(2) to set
                forth an alternative procedure that a debt collector may use to respond
                to a consumer's request for original-creditor information if the
                original creditor is the same as the current creditor. Specifically, if
                a debt collector receives a request for the name and address of the
                original creditor submitted by the consumer in writing within the
                validation period, the special rule set forth in Sec. 1006.38(c)(2)
                provides that the debt collector must cease collection of the debt
                until the debt collector reasonably determines that the original
                creditor is the same as the current creditor and either (i) notifies
                the consumer in writing or electronically in the manner required by
                Sec. 1006.42 that the original creditor is the same as the current
                creditor and refers the consumer to the debt collector's earlier
                provision of the validation information or (ii) satisfies Sec.
                1006.38(c)(1).
                 Under the final rule, a debt collector is not required to use the
                alternative procedure in Sec. 1006.38(c)(2); a debt collector can
                always comply with the rule by complying with Sec. 1006.38(c)(1). By
                adopting the Sec. 1006.38(c)(2) alternative procedure, the Bureau
                strikes the best balance between providing debt collectors with a less
                burdensome method of responding to consumer requests for original-
                creditor information and protecting consumers.
                 The Bureau adopts the alternative procedure in Sec. 1006.38(c)(2)
                as an interpretation of FDCPA section 809(a)(5) and (b), and pursuant
                to its authority under FDCPA section 814(d). In particular, Sec.
                1006.38(c)(2) is an interpretation of what it means for a debt
                collector, pursuant to FDCPA section 809(b), to ``obtain[ ] . . . the
                name and address of the original creditor'' and send that information
                to the consumer when, pursuant to FDCPA section 809(a)(5), the debt
                collector already provided the name of the current creditor to the
                consumer within the validation information (as required by FDCPA
                section 809(a)(2) and Sec. 1006.34(c)(2)(v)) and the original creditor
                is not different from the current creditor. If the original creditor is
                the same as the current creditor, the Bureau interprets FDCPA section
                809(b)'s requirement to provide original-creditor information to the
                consumer to mean that a debt collector must cease collection of the
                debt until the debt collector either provides the name and address of
                the original creditor to the consumer in compliance with Sec.
                1006.38(c)(1) or, in compliance with Sec. 1006.38(c)(2), notifies the
                consumer in writing or electronically in the manner required by Sec.
                1006.42 that the original creditor is the same as the current creditor
                and refers the consumer to the debt collector's earlier provision of
                the validation information.
                 The Bureau declines to require all debt collectors to include the
                name of the original creditor in the validation information because the
                Bureau believes such a requirement is not necessary or warranted. The
                statute prescribes a method for a consumer to obtain this information
                upon request. Further, the Bureau interprets FDCPA section 809(a)(2) as
                requiring debt collectors to disclose in the validation information the
                name of the current creditor; i.e., ``the name of the creditor to whom
                the debt is owed.''
                 The Bureau declines to define ``original creditor'' in the manner
                commenters suggested. Although the definition suggested by commenters
                might be accurate for some debts, it is not clear to the Bureau that
                the suggested definition would be accurate for all debts. The Bureau
                did not propose such a definition and the Bureau does not have
                sufficient information to develop and include a definition of
                ``original creditor'' in the rule.
                 Taking into consideration the provisions of FDCPA section 809(a)
                and (b), the final rule provides debt collectors an alternative
                response procedure, described above, when the original creditor--which
                in many cases will be the creditor as of the itemization date--is the
                same as the current creditor. The alternative procedure permits debt
                collectors to respond to some consumer requests for original-creditor
                information in a less burdensome way, while also protecting consumers.
                Therefore, the Bureau believes that defining original creditor in the
                final rule is unnecessary and unwarranted.
                [[Page 5837]]
                Section 1006.42 Sending Required Disclosures
                42(a) Sending Required Disclosures
                42(a)(2) Exceptions
                 The Bureau proposed in Sec. 1006.42(a)(2) to provide that a debt
                collector need not comply with Sec. 1006.42(a)(1) when providing the
                disclosure required by Sec. 1006.6(e) or Sec. 1006.18(e) in writing
                or electronically, unless the disclosure was included on a notice
                required by Sec. 1006.34(a)(1)(i) or Sec. 1006.38(c) or (d)(2).\394\
                Because the Bureau did not finalize Sec. 1006.34 in the November 2020
                Final Rule, the Bureau finalized Sec. 1006.42(a)(2) with a reference
                to the notice required by FDCPA section 809(a), as implemented by
                Regulation F, in lieu of a reference to the notice required by Sec.
                1006.34(a)(1)(i).\395\ Because the Bureau is now finalizing Sec.
                1006.34, the Bureau is making a technical change revising Sec.
                1006.42(a)(2) to refer to the notice required by Sec.
                1006.34(a)(1)(i), as originally proposed. The Bureau addressed comments
                received regarding proposed Sec. 1006.42(a)(2) in the section-by-
                section analysis of Sec. 1006.42(a)(2) in the November 2020 Final
                Rule.\396\
                ---------------------------------------------------------------------------
                 \394\ 84 FR 23274, 23357-59 (May 21, 2019).
                 \395\ 85 FR 76734, 76893 (Nov. 30, 2020).
                 \396\ Id. at 76850-51.
                ---------------------------------------------------------------------------
                42(b) Requirements for Certain Disclosures Sent Electronically
                 Proposed Sec. 1006.42(b)(1) generally would have required a debt
                collector who provided the validation notice described in Sec.
                1006.34(a)(1)(i)(B) electronically to do so in accordance with section
                101(c) of the E-SIGN Act.\397\ Because the Bureau did not finalize
                Sec. 1006.34 in the November 2020 Final Rule, the Bureau finalized
                Sec. 1006.42(b) with a reference to the notice required by FDCPA
                section 809(a), as implemented by Regulation F, in lieu of a reference
                to the validation notice described in Sec. 1006.34(a)(1)(i)(B).\398\
                Because the Bureau is now finalizing Sec. 1006.34, the Bureau is
                making a technical change revising Sec. 1006.42(b) to refer to the
                validation notice required by Sec. 1006.34(a)(1)(i)(B), as originally
                proposed. The Bureau addressed comments received regarding proposed
                Sec. 1006.42(b)(1) in the section-by-section analysis of Sec.
                1006.42(b) in the November 2020 Final Rule.\399\
                ---------------------------------------------------------------------------
                 \397\ 84 FR 23274, 23356-57 (May 21, 2019).
                 \398\ 85 FR 76734, 76893 (Nov. 30, 2020).
                 \399\ Id. at 76850-51.
                ---------------------------------------------------------------------------
                Subpart C--Reserved
                Subpart D--Miscellaneous
                Section 1006.100 Record Retention
                100(a) In General
                 Section 1006.100(a), as finalized in the November 2020 Final Rule,
                requires a debt collector to retain records that are evidence of
                compliance or non-compliance with the FDCPA and Regulation F. The
                Bureau proposed comment 100-1 to clarify that, for purposes of Sec.
                1006.100(a), evidence of compliance includes, among other things,
                copies of documents provided by the debt collector to the consumer in
                accordance with the requirements of proposed Sec. 1006.34.\400\
                Because the Bureau did not finalize Sec. 1006.34 in the November 2020
                Final Rule, the Bureau finalized comment 100(a)-1 to include, as an
                example of evidence of compliance, copies of documents provided by the
                debt collector to the consumer in accordance with FDCPA section 809(a),
                as implemented by Bureau regulation.\401\ Because the Bureau now is
                finalizing Sec. 1006.34, the Bureau is making a technical change
                revising comment 100(a)-1 to include, as an example of evidence of
                compliance, copies of documents provided by the debt collector to the
                consumer in accordance with Sec. 1006.34, as originally proposed. The
                Bureau addressed comments received regarding proposed comment 100-1 in
                the section-by-section analysis of Sec. 1006.100(a) and comment
                100(a)-1 in the November 2020 Final Rule.\402\
                ---------------------------------------------------------------------------
                 \400\ 84 FR 23274, 23367 (May 21, 2019).
                 \401\ 85 FR 76734, 76907 (Nov. 30, 2020).
                 \402\ Id. at 76858 n.600.
                ---------------------------------------------------------------------------
                Section 1006.104 Relation to State Laws
                 FDCPA section 816 provides that the FDCPA does not annul, alter, or
                affect, or exempt any person subject to the provisions of the FDCPA
                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 the FDCPA, and then only to the
                extent of the inconsistency. FDCPA section 816 also provides that, for
                purposes of that section, a State law is not inconsistent with the
                FDCPA if the protection such law affords any consumer is greater than
                the protection provided by the FDCPA.\403\ The November 2020 Final Rule
                finalized Sec. 1006.104 to implement FDCPA section 816.\404\
                ---------------------------------------------------------------------------
                 \403\ 15 U.S.C. 1692n.
                 \404\ 85 FR 76734 at 76860 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 Proposed comment 104-1 clarified that a disclosure required by
                applicable State law that describes additional protections under State
                law does not contradict the requirements of the FDCPA or the
                corresponding provisions of Regulation F.\405\ In the November 2020
                Final Rule, the Bureau indicated that it was not finalizing proposed
                comment 104-1 as part of that rule and would determine whether and how
                to finalize the comment as part of this final rule.\406\
                ---------------------------------------------------------------------------
                 \405\ 84 FR 23274, 23368 (May 21, 2019).
                 \406\ 85 FR 76734, 76860 (Nov. 30, 2020).
                ---------------------------------------------------------------------------
                 As discussed in the November 2020 Final Rule, some commenters asked
                the Bureau to clarify how proposed comment 104-1 would interact with
                State law disclosure requirements.\407\ According to these commenters,
                the proposed commentary did not track FDCPA section 816's statutory
                language and therefore would be susceptible to competing
                interpretations. These commenters expressed concern that proposed
                comment 104-1 could be interpreted to mean that Sec. 1006.104 would
                preempt State law disclosure requirements that afford the same
                protections as the FDCPA and the corresponding provisions of Regulation
                F. These commenters opposed such an interpretation as inconsistent with
                FDCPA section 816.
                ---------------------------------------------------------------------------
                 \407\ Id.
                ---------------------------------------------------------------------------
                 With proposed comment 104-1, the Bureau did not intend to
                communicate that Sec. 1006.104 would preempt disclosures required by
                State law that describe State laws that afford the same protections as
                the FDCPA and the corresponding provisions of Regulation F. To mitigate
                the risk that the proposed commentary could be interpreted in this
                manner, the Bureau is modifying proposed comment 104-1 to more closely
                track FDCPA section 816's statutory language.
                 Accordingly, the Bureau is finalizing comment 104-1 to clarify that
                the FDCPA and the corresponding provisions of Regulation F do not
                annul, alter, or affect, or exempt any person subject to these
                requirements from complying with a disclosure requirement under
                applicable State law that describes additional protections under State
                law that are not inconsistent with the FDCPA and Regulation F. In
                addition, comment 104-1 clarifies that a disclosure required by State
                law is not inconsistent with the FDCPA or Regulation F if the
                disclosure describes a protection such law affords any consumer that is
                greater than the protection provided by the FDCPA or Regulation F.
                [[Page 5838]]
                VI. Effective Date
                 As discussed in the November 2020 Final Rule, the Bureau proposed
                an implementation period of one year after publication of the final
                rule in the Federal Register.\408\ The Bureau received several comments
                on the proposed effective date. As noted in the November 2020 Final
                Rule, a few industry commenters supported the proposed effective date,
                stating that a one-year implementation period would provide debt
                collectors with enough time to comply with the rule. Two other industry
                commenters supported an 18-month and a 24-month implementation period,
                respectively, arguing that it would take longer than one year to update
                policies and procedures, train employees, and make programming changes
                necessary to come into compliance. A government commenter encouraged
                the Bureau to provide small entities more than one year to comply, if
                such entities were not exempted from the rule altogether. Several
                industry commenters asked the Bureau to clarify that a debt collector
                is permitted to comply with all or part of the final rule before the
                effective date.
                ---------------------------------------------------------------------------
                 \408\ 85 FR 76734, 76863 (Nov. 30, 2020); see also 84 FR 23274,
                23276 (May 21, 2019).
                ---------------------------------------------------------------------------
                 The Bureau considered those comments in finalizing the November
                2020 Final Rule and determined that that final rule would take effect
                one year after publication in the Federal Register. The Bureau
                determined that the revisions made to the proposal and discussed in
                that Final Rule would permit debt collectors to meet that effective
                date. The Bureau also recognized that all stakeholders might benefit if
                the November 2020 Final Rule and this final rule had the same effective
                date.
                 As noted in part III, the November 2020 Final Rule was published in
                the Federal Register on November 30, 2020 and will take effect on
                November 30, 2021. The Bureau concludes that all stakeholders will
                benefit if the November 2020 Final Rule and this final rule have the
                same effective date. The Bureau also determines that setting the
                effective date for this final rule as November 30, 2021, consistent
                with the effective date of the November 2020 Final Rule, will provide
                debt collectors nearly one year, and therefore sufficient time, to come
                into compliance with this final rule.
                 The Bureau notes that debt collectors may, but are not required to,
                comply with the final rule's requirements and prohibitions before the
                effective date. Until that date, the FDCPA and other applicable law
                continue to govern the conduct of FDCPA debt collectors. Similarly, to
                the extent the final rule establishes a safe harbor from liability for
                certain conduct or a presumption that certain conduct complies with or
                violates the rule, those safe harbors and presumptions are not
                effective until the final rule's effective date.
                VII. Dodd-Frank Act Section 1022(b) Analysis
                A. Overview
                 In developing the final rule, the Bureau has considered the
                potential benefits, costs, and impacts as required by section
                1022(b)(2)(A) of the Dodd-Frank Act.\409\
                ---------------------------------------------------------------------------
                 \409\ Specifically, section 1022(b)(2)(A) of the Dodd-Frank Act
                (12 U.S.C. 5512(b)(2)(A)) requires the Bureau to consider the
                potential benefits and costs of the regulation to consumers and
                covered persons, including the potential reduction of access by
                consumers to consumer financial products and services; the impact of
                the rule on insured depository institutions and insured credit
                unions with less than $10 billion in total assets as described in
                section 1026 of the Dodd-Frank Act (12 U.S.C. 5516); and the impact
                on consumers in rural areas.
                ---------------------------------------------------------------------------
                 Debt collectors play a critical role in markets for consumer
                financial products and services. Credit markets function because
                lenders expect that borrowers will pay them back. In consumer credit
                markets, if borrowers fail to repay what they owe per the terms of
                their loan agreement, creditors often engage debt collectors to attempt
                to recover amounts owed, whether through the court system or through
                less formal demands for repayment.
                 In general, third-party debt collection creates the potential for
                market failures. Consumers do not choose their debt collectors, and, as
                a result, debt collectors do not have the same incentives that
                creditors have to treat consumers fairly.\410\ Certain provisions of
                the FDCPA may help mitigate such market failures in debt collection,
                for example by prohibiting unfair, deceptive, or abusive debt
                collection practices by third-party debt collectors.
                ---------------------------------------------------------------------------
                 \410\ Consumers do choose their lenders, and, in principle,
                consumer loan contracts could specify which debt collector would be
                used or what debt collection practices would be in the event a loan
                is not repaid. Some economists have identified potential market
                failures that prevent loan contracts from including such terms even
                when they could make both borrowers and lenders better off. For
                example, terms related to debt collection may not be salient to
                consumers at the time a loan is made. Alternatively, if such terms
                are salient, a contract that provides for more lenient collection
                practices may lead to adverse selection, attracting a
                disproportionate share of borrowers who know they are more likely to
                default. See Thomas A. Durkin et al., Consumer Credit and the
                American Economy 521-25 (Oxford U. Press 2014) (discussing potential
                sources of market failure and potential problems with some of those
                arguments). See also Erik Durbin & Charles Romeo, The Economics of
                Debt Collection: With attention to the issue of salience of
                collections at the time credit is granted, Journal of Credit Risk
                (Sept. 4, 2020) (discussing how rules that limit debt collection
                affect consumer welfare when debt collection is not salient to
                consumers when they borrow).
                ---------------------------------------------------------------------------
                 Any restriction on debt collection may reduce repayment of debts,
                providing a benefit to some consumers who owe debts and an offsetting
                cost to creditors and debt collectors. A decrease in repayment will in
                turn lower the expected return to lending. This can lead lenders to
                increase interest rates and other borrowing costs and to restrict
                availability of credit, particularly to higher-risk borrowers.\411\
                Because of this, policies that increase protections for consumers with
                debts in collection involve a tradeoff between the benefits of
                protections for those consumers and the possibility of increased costs
                of credit and reduced availability of credit for all consumers. Whether
                there is a net benefit from such protections depends on whether
                consumers value the protections enough to outweigh any associated
                increase in the cost of credit or reduction in availability of credit.
                ---------------------------------------------------------------------------
                 \411\ See Thomas A. Durkin et al., Consumer Credit and the
                American Economy 521-25 (Oxford U. Press 2014) (discussing theory
                and evidence on how restrictions on creditor remedies affect the
                supply of credit). Empirical evidence on the impact of State laws
                restricting debt collection is discussed in section G below. The
                provisions in this final rule could also affect consumer demand for
                credit, to the extent that consumers contemplate collection
                practices when making borrowing decisions. However, there is
                evidence suggesting that consumer demand for credit is generally not
                responsive to differences in creditor remedies. See James Barth et
                al., Benefits and Costs of Legal Restrictions on Personal Loan
                Markets, Journal of Law & Economics, 29(2) (1986).
                 \411\ See 15 U.S.C. 1692(e).
                ---------------------------------------------------------------------------
                 The final rule will further the FDCPA's goals of eliminating
                abusive debt collection practices and ensuring that debt collectors who
                refrain from such practices are not competitively disadvantaged.\412\
                However, as discussed below, it is not clear based on the information
                available to the Bureau whether the net effect of the final rule will
                be to make it more costly or less costly for debt collectors to recover
                unpaid amounts, and therefore not clear whether the rule will tend to
                increase or decrease the supply of credit. The final rule will benefit
                both consumers and debt collectors by increasing clarity and certainty
                about what the FDCPA prohibits and requires. When a law is unclear, it
                is more likely that parties will disagree about what the law requires,
                that legal disputes will arise, and that litigation will be required to
                resolve disputes. Since 2010, consumers have filed approximately 8,000
                to 12,000 lawsuits under the FDCPA each year, some of which involve
                issues on
                [[Page 5839]]
                which the law is unclear.\413\ The number of disputes settled without
                litigation has likely been much greater.\414\ Perhaps more important
                than the costs of resolving legal disputes are the steps that debt
                collectors take to prevent legal disputes from arising in the first
                place. This includes direct costs of legal compliance, such as auditing
                and legal advice, as well as indirect costs from avoiding collection
                practices that might be both effective and legal but that raise
                potential legal risks. In some cases, debt collectors seeking to follow
                the law and avoid litigation have adopted practices that appear to be
                economically inefficient, with costs that exceed the benefits to
                consumers or even impose net costs on consumers.\415\
                ---------------------------------------------------------------------------
                 \412\ See id.
                 \413\ See WebRecon LLC, WebRecon Stats for Dec 2019 & Year in
                Review, https://webrecon.com/webrecon-stats-for-dec-2019-and-year-in-review-how-did-your-favorite-statutes-fare/ (last visited Dec. 1,
                2020). Greater clarity about legal requirements could reduce
                unintentional violations and could also reduce lawsuits because,
                when parties can better predict the outcome of a lawsuit, they may
                be more likely to settle claims out of court.
                 \414\ Some debt collectors have reported that they receive
                approximately 10 demand letters from attorneys asserting a violation
                of the FDCPA for each lawsuit filed. See Small Business Review Panel
                Outline, supra note 39, at 69 n.105.
                 \415\ For example, as discussed further below, debt collectors
                typically may disclose only the information that FDCPA section
                809(a) specifically references and may provide the FDCPA section 809
                information using statutory language, rather than plain language
                that consumers can more easily comprehend.
                ---------------------------------------------------------------------------
                 This final rule relating to disclosures could make debt collection
                either more or less costly in ways that are difficult to predict. For
                example, the validation notice requirements will provide consumers with
                more information than they currently receive about debts, which could
                reduce costs to consumers and debt collectors from disputes that arise
                when consumers do not recognize the debt or do not understand the basis
                for the alleged amount due. At the same time, the final rule's clearer
                explanation of dispute rights could make consumers more likely to
                dispute, which could provide benefits to consumers while increasing
                costs for debt collectors. Disputes are costly for debt collectors to
                process, so these requirements could either increase or decrease debt
                collector and consumer costs depending on the net effect on dispute
                rates.
                 In developing the final rule, the Bureau has consulted, or offered
                to consult with, the appropriate prudential regulators and other
                Federal agencies, including regarding consistency with any prudential,
                market, or systemic objectives administered by such agencies.
                B. Provisions To Be Analyzed
                 The analysis below considers the potential benefits, costs, and
                impacts to consumers and covered persons of key provisions of the final
                rule (provisions), which include:
                 1. Time-barred debt: Prohibiting suits and threats of suit.
                 2. Notice for validation of debts.
                 3. Required actions prior to furnishing information.
                C. Data Limitations and Quantification of Benefits, Costs, and Impacts
                 The discussion in this part VII relies on publicly available
                information as well as information the Bureau has obtained. To better
                understand consumer experiences with debt collection, the Bureau
                developed its 2015 Survey of Consumer Views on Debt, which provided the
                first comprehensive and nationally representative data on consumers'
                experiences and preferences related to debt collection.\416\ In
                addition, the Bureau relies on its Consumer Credit Panel (CCP) to
                understand potential benefits and costs to consumers of the rule.\417\
                To better understand potential effects of the rule on industry, the
                Bureau has engaged in significant outreach to industry, including
                through the CFPB Debt Collection Operations Study.\418\ In July 2016,
                the Bureau consulted with small entities as part of the SBREFA process
                and obtained important information on the potential impacts of
                proposals that the Bureau was considering at the time for the topics
                covered by the final rule; many of those proposals are included in the
                final rule.\419\
                ---------------------------------------------------------------------------
                 \416\ See CFPB Debt Collection Consumer Survey, supra note 292.
                 \417\ For more information about Bureau data sources, see Bureau
                of Consumer Fin. Prot., Sources and uses of data at the Bureau of
                Consumer Financial Protection (Sept. 26, 2018), https://www.consumerfinance.gov/data-research/research-reports/sources-and-uses-data-bureau-consumer-financial-protection/.
                 \418\ See CFPB Debt Collection Operations Study, supra note 37.
                 \419\ See Small Business Review Panel Report, supra note 40.
                ---------------------------------------------------------------------------
                 The sources described above, together with other sources of
                information and the Bureau's market knowledge, form the basis for the
                Bureau's consideration of the likely impacts of the final rule. The
                Bureau makes every attempt to provide reasonable estimates of the
                potential benefits and costs to consumers and covered persons of this
                final rule given available data. However, available data sources
                generally do not permit the Bureau to quantify, in dollar terms, how
                particular provisions will affect consumers. With respect to industry
                impacts, much of the Bureau's existing data come from qualitative input
                from debt collectors and other entities that operate in the debt
                collection market rather than from representative sampling that would
                allow the Bureau to estimate total benefits and costs.
                 General economic principles and the Bureau's expertise in consumer
                financial markets, together with the data and findings that are
                available, provide insight into the potential benefits, costs, and
                impacts of the final rule. Where possible, the Bureau has made
                quantitative estimates based on these principles and the data
                available. Some benefits and costs, however, are not amenable to
                quantification, or are not quantifiable given the data available to the
                Bureau. The Bureau provides a qualitative discussion of those benefits,
                costs, and impacts. The Bureau requested additional data or studies
                that could help quantify the benefits and costs to consumers and
                covered persons of the May 2019 Proposed Rule and the February 2020
                Proposed Rule. The Bureau summarizes comments on this subject below,
                but few comments explicitly addressed quantifying the costs and
                benefits of the rule or provided additional data or studies. Comments
                on the benefits and costs of the rule are also discussed in part V
                above.
                D. Baseline for Analysis
                 In evaluating the potential benefits, costs, and impacts of the
                final rule, the Bureau takes as a baseline the current legal framework
                governing debt collection. This includes debt collector practices as
                they currently exist, responding to the requirements of the FDCPA as
                currently interpreted by courts and law enforcement agencies, other
                Federal laws, and the rules and statutory requirements promulgated by
                the States.\420\ In the consideration of potential benefits, costs, and
                impacts below, the Bureau discusses its understanding of practices in
                the debt collection market under this baseline and how those practices
                are likely to change under the final rule.
                ---------------------------------------------------------------------------
                 \420\ These requirements, and the specificity of the
                requirements, may vary depending upon the jurisdiction in which the
                collection occurs. This baseline does not include any potential
                impacts of the November 2020 Final Rule, however. The November 2020
                Final Rule included a separate Dodd-Frank Act Section 1022(b)
                analysis, and that rule's provisions do not go into effect until
                November 30, 2021.
                ---------------------------------------------------------------------------
                 Until the creation of the Bureau, no Federal agency was given the
                authority to write substantive regulations implementing the FDCPA,
                meaning that
                [[Page 5840]]
                many of the FDCPA's requirements are subject to interpretations in
                court decisions that are not always consistent or do not always
                definitely resolve an issue, such as a single district court opinion on
                an issue. Debt collectors' practices reflect their interpretations of
                the FDCPA and their decisions about how to balance effective collection
                practices against litigation risk. Many of the impacts of the final
                rule relative to the baseline would arise from changes that debt
                collectors would make in response to additional clarity about the most
                appropriate interpretation of what conduct is permissible and not
                permissible under the FDCPA's provisions.
                 The Bureau received no comments regarding its choice of baseline
                for its section 1022(b) analysis.
                E. Goals of the Rule
                 The final rule is intended to further the FDCPA's goals of
                eliminating abusive debt collection practices and ensuring that debt
                collectors who refrain from such practices are not competitively
                disadvantaged. To these ends, an important goal of the rule is to
                benefit both consumers and debt collectors by increasing clarity and
                certainty about what the FDCPA prohibits and requires, which could
                improve compliance with the FDCPA while reducing unnecessary litigation
                regarding the FDCPA's requirements.
                 As discussed in part V and in this part VII, other goals of the
                rule's provisions regarding validation information include providing
                more information to consumers about their debts, which may help
                consumers determine whether a debt is theirs and whether the reported
                amount owed is accurate and may reduce unnecessary disputes. The
                validation information is also intended to help consumers to know their
                rights and be able to exercise them, including by disputing a debt. In
                addition, the model validation notice is intended to provide
                information to consumers in a more appealing and easy-to-read format,
                making it more likely that consumers read and comprehend the
                information than with the validation notices currently in use.
                 The rule's provision requiring debt collectors to take certain
                actions prior to furnishing information about a debt to a consumer
                reporting agency is intended to increase the likelihood that consumers
                learn about an alleged debt before furnishing occurs, giving them an
                opportunity to resolve the debt or dispute it if appropriate.
                 The rule's provision prohibiting debt collectors from suing or
                threatening to sue on time-barred debts is intended to mitigate the
                consumer harms that can result from such actions, including causing
                some consumers to pay or prioritize time-barred debts over other debts
                in the mistaken belief that doing so is necessary to avoid litigation
                or adverse judgments, when in fact consumers have meritorious defenses
                based on the statute of limitations.
                F. Coverage of the Rule
                 The final rule applies to debt collectors as defined in the FDCPA
                and Sec. 1006.2(i) of the November 2020 Final Rule. Creditors that
                collect on debts they own generally will not be affected directly by
                the final rule because they typically are not debt collectors for
                purposes of the FDCPA. Creditors, however, may experience indirect
                effects if debt collectors' costs increase and if those costs are
                passed on to creditors.
                G. Potential Benefits and Costs to Consumers and Covered Persons
                 The Bureau discusses the benefits and costs of the rule to
                consumers and covered persons (generally FDCPA debt collectors) in
                detail below.\421\ The Bureau believes that an important benefit of
                many of the provisions to both consumers and covered persons--compared
                to the baseline of the FDCPA as currently interpreted by courts and law
                enforcement agencies--is an increase in clarity and precision of the
                law governing debt collection. Greater certainty about legal
                requirements can benefit both consumers and debt collectors, making it
                easier for consumers to understand and assert their rights and easier
                for firms to ensure they are in compliance. The Bureau discusses these
                benefits in more detail with respect to certain provisions below but
                believes that they generally apply, in varying degrees, to all of the
                provisions discussed below.
                ---------------------------------------------------------------------------
                 \421\ For purposes of the section 1022(b)(2) analysis, the
                Bureau considers any consequences that consumers perceive as harmful
                to be a cost to consumers. In considering whether consumers might
                perceive certain activities as harmful, the Bureau is not analyzing
                whether those activities would be unlawful under the FDCPA or the
                Dodd-Frank Act.
                ---------------------------------------------------------------------------
                1. Time-Barred Debt: Prohibiting Suits and Threats of Suit
                 Section 1006.26(b) prohibits a debt collector from suing or
                threatening to sue a consumer to collect a time-barred debt.
                 As discussed in part V above, multiple courts have held that the
                FDCPA prohibits suits and threats of suit on time-barred debt. The
                Bureau understands that most debt collectors do not knowingly sue or
                threaten to sue consumers to collect time-barred debts. Although the
                final rule applies a strict liability standard to this prohibition,
                under which debt collectors may be liable for suits or threats of suit
                even if they do not know that the debt is time-barred, the Bureau
                believes that debt collectors have multiple ways of managing such risk
                including, but not limited to, confirming that the statute of
                limitations has not expired before bringing or threatening to bring a
                legal action or, if a debt collector is unable to make such a
                determination, refraining from bringing or threatening to bring a legal
                action while, in most States, continuing with non-litigation collection
                activities. Therefore, the Bureau does not expect this provision of the
                rule to have a significant effect on most debt collectors.
                 To the extent that there are costs to covered persons or benefits
                to consumers from this provision, they will most likely come from
                reduced payments on time-barred debts, to the extent that some debt
                collectors currently sue or threaten to sue on time-barred debts as a
                strategy to elicit payment.\422\ If it is currently true that (1) suing
                or threatening to sue on debts is an important means of collection for
                debts for which the statute of limitations is close to expiring, and
                (2) most debt collectors stop suing or threatening to sue once the
                statute of limitations for a debt expires, then one would expect
                repayment rates to drop after the statute of limitations expires, and
                that drop might be made more significant by the provision. Such a
                reduction in payments would benefit consumers who owe the debts while
                imposing costs on debt collectors and creditors and potentially
                increasing the cost of credit generally.
                ---------------------------------------------------------------------------
                 \422\ The final rule may also increase costs to covered persons
                to the extent that debt collectors who currently sue or threaten to
                sue to collect time-barred debt increase their efforts to determine
                whether or not a debt is time barred. As discussed above in part V,
                The Bureau recognizes that, in most jurisdictions, expiration of the
                statute of limitations provides the consumer with an affirmative
                defense to liability, but it does not bar a debt collector from
                bringing suit. As such, some debt collectors who sue or threaten to
                sue on older debts may currently expend less time and effort
                verifying the time-barred status of a debt than they will under the
                final rule.
                ---------------------------------------------------------------------------
                 The Bureau therefore attempted to indirectly measure the potential
                effect of the provision by examining the behavior of consumers who owe
                debts that either recently expired or are close to expiring under their
                State's statute of limitations. To do so, the Bureau used data from its
                Consumer Credit Panel (CCP), which contains information from one of the
                [[Page 5841]]
                three nationwide CRAs. The Bureau used data from the CCP to attempt to
                estimate the current effect of State statutes of limitation on the
                propensity of consumers to pay old debts in collection.
                 The CCP contains information on collections tradelines--records
                that were furnished to this nationwide CRA by third-party debt
                collectors or debt buyers. The Bureau analyzed these data to determine
                whether the probability of payment declines around the expiration of
                the statute of limitations in the consumer's State. Specifically, the
                Bureau followed debts reported in the CCP from the time they were first
                reported on a consumer's credit record until they either showed some
                record of payment or disappeared from the credit record. In this
                analysis, the Bureau assumed that the applicable statute of limitations
                is the one applicable to written contracts in the consumer's State of
                residence and that the statute of limitations begins for a debt on the
                date that the debt first appears on the consumer's credit report. The
                Bureau assumed this starting date because there was no other date in
                the available data on which to reasonably base the beginning of the
                statute of limitations. There is likely to be some inaccuracy in this
                assumption due to a variety of factors, including delays between the
                beginning of the period defined by the statute of limitations and the
                first report of information to the CRA and cases in which the
                applicable statute of limitations is not the one in the consumer's
                State. However, if the estimated expiration of the statute of
                limitations is at least approximately correct in most cases, then one
                would expect to observe whether the expiration of the statute of
                limitations has an effect on the likelihood that a debt is reported to
                have been paid.
                 The Bureau calculated the probability of payment occurring after a
                given number of days, conditional on no payment occurring before--in
                technical terms, the ``hazard rate'' for payments--for all collections
                tradelines in the CCP. The Bureau then calculated the average hazard
                rate based on the number of months before or after the estimated
                expiration of the applicable statute of limitations. This calculation
                is plotted in Figure 1, below. The figure shows that the probability of
                a collections tradeline showing evidence of payment declines steadily
                for at least a year leading up to the estimated expiration of the
                statute of limitations and continues to decline at roughly the same
                rate afterwards. Thus, while the probability of payment declines over
                time, the reduced ability of debt collectors to pursue litigation does
                not seem to materially affect payments on collections tradelines.
                Combined with the Bureau's understanding that debt collectors generally
                do not knowingly sue or threaten to sue on time-barred debt, this
                suggests that the provision would be unlikely to cause any further
                reduction in the rate of repayment on time-barred debt.
                [GRAPHIC] [TIFF OMITTED] TR19JA21.027
                 Because the available data do not permit the Bureau to identify the
                expiration of the statute of limitations precisely, the analysis above
                may fail to identify some effects.
                2. Notice for Validation of Debts
                 Section 1006.34 implements and interprets FDCPA section 809(a),
                (b), (d), and (e). Specifically, Sec. 1006.34(a) provides that,
                subject to certain exceptions, a debt collector must provide a consumer
                the validation information described in Sec. 1006.34(c). Section
                1006.34(c) implements FDCPA section 809(a)'s content requirements
                [[Page 5842]]
                and specifies that validation information includes certain information
                about the debt and the consumer's protections with respect to debt
                collection that debt collectors do not currently provide to consumers.
                Section 1006.34(d) sets forth a general requirement that such
                information be clear and conspicuous. Section 1006.34(d) also provides
                safe harbors for using the model validation notice, specified
                variations of the model notice, or a substantially similar form, and
                permits the inclusion of certain optional information. Section
                1006.34(e) affirmatively permits debt collectors to provide validation
                notices translated into other languages and requires debt collectors
                who offer to provide consumers translated notices to provide them to
                consumers who request them.
                 Potential benefits and costs to consumers. The required validation
                information may benefit consumers in four ways. First, the disclosures
                will provide more information about the debt, which may help consumers
                determine whether the debt is theirs and whether the reported amount
                owed is accurate. Second, the notice will provide a plain-language
                disclosure of the consumer's rights in debt collection, in particular
                the right to dispute, which should help consumers to know their rights
                and be able to exercise them. Third, the validation information will
                include consumer-response information that should make it easier for
                consumers to take certain actions, including disputing a debt. Finally,
                the model validation notice form is intended to provide information to
                consumers in a more plain-language and visually appealing format,
                making it more likely that consumers will read and comprehend the
                information than with the validation notices currently in use.
                 To quantify the benefit of providing more and clearer validation
                information, the Bureau would need to estimate the impact of this
                additional information on consumers' ability to recognize their debts
                compared to what is currently provided on validation notices, as well
                as how consumers would respond to that additional information. Although
                the Bureau is not aware of data that would permit a full accounting of
                these benefits, below is a summary of information the Bureau is aware
                of that is relevant to assessing these benefits.
                 The Bureau understands that, in general, validation notices
                currently include little or no information about the debt beyond the
                information specifically listed in section 809(a) of the FDCPA (e.g.,
                the current amount of the debt and the name of the current creditor).
                This information may not be sufficient for the consumer to recognize
                the debt, particularly if: (1) The amount owed has changed over time
                due to interest, fees, payments, or credits; (2) the debt collector has
                changed since an original collection attempt; or (3) the creditor's
                name is not one the consumer associates with the debt (as with some
                store-branded credit cards issued by third-party financial
                institutions). Consumers who do not recognize a debt because the
                information on a validation notice is insufficient may incur costs if
                they mistakenly dispute a debt they owe, make a payment on a debt they
                do not owe, or ignore a debt on the assumption that the collection
                attempt is in error.
                 Relative to current validation notices, the validation information
                under the final rule will include more specific details about the debt,
                such as the debt's account number and an itemization of the debt. The
                Bureau has determined that this information will benefit consumers by
                making it easier for them to determine whether they owe a debt and,
                therefore, reducing the likelihood of incurring costs due to mistakes
                like those noted above. The consumer can also use the consumer-response
                information to request the name and address of the original creditor,
                which may further help the consumer to recognize the debt.
                 To fully evaluate the benefits to consumers of disclosing this
                additional information, the Bureau would need representative data to
                estimate how often consumers would read and understand the additional
                information on the notice and the extent to which that information
                increases consumer recognition and understanding compared to a notice
                without it. For example, the Bureau could further quantify some of the
                consumer benefits of the additional information if the Bureau were able
                to estimate: (1) How many consumers ignore notices out of a mistaken
                conclusion that the debt is not theirs; (2) how many consumers dispute
                correct debts, and subsequently, how much time the validation notice
                saves by obviating later interactions that result from improper
                disputes; and (3) how many consumers fail to dispute or make payments
                on incorrect debts. The Bureau is not aware of a source of information
                on the number of consumers in these categories or the possible time
                savings that could result from the validation information. The Bureau's
                Debt Collection Consumer Survey suggests that the required validation
                information would likely be helpful in recognizing a debt.
                Specifically, when asked how helpful various pieces of information
                would be in figuring out whether they owed a debt, consumers were most
                likely to indicate that the creditor name, type of debt, and an
                itemization of the amount owed (such as principal, interest, and fees)
                were especially valuable.\423\ These opinions were echoed in focus
                groups in which consumers noted that, after a debt is sold, it is more
                difficult to recognize, and that they wanted as much information as
                possible to help them recognize the debt as theirs (especially the
                account number, creditor, and amount due) with the exception of
                sensitive information like social security numbers.\424\
                ---------------------------------------------------------------------------
                 \423\ CFPB Debt Collection Consumer Survey, supra note 292.
                 \424\ FMG Focus Group Report, supra note 26, at 15-16.
                ---------------------------------------------------------------------------
                 To quantify the benefits of the provision requiring a clear and
                conspicuous disclosure of a consumer's right to dispute a debt, the
                Bureau would need to estimate the number of consumers who fail to
                dispute debts that they do not owe because they are unaware of, or do
                not comprehend, their right to dispute. The Bureau cannot precisely
                quantify this benefit; however, the discussion below identifies several
                applicable considerations and estimates.
                 The Bureau estimates that at least 49 million consumers are
                contacted by debt collectors each year.\425\ Twenty-eight percent of
                consumers who said they had been contacted about one or more debts in
                collection reported that the contacts included attempts to collect at
                least one debt that the consumers believed they did not owe.\426\ One-
                third of consumers who had been contacted said the amount the creditor
                or debt collector was trying to collect was wrong for at least one of
                these debts, and 16 percent said the contacts included at least one
                contact about a debt that was instead owed by a family member. (Some
                consumers reported more than one of these issues). Taken together, more
                than half of consumers (53 percent) who said they had been contacted
                about one or more debts in collection reported that they thought at
                least one of the debts they were contacted about was in error. This
                suggests that there are many consumers who receive the validation
                notices in use today who might be likely
                [[Page 5843]]
                to dispute based on their perception that either the debt is not theirs
                or is wrong.
                ---------------------------------------------------------------------------
                 \425\ See CFPB Debt Collection Consumer Survey, supra note 292,
                at 13, 40-41.
                 \426\ The survey questions concerning consumer beliefs about
                errors in collections did not ask respondents to distinguish between
                debts owed to a debt collector and debts owed to a creditor. If
                consumers are more or less likely to believe there is an error for
                collection attempts by debt collectors, then this percentage and
                those below may over- or under-estimate the likelihood that a
                consumer believes a debt is in error when the consumer is contacted
                by a debt collector.
                ---------------------------------------------------------------------------
                 Among the 53 percent of consumers who cited one of the issues noted
                above, 42 percent reported that they disputed a collection in the prior
                year, and 11 percent of consumers who had not cited one of those issues
                indicated that they had disputed a debt. The fact that less than half
                of consumers who questioned a debt about which the creditor or debt
                collector contacted them reported disputing a debt is consistent with
                the possibility that some consumers do not dispute in response to a
                collection effort because they are not aware of the option to dispute
                or do not understand the steps required to do so. The required clear-
                and-conspicuous statement of the dispute right could benefit these
                consumers by making them aware of their right to dispute and informing
                them how to dispute.
                 The survey's finding that only 42 percent of consumers who thought
                they experienced an error with a debt in collection disputed the error
                suggests consumers are uncertain about how to dispute a debt in
                collection or that they believe that disputes require too much time and
                effort relative to the expected benefit. The required consumer-response
                information could reduce these impediments to disputing debts that
                consumers believe are in error. Specifically, the consumer-response
                information will provide a clear means of disputing a debt in a way
                that triggers the protections provided by the FDCPA and this rule.
                Furthermore, the convenience of the consumer-response information,
                which is formatted on the model validation notice as a tear-off with
                prompts for various actions, could reduce barriers to responding by
                eliminating or reducing the burden of, for example, deciding what
                information is relevant and how to phrase the response.\427\ This could
                allow some consumers to save time and avoid other negative
                consequences, such as lower credit scores due to a debt they may not
                owe being listed as unpaid on their credit reports.
                ---------------------------------------------------------------------------
                 \427\ A 2016 research report by the United Kingdom's Financial
                Conduct Authority showed that, in a large randomized control trial,
                a tear-off form (with a text or email reminder) led to more
                consumers switching from a current savings account to one with a
                better interest rate relative to getting only an informational text
                or email reminder and relative to an informational box with
                instructions on how to switch. Paul Adams et al., Attention, Search
                and Switching: Evidence on Mandated Disclosure from the Savings
                Market (UK Fin. Conduct Authority, Occasional Paper No. 19 2016),
                https://www.fca.org.uk/publication/occasional-papers/occasional-paper-19.pdf.
                ---------------------------------------------------------------------------
                 Additionally, the consumer-response information includes an option
                to request information about the original creditor. Original-creditor
                information may help consumers in determining whether the debt is
                theirs.
                 The Bureau has tested a model validation notice. Several
                considerations went into the content and design of the model validation
                notice. First, consumers must have relevant and accurate information to
                make informed decisions about how to act with regard to the debt. The
                Bureau therefore conducted consumer testing to identify what pieces of
                information consumers considered to be important to help them identify
                whether a debt was theirs, whether the amount stated was correct, and
                how the amount the debt collector was attempting to collect has changed
                over time (e.g., due to fees, interest, and payments).\428\ However,
                there is some indication that consumers tend to not read certain types
                of standard-form disclosures.\429\ To try to avoid this result, the
                Bureau conducted consumer testing exploring how consumers interacted
                and engaged with the notice and the pieces of information contained
                therein.\430\ This helped the Bureau understand whether consumers were
                inclined to engage with the document in general and which pieces of the
                validation notice received more or less consumer attention.
                ---------------------------------------------------------------------------
                 \428\ FMG Summary Report, supra note 29.
                 \429\ See, e.g., Ian Ayres & Alan Schwartz, The No-Reading
                Problem in Consumer Contract Law, 66 Stan. L. Rev. 545 (2014);
                Yannis Bakos et al., Does Anyone Read the Fine Print? Consumer
                Attention to Standard-Form Contracts, 43 J. Legal Studies 1, 1-35
                (2014); George R. Milne & Mary J. Culnan, Strategies for Reducing
                Online Privacy Risks: Why Consumers Read (or Don't Read) Online
                Privacy Notices, 18 J. Interactive Mktg. 3, 15-29 (2004); Jonathan
                A. Obar & Anne Oeldorf-Hirsch, The Biggest Lie on the internet:
                Ignoring the Privacy Policies and Terms of Service Policies of
                Social Networking Services (York U., draft version, 2018), http://dx.doi.org/10.2139/ssrn.2757465.
                 \430\ FMG Cognitive Report, supra note 27.
                ---------------------------------------------------------------------------
                 The Bureau incorporated the findings from this consumer testing in
                its design of the model validation notice. To increase both consumer
                engagement with and comprehension of the validation information, the
                Bureau designed the model notice to be visually engaging. The notice
                uses plain language wherever possible and conforms to recommendations
                the Securities and Exchange Commission (SEC) set forth in its plain
                English handbook.\431\ To reduce the perceived complexity of the
                information, the form uses a clear hierarchy of information through
                positioning in a columnar format, varying type size, and bold-faced
                type for subsection headings. It uses shading to highlight the amount
                due and plain language rather than technical terms. Usability testing
                analyzing eye-tracking suggests that participants were able to locate
                relevant information on the form, with most participants able to
                quickly locate their account number and the contact information of the
                creditor.\432\ The information presented in the form is also concise,
                presenting consumers with a manageable amount of information about the
                debt and what they can do in response to the information. This is
                important, as the perceived and actual cost to a consumer of reading a
                disclosure increases with the amount of information provided.\433\
                ---------------------------------------------------------------------------
                 \431\ See Sec. & Exchange Comm'n, A Plain English Handbook (Aug.
                1998), https://www.sec.gov/pdf/handbook.pdf.
                 \432\ FMG Summary Report, supra note 29.
                 \433\ The idea that consumers may decrease their engagement with
                information when more information is provided is somewhat supported
                by research on ``choice overload.'' This work indicates that, if
                choice sets are large, some people opt to make no choice at all.
                See, e.g., Sheena Iyengar et al., How Much Choice is Too Much?
                Contributions to 401(k) Retirement Plans, in Pension Design and
                Structure: New Lessons from Behavioral Finance, at 83 (Oxford U.
                Press 2004).
                ---------------------------------------------------------------------------
                 A number of consumer advocate and academic commenters asserted that
                the proposed model notice was not adequately tested. Some of these
                commenters stated that the Bureau's testing included too few
                participants to generate valid conclusions about the proposed model
                notice's efficacy or to evaluate the comprehension of consumers,
                particularly of the least sophisticated consumers. For instance, a
                consumer advocate expressed concern that only 60 consumers were
                included in the cognitive and usability testing rounds.\434\ Likewise,
                an academic commenter stated that the Bureau's consumer testing focused
                too heavily on observing what testing participants looked at on the
                model notice (based on the use of eye tracking techniques) at the
                expense of testing participants' comprehension of the notice. Another
                commenter stated that the Bureau should have tested more diverse
                groups, including consumers with limited English proficiency, students,
                older consumers, and consumers from more diverse socioeconomic
                backgrounds. Some consumer advocate and academic commenters recommended
                that the Bureau field test the proposed model notice with consumers
                with real debts. A consumer advocate expressed concern about the
                performance of certain aspects of the proposed model notice in
                quantitative testing, noting in particular that approximately 40
                percent of respondents who received the model
                [[Page 5844]]
                notice failed to identify the correct entity the consumer should
                pay.\435\
                ---------------------------------------------------------------------------
                 \434\ See FMG Summary Report, supra note 29, at 5-7.
                 \435\ Several comments in response to the May 2019 proposal also
                criticized the consumer testing as being outdated because, when that
                proposal was published, the most recent testing had occurred in
                2016. However, the Bureau does not find any reason to believe that
                consumer understanding of the model notice has changed since 2016,
                and the commenters did not provide any evidence to support such a
                claim. Moreover, since the May 2019 proposal, the Bureau has
                conducted two additional testing rounds.
                ---------------------------------------------------------------------------
                 The Bureau disagrees that the model validation notice was not
                adequately tested. The model validation notice was developed and
                validated over multiple rounds of testing between 2014 and 2020, and
                the Bureau determines that these multiple rounds of testing were
                sufficient to assess the model validation notice's efficacy and
                comprehensibility. Further, the Bureau disagrees that its testing
                focused on eye-tracking at the expense of comprehension testing as
                consumer comprehension of the model validation notice was assessed in
                three rounds of testing. The Bureau's testing used eye-tracking in
                conjunction with consumer responses to inform its conclusions.
                 The Bureau disagrees that it did not sample sufficiently diverse
                groups. The Bureau selected respondents with the goal of developing
                diverse testing pools that would serve as a proxy for the population at
                large. For example, in one round of usability testing, participants
                reflected a range of demographic characteristics broken down by race
                and ethnicity, household income, education level, and employment
                status.\436\ With respect to the criticism that the Bureau did not
                ``field test'' the model validation notice, testing the form with
                consumers with real debts would have been impractical.
                ---------------------------------------------------------------------------
                 \436\ FMG Usability Report, supra note 28, at 85-87.
                ---------------------------------------------------------------------------
                 Regarding comments that the model validation notice did not perform
                well during the quantitative testing round, the Bureau disagrees. As
                noted above, in that testing round, the model validation notice
                consistently performed better than or equal to the status quo notice,
                including on the question of to whom the consumer should send a
                payment.\437\ Additionally, the Bureau conducted qualitative follow-up
                testing of the model notice in October 2020. In this testing 88 percent
                of respondents reported that the notice was either ``very easy'' or
                ``easy'' to understand.\438\ Between 71 percent and 100 percent of
                participants responded correctly to 14 different comprehension
                questions. Although some participants expressed confusion about a few
                aspects of the notice, the initial reactions to the notice were that
                information was clear and the available actions were obvious.
                ---------------------------------------------------------------------------
                 \437\ In response to the question ``According to the notice, if
                Person A wanted to make a payment on the debt, who should he or she
                sent the payment to?'' approximately 60 percent of consumers who
                received the model validation notice answered correctly compared to
                approximately 40 percent of consumers who received a status quo
                notice. CFPB Quantitative Testing Report, supra note 31, at 14.
                 \438\ See id. at 16.
                ---------------------------------------------------------------------------
                 In summary, the Bureau's testing establishes that consumers will
                benefit from the use of the model notice compared to the baseline of
                status quo validation notices.
                 The Bureau expects consumers to experience few costs as a result of
                the provision.
                 Potential benefits to covered persons. The provision provides debt
                collectors with a safe harbor if they use the model validation notice,
                specified variations of the model notice, or a substantially similar
                form to meet the requirements in Sec. 1006.34(c). The Bureau
                understands that debt collectors currently face litigation risk
                associated with the validation notices they send, reflecting, in part,
                conflicting court decisions about what language is required and what
                language is permitted in the notices.\439\ The Bureau expects a
                significant number of debt collectors will use the model notice,
                specified variations of the model notice, or a substantially similar
                form and, therefore, will face significantly reduced litigation risk
                when providing validation notices because they will receive the safe
                harbor. This will benefit debt collectors directly, by reducing
                litigation costs related to validation notices. The provision's
                requirements to provide specific information about the debt and about a
                consumer's protections in debt collection could also indirectly benefit
                debt collectors by adding information to validation notices that would
                be helpful to consumers but that debt collectors currently do not
                include for fear that it would increase litigation risk. The validation
                information may also make consumers more likely to dispute, which could
                increase costs for debt collectors, as discussed under ``Potential
                costs to covered persons'' below.
                ---------------------------------------------------------------------------
                 \439\ See Small Business Review Panel Report, supra note 40, at
                22.
                ---------------------------------------------------------------------------
                 The validation information includes specific information about the
                debt intended to help consumers identify the debt and understand the
                amount the debt collector claims is owed. The Bureau's qualitative
                consumer research and the Bureau's complaint data suggest that the
                information currently included in validation notices is often not
                sufficient for consumers to identify a debt or whether the amount owed
                is correct. If consumers are better able to identify debts, they may be
                less likely to dispute or ignore a debt that they in fact owe, and at
                the same time may be better able to articulate the basis for a dispute
                of a debt that they do not owe. These effects could benefit debt
                collectors by reducing the costs associated with consumer disputes.
                Although it is possible that debt collectors could currently provide
                such information on validation notices, the Bureau understands that
                some debt collectors who would like to provide additional information
                do not do so largely due to the legal risks associated with including
                information in the validation notice beyond what is expressly required
                by the FDCPA.\440\ The form will significantly reduce this legal risk.
                To quantify the benefits of this provision to covered persons, the
                Bureau would need data on how frequently consumers do not recognize the
                debt or the amount owed as identified on a validation notice, how many
                consumers would better recognize the debt if they received the required
                validation information, and how consumers would act in response to that
                information. While the Bureau is not aware of available data that would
                permit it to estimate these numbers, the Debt Collection Consumer
                Survey does provide some basis for concluding that the required
                validation information will be helpful to consumers and, therefore,
                beneficial for debt collectors.
                ---------------------------------------------------------------------------
                 \440\ See Small Business Review Panel Report, supra note 40, at
                22 (finding that small entities would benefit from a model notice
                that reduced litigation risk arising from conflicting court
                decisions about what information is permitted on a validation
                notice).
                ---------------------------------------------------------------------------
                 The validation information could reduce debt collector costs
                associated with disputes by preventing some disputes from consumers who
                are more likely to recognize that they owe a debt and by making the
                disputes that debt collectors receive clearer and easier to resolve.
                 Debt collectors report that processing disputes is a costly
                activity and that it can be especially difficult to process disputes if
                the consumer provides little or no detail about the basis for a
                dispute. Debt collectors surveyed by the Bureau indicated that most
                disputes took between five minutes and one hour of staff time to
                resolve, with 15 to 30 minutes being the most common amount of
                time.\441\ Respondents said that disputes took the longest amount of
                time to resolve if the basis of the dispute
                [[Page 5845]]
                was unclear or if the consumer said the debt was not theirs.\442\
                ---------------------------------------------------------------------------
                 \441\ CFPB Debt Collection Operations Study, supra note 37, at
                31.
                 \442\ Id.
                ---------------------------------------------------------------------------
                 One commenter noted that 40 percent of disputes at their debt
                collection agency are non-generic and generally resolvable. This
                commenter asserted that the tear offs on the model validation notice
                will make these non-generic disputes less informative. An industry
                commenter noted that 99.4 percent of accounts it received were not
                disputed. Of the 0.6 percent that are disputed, 80 percent are accurate
                once more information is gathered. Given this, the commenter argued
                that providing consumers itemized statements for medical bills, which
                can run into many pages, is unnecessary.
                 The Bureau does not have a basis to estimate how much the
                validation information might affect dispute rates. As an illustration
                of potential cost savings if dispute rates fall, if the information
                were to reduce the number of consumers who dispute by 1 percent of all
                validation notices sent, and assuming that there are 140 million
                validation notices sent per year,\443\ the overall number of annual
                disputes would fall by 1.4 million. Assuming time to process each
                dispute of 0.375 hours, the overall savings to industry would be
                estimated at 525,000 person-hours, or approximately 250 full-time
                equivalents. Assuming labor costs for debt collectors of $22 per
                hour,\444\ this would represent industry cost savings of about $11.5
                million.
                ---------------------------------------------------------------------------
                 \443\ The assumption of 140 million validation notices per year
                is based on an estimated 49 million consumers contacted by debt
                collectors each year and an assumption that each consumer receives
                an average of approximately 2.8 notices during the year.
                 \444\ This assumes an hourly wage of $15 and taxes, benefits,
                and incentives of $7 per hour. See CFPB Debt Collection Operations
                Study, supra note 37, at 17 (reporting estimated debt collector
                wages between $10 and $20 per hour plus incentives).
                ---------------------------------------------------------------------------
                 The validation notice could also reduce the cost of processing
                disputes by making it easier for consumers who dispute to provide at
                least some information about the basis of their disputes. This could
                reduce the costs to covered persons of processing disputes by making it
                easier for debt collectors to investigate disputed debts in order to
                verify the debt.
                 Potential costs to covered persons. Debt collectors already send
                validation notices to consumers to comply with the FDCPA, so the
                validation information will generally affect the content of existing
                disclosures debt collectors are sending rather than require debt
                collectors to send entirely new disclosures. Nonetheless, debt
                collectors will incur certain costs to comply with the form. These
                include one-time compliance costs, the ongoing costs of obtaining the
                required validation information, and potentially ongoing costs of
                responding to a potential increase in the number of disputes.
                 The provision will require debt collectors to reformat their
                validation notices to accommodate the validation information
                requirements. The Bureau expects that any one-time costs to debt
                collectors of reformatting the validation notice will be relatively
                small, particularly for debt collectors who rely on vendors, because
                the Bureau expects that most vendors will provide an updated notice at
                no additional cost.\445\ The Bureau understands from its outreach that
                many covered persons currently use vendors to provide validation
                notices.\446\ Surveyed firms, and their vendors, told the Bureau that
                vendors do not typically charge an additional cost to modify an
                existing template (although this practice might not apply given that
                the final rule likely will require more extensive changes to validation
                notices than vendors typically make today).\447\ Debt collectors and
                vendors will bear costs to understand the requirements of the provision
                and to ensure that their systems generate notices that comply with the
                requirements, although these costs will be mitigated somewhat by the
                availability of a model notice.
                ---------------------------------------------------------------------------
                 \445\ See id. at 33.
                 \446\ In the Operations Study, over 85 percent of debt
                collectors surveyed by the Bureau reported using letter vendors. Id.
                at 32.
                 \447\ Id. at 33.
                ---------------------------------------------------------------------------
                 The validation information will require debt collectors to provide
                certain additional information about the debt, which will require that
                debt collectors receive and maintain certain data fields and
                incorporate them into the notices. The Bureau believes that the large
                majority of debt collectors already receive and maintain most data
                fields included in the final validation information. However, some
                respondents to the Debt Collection Operations Study reported that they
                do not receive from creditors information about post-default interest,
                fees, payments, and credits.\448\ These debt collectors will have to
                update their systems to track these fields. The Bureau understands that
                such system updates would be likely to cost less than $1,000 for each
                debt collector.\449\
                ---------------------------------------------------------------------------
                 \448\ In the Bureau's Operations Study, 52 of 58 respondents
                reported receiving itemization of post-charge-off fees on at least
                some of their accounts. Id. at 23.
                 \449\ Id. at 26.
                ---------------------------------------------------------------------------
                 At least one industry commenter asserted that one-time compliance
                costs would be significantly higher than $1,000, at least for
                collectors of medical debt. This commenter estimated costs of between
                $22,000 and $31,000 for implementation. The commenter noted that, for
                collectors of medical debt, an itemization of charges requires
                information about payments by the consumer's health insurance,
                increasing the complexity and cost of tracking the necessary
                information. The Bureau acknowledges that costs may be higher for some
                debt collectors. However, the Bureau's estimate is based on responses
                to the CFPB Debt Collection Operations Study, more than half of which
                came from debt collectors of medical debt. As such, the Bureau believes
                that, on average, its estimate of less than $1,000 in one-time costs is
                reasonable.
                 If debt collectors adjust their systems to produce notices
                including the new validation information, 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 costs related to
                the validation information requirements if the required data are not
                always available to debt collectors.\450\ 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. However,
                the Bureau's understanding is that most creditors, including medical
                providers, do track this information, and many debt collectors already
                provide this information on validation notices. Further, debt
                collectors are already
                [[Page 5846]]
                required to disclose an itemization for some types of debt in at least
                one jurisdiction, New York State.\451\
                ---------------------------------------------------------------------------
                 \450\ One industry trade group estimated that an itemization
                requirement would cost $600 million in professional fees to conduct
                legal analyses of HIPAA compliance for medical debt, $30 million for
                one-time system reprogramming for debt collectors, and $3 billion
                for one-time system reprogramming for creditors. The proposal
                allegedly would also result in billions of dollars in ongoing
                support costs and uncompensated medical care because, according to
                the commenter, the proposed requirement, if adopted, would increase
                the risks that hospitals might be unable to use debt collectors. As
                discussed in part V, the itemization requirement should not raise
                issues of HIPAA compliance that would require creditors to engage
                legal counsel in order to provide the required information, as HIPAA
                privacy regulations explicitly permit disclosure where required by
                law. While some one-time costs will be required so that collection
                and billing systems can incorporate the data needed to comply with
                the requirement, as discussed in this section, the Bureau
                understands that the required changes would not be far outside the
                scope of normal adjustments to billing and collection systems and
                does not have reason to believe the changes would be so expensive as
                to prevent hospitals from using debt collectors. The final rule
                permits debt collectors to use the date of the last statement or
                invoice provided to the consumer by a creditor as the itemization
                date. If providing a debt collector with itemization information
                were prohibitively expensive for a medical provider, such providers
                could avoid these costs by simply issuing a statement to the
                consumer.
                 \451\ See 23 NYCRR 1.2(b) (requiring debt collectors to provide
                an itemized accounting of the debt within five days after the
                initial communication with a consumer in connection with the
                collection of certain types of charged-off debt, such as credit card
                debt). The fact that debt collectors subject to New York's
                requirements continue to operate and send validation notices in New
                York suggests that, although the itemization requirement may impose
                one-time adjustment costs on some creditors and debt collectors,
                ongoing costs are not prohibitive, at least for the types of debts
                for which New York has required itemization.
                ---------------------------------------------------------------------------
                 In addition, as discussed in the section-by-section analysis of
                Sec. 1006.34(b)(3), the final rule's itemization date definition
                permits debt collectors to select an itemization date that is feasible
                for the type of debt in collection and the information debt collectors
                receive. And Sec. 1006.34(c)(2)(viii) requires itemization of fees,
                interest, and credits only subsequent to the selected itemization date.
                Thus, for example, if a debt collector selects the last statement date
                as the itemization date under Sec. 1006.34(b)(3), and if the creditor
                has recently issued a statement to the consumer, the debt collector
                need only obtain and provide to the consumer an itemization with fees,
                interest, and credits subsequent to that last statement date. And, as
                discussed in the section-by-section analysis of Sec. 1006.34(d)(2), a
                debt collector may provide the itemization on a separate page and
                retain the safe harbor for the rest of the validation notice.
                 Industry commenters asserted that there would be additional
                printing and mailing costs of the provision due to the tear-off portion
                of the model notice, which is formatted for use with a return envelope.
                The commenters argued that many debt collectors do not currently
                include return envelopes with their validation notices and that
                including a return envelope would increase mailing costs. The Bureau
                disagrees that this would be a cost of the rule, as the rule does not
                require including a return envelope with a mailed validation notice,
                the format of the tear-off portion notwithstanding. Given that it is
                not required, the Bureau expects that debt collectors will only begin
                including return envelopes if they find, in their own analysis, that
                the benefit exceeds the additional costs.
                 Several commenters discussed the potential for ongoing costs of
                providing the new validation information. One industry commenter
                expressed concern about the availability of the information required on
                the model validation notice for medical debt, as the commenter believed
                that the only available itemization date permitted by the proposal for
                these debts would be date of service (i.e., the transaction date), and
                the commenter stated that date of service was currently only available
                from 17.2 percent of its clients. Another industry commenter noted that
                there would be costs associated with providing updated itemization
                dates for a debt that transfers between debt collectors.
                 Industry trade association commenters noted that there would be
                costs to creditors of providing the fields to debt collectors and that
                not all of the required fields are necessarily tracked by all creditors
                currently, particularly credit unions. The Bureau acknowledges that the
                FDCPA and this final rule may create indirect costs for creditors that
                use debt collectors, because the costs to debt collectors of complying
                with FDCPA requirements may be passed on to creditors and because debt
                collectors must receive certain information about debts in order to
                comply with FDCPA requirements. The information available to the Bureau
                does not suggest that any indirect costs to creditors of this provision
                will be large.
                 Further, one industry commenter asserted that the itemization
                requirement could competitively harm collectors of medical debt. This
                commenter asserted that medical care providers are currently unable to
                provide the required itemization information, and rather than incurring
                costs to provide this information, would switch to using debt
                collectors who do not comply with the law. This would put compliant
                debt collectors at a competitive disadvantage. As noted above, the
                Bureau acknowledges that the provision may affect the costs to
                creditors, including medical care providers, of using FDCPA debt
                collectors, because creditors must provide debt collectors with the
                necessary information for the validation notice. It is also possible
                that in some cases a less sophisticated creditor may employ a debt
                collector who does not attempt to comply with the rule. However, the
                Bureau finds it unlikely that this provision of the rule would lead to
                widespread non-compliance, at the expense of debt collectors who comply
                with the requirements of the rule. The Bureau, the FTC, and other
                Federal and State law enforcement agencies have and will continue to
                maintain vigorous enforcement of the FDCPA.\452\ Any debt collector who
                obtained enough business through non-compliance with the rule to do
                material harm to debt collectors who comply with the rule would be
                likely to attract enforcement action from regulators. Moreover, the
                risk of reputational harm is likely to deter some medical providers
                from intentionally employing debt collectors who knowingly do not
                comply with the rule.
                ---------------------------------------------------------------------------
                 \452\ See, e.g., Bureau of Consumer Fin. Prot., CFPB, FTC,
                State, and Federal Law Enforcement Partners Announce Nationwide
                Crackdown on Phantom and Abusive Debt Collection (Sept. 29, 2020),
                https://www.consumerfinance.gov/about-us/newsroom/cfpb-ftc-state-and-federal-law-enforcement-partners-announce-nationwide-crackdown-phantom-and-abusive-debt-collection.
                ---------------------------------------------------------------------------
                 Other potential costs to debt collectors could arise if changes to
                the validation information affect how consumers respond, particularly
                whether they dispute the debt. As discussed above, because the
                validation information 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 consumer-response
                information would make it easier to dispute debts or request the name
                and address of the original creditor. Together with the additional
                information about consumers' ability to dispute that will be provided,
                this could increase the number of consumers who dispute or request
                original-creditor information. Similarly, some industry commenters
                argued that the tear-off portion of the model notice would make
                disputes easier, resulting in more disputes. The overall impact on
                dispute rates is unclear.
                 Any increases in dispute rates would not be likely to substantially
                reduce collection revenue, but increased dispute rates would increase
                debt collector costs. With respect to collections revenue, the Bureau
                expects that, with some fairly limited exceptions, consumers who choose
                to pay a debt are generally those who recognize that they owe the debt
                and want to pay it, and that in most cases the validation information
                would be unlikely to cause such consumers to dispute rather than
                pay.\453\ With respect to costs, the disclosures could lead consumers
                who do not recognize the debt or who believe there is a problem with
                the amount demanded to dispute
                [[Page 5847]]
                the debt rather than ignoring it. Responding to disputes is a costly
                activity for debt collectors, so an increase in dispute rates would
                increase these costs. As discussed above, covered persons surveyed by
                the Bureau indicated that most disputes took between five minutes and
                one hour of staff time to resolve, with 15 to 30 minutes being the most
                common amount of time.\454\
                ---------------------------------------------------------------------------
                 \453\ While there is some evidence that consumers sometimes pay
                alleged debts even though they do not believe they owe them, such
                consumers may be motivated by factors, such as credit reporting
                concerns, that are not addressed by the validation notice itself.
                See Jeff Sovern et al., Validation and Verification Vignettes: More
                Results from an Empirical Study of Consumer Understanding of Debt
                Collection Validation Notices, at 46-47 (St. John's U., Working
                Paper No. 18-0016, 2018), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3219171.
                 \454\ CFPB Debt Collection Operations Study, supra note 37, at
                31. The discussion in ``Benefits to covered persons'' above provides
                an illustration of the potential impact on debt collectors of a
                change in dispute rates. Using the assumptions in that illustration,
                if the net impact of the proposal were to increase industrywide
                disputes by 1 million disputes per year, it could imply increased
                industry costs totaling around $8.25 million per year.
                ---------------------------------------------------------------------------
                 Alternative proposals to require Spanish-language disclosures. The
                Bureau considered proposals that would require debt collectors to
                provide a Spanish-language translation of the validation information
                under certain circumstances, such as on the reverse side of any
                English-language validation notice or if requested by a consumer.
                Consumers with limited English proficiency may benefit from
                translations of the validation information, and Spanish speakers
                represent the second-largest language group in the United States after
                English speakers.\455\
                ---------------------------------------------------------------------------
                 \455\ In 2013, 38.4 million residents in the United States aged
                five and older spoke Spanish at home. See U.S. Census Bureau, Facts
                for Features: Hispanic Heritage Month 2015 (Sept. 14, 2015), https://www.census.gov/newsroom/facts-for-features/2015/cb15-ff18.html.
                ---------------------------------------------------------------------------
                 Requiring Spanish-language disclosures would impose costs on some
                debt collectors. A requirement to send a Spanish-language disclosure on
                the back of each validation notice could increase mailing costs for all
                validation notices that are sent by mail, because it would require
                information that would otherwise be printed on the back of validation
                notices, such as State-mandated disclosures, to be provided on a
                separate page. A requirement to provide Spanish-language validation
                notices upon request could lead to a smaller increase in mailing costs
                but could require debt collectors to develop and maintain systems for
                tracking a consumer's language preference and responding to that
                preference.
                 The Bureau understands that some debt collectors currently send
                validation notices in Spanish to some consumers. These debt collectors
                presumably believe that the increase in revenues from sending them to
                these consumers exceeds the costs of doing so. To the extent sending
                such notices is already prevalent, it would limit the consumer benefits
                of a provision that requires Spanish-language translations as well as
                the costs to debt collectors of such a provision, although there would
                still be costs associated with ensuring that such disclosures were made
                as required by regulation.
                 Consumer advocate and academic commenters argued that the Bureau
                should have required that the validation notice be in the language of
                the original transaction, including languages other than English or
                Spanish. The commenters noted that procedural hurdles, such as a
                mismatch between the consumers' primary language and the language of a
                disclosure, can have large effects on behavior. The Bureau notes that
                this alternative would impose significantly greater costs on debt
                collectors than the final rule, as they would need to maintain versions
                of the model notice for each such language. At the same time, the
                marginal benefit to consumers of the alternative suggested by
                commenters would be smaller, as fewer consumers communicate in
                languages other than English and Spanish.
                3. Required Actions Prior to Furnishing Information
                 Section 1006.30(a)(1) prohibits a debt collector from furnishing
                information to a consumer reporting agency (CRA) about a debt before
                taking specific actions to contact the consumer about that debt. A debt
                collector can satisfy this requirement by: (i) Speaking to the consumer
                about the debt in person or by telephone; or (ii) placing a letter in
                the mail or sending an electronic message to the consumer about the
                debt and waiting a reasonable period of time to receive a notice of
                undeliverability, provided certain other conditions are satisfied. A
                validation notice is one type of letter or electronic communication
                debt collectors can use to satisfy Sec. 1006.30(a)(1)(ii).
                 Potential benefits and costs to consumers. The final rule will help
                consumers to learn about an alleged debt before a debt collector
                furnishes adverse information to a CRA. If consumers believe that the
                information is incorrect, they will have an opportunity to dispute the
                debt.
                 When debt collectors furnish information about unpaid debts to
                CRAs, that information can appear on consumer credit reports,
                potentially limiting consumers' ability to obtain credit, employment,
                or housing. If consumers are unaware that information about a possible
                unpaid debt is being furnished to a CRA, then they may not realize that
                their ability to obtain credit, employment or housing may be affected
                by the debt's presence on their credit reports. They may pay more for
                credit or lose out on employment or housing because they are unaware
                that their credit scores have been negatively affected or they may
                discover the adverse information only when they apply for credit,
                employment, or housing.
                 To quantify the potential consumer benefits from the final rule,
                the Bureau would need to know: (1) How frequently consumers are unaware
                that debt collectors furnished information about their debts to CRAs
                but would become aware of it if debt collectors informed consumers
                prior to furnishing information; and (2) the benefit to these consumers
                of becoming aware they had a debt in collections.
                 In many cases, consumers will not be affected by the provision
                because many debt collectors already take one of the actions required
                by the final rule before furnishing information to CRAs. Many other
                consumers will not be affected by the provision because not all debt
                collectors furnish information to CRAs about the debts on which they
                are seeking to recover.
                 The Bureau understands that most debt collectors mail validation
                notices to consumers shortly after they receive accounts for
                collection.\456\ A minority of debt collectors sometimes or always mail
                validation notices only after speaking with consumers (whether contact
                was initiated by the debt collector or the consumer).\457\ The Bureau
                does not have representative data to estimate how often consumers would
                be affected by the provision, but the evidence suggests that a
                relatively small share of debt collectors furnish information to CRAs
                before providing a validation notice or taking one of the other actions
                required by the final rule. If, for example, debt collectors sent
                [[Page 5848]]
                validation notices for an additional five percent of debts in
                collection, the provision could result in up to approximately seven
                million additional validation notices sent each year (assuming that no
                debt collectors would cease furnishing in response to the
                provision).\458\
                ---------------------------------------------------------------------------
                 \456\ See CFPB Debt Collection Operations Study, supra note 37,
                at 28. One large industry commenter, which does furnish to the CRAs,
                also confirmed that it almost always mails a validation notice
                before furnishing. To comply with the final rule, these debt
                collectors would also need to wait a reasonable period of time to
                allow for notifications of non-delivery, and only furnish if they
                don't receive such notifications. The Bureau does not have
                information as to how many of these debt collectors currently take
                these additional steps. However, the Bureau expects that taking
                these additional steps would impose minimal costs on debt collectors
                that do not already take them.
                 \457\ In the Bureau's Operations Study, 53 of 58 respondents
                said that they send a validation notice shortly after debt
                placement, and of those that do not, three respondents that said
                that they furnish data to CRAs. Id. During the meeting of the SBREFA
                Panel, only one small entity representative described additional
                burdens it would face as a result of a requirement to communicate
                with consumers before furnishing information to credit bureaus.
                 \458\ This estimate assumes 140 million validation notices are
                sent each year, based on an estimated 49 million consumers contacted
                by debt collectors each year and an assumption that each receives an
                average of approximately 2.8 notices during the year.
                ---------------------------------------------------------------------------
                 Learning that a debt is in collections shortly after the
                collections process begins can help consumers prevent or mitigate harm
                from adverse information on their credit reports. This can be
                particularly important if the information about the debt is inaccurate
                because in those cases consumers who learn of the alleged debt can
                dispute the debt under the FDCPA or dispute the item of information
                under the FCRA. By informing consumers about the collection item before
                it is furnished to a CRA, the final rule will make it less likely that
                consumers learn about a collection item when they are in the process of
                applying for credit or other benefits, at which point they may feel
                pressure to resolve the item and may not have the opportunity to fully
                dispute the item.
                 An FTC report addressed the prevalence of collections-related
                errors in credit reports.\459\ The FTC report analyzed data from a
                sample of 1,001 consumers and identified errors in the credit records
                of three nationwide CRAs. The report found collections-related errors
                in 4.9 percent of credit reports, and credit reports with documented
                errors contained, on average, 1.8 errors per report. The Bureau's Debt
                Collection Consumer Survey also suggests that debt collectors make
                collection errors, finding that 53 percent of consumers who said they
                had been contacted about one or more debts in collection said that
                these contacts included at least one debt the consumer thought was in
                error.\460\
                ---------------------------------------------------------------------------
                 \459\ Fed. Trade Comm'n, Report to Congress under Section 319 of
                the Fair and Accurate Credit Transactions Act of 2003, (Dec. 2012)
                https://www.ftc.gov/sites/default/files/documents/reports/section-319-fair-and-accurate-credit-transactions-act-2003-fifth-interim-federal-trade-commission/130211factareport.pdf (FTC Report to
                Congress).
                 \460\ CFPB Debt Collection Consumer Survey, supra note 292, at
                24.
                ---------------------------------------------------------------------------
                 Credit scores are based on a wide variety of information in
                consumer credit files. While many errors have only small effects on
                consumers' credit scores,\461\ in some cases information in credit
                files about unpaid debts can have a reasonably large impact on credit
                scores. For example, analysis of telecommunications collection items in
                credit reports has shown that, while additional collection items have
                relatively small effects in some cases, they can have substantial
                effects for some consumers, with an average reduction in credit score
                of more than 41 points for super-prime consumers.\462\ In some
                circumstances, these changes could lead to higher interest rates for
                consumers or denial of credit, particularly for borrowers with
                otherwise high credit scores.
                ---------------------------------------------------------------------------
                 \461\ See FTC Report to Congress, supra note 459, at 43.
                 \462\ See Brian Bucks et al., Bureau of Consumer Fin. Prot.,
                Collection of Telecommunication Debt, https://files.consumerfinance.gov/f/documents/bcfp_consumer-credit-trends_collection-telecommunications-debt_082018.pdf (Aug. 2018).
                ---------------------------------------------------------------------------
                 Potential benefits and costs to covered persons. The final rule
                will affect the practices of debt collectors who sometimes furnish
                information about consumers' debts to CRAs before taking one of the
                required actions under the final rule. The Bureau understands that most
                debt collectors mail validation notices to consumers shortly after they
                receive the accounts for collections and before they furnish
                information on those accounts. These debt collectors either already
                would be in compliance with the final rule or could come into
                compliance with minimal additional cost.\463\ Forty-five out of 58 debt
                collectors responding to the Bureau's Operations Study said that they
                furnish information to CRAs.\464\ Of these respondents, all but three
                said that they send a validation notice upon account placement, such
                that the final rule's requirement would be satisfied as long as the
                debt collectors also wait a reasonable period of time to allow for
                notifications of non-delivery, and only furnish if they do not receive
                such notifications. These debt collectors will likely need to review
                their policies to ensure that validation notices are always sent (or
                validation information is provided in an initial communication) prior
                to reporting on the account, which the Bureau expects would involve a
                small one-time cost. Debt collectors that do not currently wait a
                reasonable period of time prior to furnishing to allow for
                notifications of non-delivery, accept non-delivery notifications, and
                only furnish if they do not receive such notifications would need to
                adopt these practices, but the Bureau expects this would impose minimal
                ongoing operational costs. Other debt collectors do not furnish
                information to CRAs at all and will not be affected by the requirement.
                ---------------------------------------------------------------------------
                 \463\ In the Operations Study, 53 of 58 respondents said that
                they send a validation notice shortly after debt placement. CFPB
                Debt Collection Operations Study, supra note 37, at 28. To comply
                with the final rule, these debt collectors would also need to wait a
                reasonable period of time to allow for notifications of non-
                delivery, accept non-delivery notifications and only furnish if they
                don't receive such notifications. The Bureau does not have
                information as to how many of these debt collectors currently take
                these additional steps. However, the Bureau expects that taking
                these additional steps would impose minimal costs on debt collectors
                that do not already take them.
                 \464\ Id. at 19.
                ---------------------------------------------------------------------------
                 Debt collectors who furnish information to CRAs prior to
                communicating with consumers but provide validation notices to
                consumers only after they have been in contact with consumers will need
                to change their practices and would face increased costs as a result of
                the final rule. Because these debt collectors are already required to
                provide validation notices to consumers (unless validation information
                is provided in an initial communication or the debt has been paid), the
                Bureau expects that many already have systems in place for sending
                notices and will not face one-time compliance costs greater than those
                of other debt collectors.\465\ However, these debt collectors will face
                ongoing costs from sending validation notices to more consumers than
                they otherwise would, at an estimated cost of $0.50 to $0.80 per debt
                if sent by mail.\466\ To the extent debt collectors take advantage of
                opportunities to send validation notices electronically, the marginal
                cost of sending each notice is likely to be approximately zero.
                Alternatively, these debt collectors could cease furnishing information
                to CRAs until after they take the specific steps identified in the
                final rule, which could impact the effectiveness of their collection
                efforts.\467\ Because debt collectors could choose the less burdensome
                of these options, the additional costs of delivering notices represent
                an upper bound on the burden of the provision for debt collectors.
                ---------------------------------------------------------------------------
                 \465\ Debt collectors who do not currently have systems in place
                for sending notices will face one-time compliance costs to implement
                those systems.
                 \466\ See CFPB Debt Collection Operations Study, supra note 37,
                at 32-33. One small entity representative on the Bureau's SBREFA
                Panel indicated that, for about one-half of its accounts, it
                currently sends validation notices only after speaking with a
                consumer, and that, if it were required to send validation notices
                to all consumers, it would incur additional mailing costs of $0.63
                per mailing for an estimated 400,000 accounts per year. A small
                industry commenter asserted that mailing costs were significantly
                higher than $0.50-$0.80 per debt but did not provide an alternative
                figure.
                 \467\ If debt collectors furnish information to CRAs less
                frequently this could make consumer reports less informative in
                general, which could have negative effects on the credit system by
                making it harder for creditors to assess credit risk.
                ---------------------------------------------------------------------------
                [[Page 5849]]
                 Commenters noted several specific situations in which the proposed
                provision could, in the commenters' view, unduly burden debt
                collectors. One small industry commenter raised the concern that a bad
                address, which occurs in 15 percent of accounts at their agency, would
                stop collections. Another industry commenter noted that 3 percent of
                its notices are returned as undeliverable and argued that attempting to
                deliver a validation notice should count as a communication and thus
                allow furnishing. Another industry commenter noted that some States are
                ``closed'' in the sense that debt collectors based in other States are
                not allowed to deliver notices into those States. This commenter was
                concerned that the proposed provision would not allow furnishing of
                information about consumers in those States and argued that this will
                reduce credit report accuracy. A joint comment by an industry commenter
                and CRA argued that the proposed provision would be particularly
                problematic in the check verification space. The commenter noted that,
                in the case of bad checks, the debt collector generally does not have
                the consumer's address or telephone number and cannot communicate with
                the consumer directly. In these cases, the debt collector would report
                the bad check to a check verification CRA, but this could be prohibited
                under the proposed provision. The commenter argued that the proposed
                provision could undermine the reliability of the check payment system
                by making it impossible to track check fraud, among other things.
                 The Bureau agrees with some of the commenters with respect to these
                additional costs and has revised the final rule from the proposal to
                reduce or eliminate these costs. In particular, the Bureau has revised
                Sec. 1006.30(a) to specify that, if a debt collector places a letter
                in the mail or sends an electronic message to the consumer about the
                debt, the debt collector must wait a reasonable period of time (with a
                safe harbor for waiting 14 consecutive days) before furnishing
                information about the debt to a CRA and, during that period, permit
                receipt of, and monitor for, notifications of undeliverability for mail
                and electronic messages. A debt collector who places a letter in the
                mail or sends an electronic message, does not receive a notice of
                undeliverability during that period, and furnishes information to a
                consumer reporting agency after the period ends has not violated the
                rule even if the debt collector subsequently receives a notice of
                undeliverability. Section 1006.30(a)(2) of the final rule also
                specifies that Sec. 1006.30(a)(1) does not apply to the furnishing of
                information about a debt to a specialty check verification CRA. The
                Bureau believes these changes will reduce or eliminate many of the
                costs cited by the commenters.
                H. Potential Reduction of Access by Consumers to Consumer Financial
                Products and Services
                 Economic theory indicates that it is possible for changes in debt
                collection rules, such as those contained in this final rule, to affect
                consumers' access to credit. Under economic theory, creditors should
                decide to extend credit based on the discounted expected value of the
                revenue stream from that extension of credit. This entails considering
                the possibility that the consumer will ultimately default and expected
                payments will decrease. If this final rule addressing disclosures were
                to increase collection costs or reduce revenue collected from
                delinquent debt, then this would reduce the return to lending, which in
                theory could lead lenders to increase the cost of lending, restrict
                availability of credit, or both.
                 As discussed in the November 2020 Final Rule, the Bureau has
                considered the available empirical data and research on the effect of
                State debt collection laws on the price and availability of
                credit.\468\ That research shows that State debt collection laws affect
                the price and availability of credit in ways that theory would predict,
                but that effects are relatively small even for changes in State laws
                that are likely more significant than the provisions in this final
                rule.\469\ In light of that research and the CCP analysis above, the
                Bureau concludes that the provisions in this final rule are unlikely to
                cause any significant reduction in access to consumer credit.
                ---------------------------------------------------------------------------
                 \468\ See 84 FR 23274, 23389-91 (May 21, 2019).
                 \469\ For example, one study found that additional State
                regulations on debt collectors' conduct caused the rate at which a
                credit inquiry led to a successful account opening to decline by
                less than 0.02 percentage points off a base rate of about 43
                percent. See id. at 23389-90.
                ---------------------------------------------------------------------------
                I. Potential Specific Impacts of the Rule
                1. Depository Institutions and Credit Unions With $10 Billion or Less
                in Total Assets, as Described in Section 1026
                 Depository institutions and credit unions are generally not debt
                collectors under the FDCPA and therefore would not be covered under the
                final rule. Creditors could experience indirect effects from the final
                rule to the extent they hire FDCPA debt collectors or sell debt in
                default to such debt collectors. Such creditors could experience higher
                costs if debt collectors' costs increase and if debt collectors are
                able to pass those costs on to creditors. The Bureau understands that
                many depository institutions and credit unions with $10 billion or less
                in total assets rely on FDCPA debt collectors to collect uncollected
                amounts, but the Bureau does not have data indicating whether such
                institutions are more or less likely than other creditors to do so. The
                Bureau did not receive any comments on this issue with respect to the
                provisions in this final rule.
                2. Impact of the Final Rule on Consumers in Rural Areas
                 Consumers in rural areas may experience benefits from the final
                rule that are different in certain respects from the benefits
                experienced by consumers in general. For example, consumers in rural
                areas may be more likely to borrow from small local banks and credit
                unions that may be less likely to outsource debt collection to FDCPA
                debt collectors.
                 The Bureau requested interested parties to provide data, research
                results, and other factual information on the impact of the proposed
                rule on consumers in rural areas, but the Bureau did not receive any
                comments on this subject.
                VIII. Final Regulatory Flexibility Act Analysis
                 The Regulatory Flexibility Act (RFA) generally requires an agency
                to conduct an Initial Regulatory Flexibility Analysis (IRFA) and a
                Final Regulatory Flexibility Analysis (FRFA) of any rule subject to
                notice-and-comment rulemaking requirements.\470\ Section 604(a) of the
                RFA sets forth the required elements of the FRFA. Section 604(a)(1)
                requires a statement of the objectives of, and the legal basis for, the
                rule.\471\ Section 604(a)(2) requires a statement of the significant
                issues raised by the public comments in response to the initial
                regulatory flexibility analysis, a statement of the assessment of the
                agency of such issues, and a statement of any changes made in the
                proposed rule as a result of such comments. Section 604(a)(3) requires
                the response of the agency to any comments filed by the Chief Counsel
                for Advocacy of the Small Business Administration in response to the
                proposed rule and a detailed statement of any change made to the
                proposed rule in the final rule as a result of the comments. Section
                604(a)(4) requires a description of and,
                [[Page 5850]]
                where feasible, an estimate of the number of small entities to which
                the rule will apply.\472\ Section 604(a)(5) requires a description of
                the projected reporting, recordkeeping, and other compliance
                requirements of the rule, including an estimate of the classes of small
                entities that will be subject to the requirement and the types of
                professional skills necessary for the preparation of the report or
                record.\473\ Section 604(a)(6) requires a description of any
                significant alternatives to the rule that accomplish the stated
                objectives of applicable statutes and that minimize any significant
                economic impact of the rule on small entities.\474\ Finally, section
                604(a)(7) requires a description of the steps the agency has taken to
                minimize any additional cost of credit for small entities.\475\
                ---------------------------------------------------------------------------
                 \470\ 5 U.S.C. 603(a), 604(a).
                 \471\ 5 U.S.C. 604(a)(1).
                 \472\ 5 U.S.C. 604(a)(4).
                 \473\ 5 U.S.C. 604(a)(5).
                 \474\ 5 U.S.C. 604(a)(6).
                 \475\ Id.
                ---------------------------------------------------------------------------
                A. Statement of the Objectives of, and Legal Basis for, the Final Rule
                 As discussed in part IV, the Bureau issues this rule pursuant to
                its authority under the FDCPA and the Dodd-Frank Act. The objectives of
                the final rule are to clarify and implement the FDCPA's provisions and
                to further the FDCPA's goals of eliminating abusive debt collection
                practices and ensuring that debt collectors who refrain from abusive
                debt collection practices are not competitively disadvantaged.\476\ As
                the first Federal agency with authority under the FDCPA to prescribe
                substantive rules with respect to the collection of debts by debt
                collectors, the Bureau is requiring consumer disclosure requirements to
                provide greater clarity for both consumers and industry participants as
                to the information debt collectors must provide consumers to comply
                with the law. The Bureau intends that these clarifications will help to
                eliminate abusive debt collection practices and ensure that debt
                collectors who refrain from abusive debt collection practices are not
                competitively disadvantaged.\477\
                ---------------------------------------------------------------------------
                 \476\ See 15 U.S.C. 1692(e).
                 \477\ See id.
                ---------------------------------------------------------------------------
                 As amended by the Dodd-Frank Act, FDCPA section 814(d) provides
                that the Bureau may ``prescribe rules with respect to the collection of
                debts by debt collectors,'' as that term is defined in the FDCPA.\478\
                Section 1022(a) of the Dodd-Frank Act provides that ``[t]he Bureau is
                authorized to exercise its authorities under Federal consumer financial
                law to administer, enforce, and otherwise implement the provisions of
                Federal consumer financial law.'' \479\ ``Federal consumer financial
                law'' includes title X of the Dodd-Frank Act and the FDCPA. The legal
                basis for the final rule is discussed in detail in the legal authority
                analysis in part IV and in the section-by-section analysis in part V.
                ---------------------------------------------------------------------------
                 \478\ 15 U.S.C. 1692l(d).
                 \479\ 12 U.S.C. 5512(a).
                ---------------------------------------------------------------------------
                B. Significant Issues Raised by the Public Comments in Response to the
                Initial Regulatory Flexibility Analysis
                 The Bureau received comments on the IRFA from the Acting Chief
                Counsel for Advocacy of the Small Business Administration, which are
                discussed in the next section. The Bureau did not receive other
                comments that referenced the IRFA specifically; however, several
                commenters did raise issues about the burdens of the proposed rule's
                provisions, and the Bureau's response to these issues is discussed in
                parts V and VII above and in this part below.
                C. Response to Any Comments Filed by the Chief Counsel for Advocacy of
                the Small Business Administration
                 The Acting Chief Counsel for Advocacy of the Small Business
                Administration filed a public comment letter on the May 2019 proposed
                rule that discusses both the IRFA and certain of the proposed
                requirements (the ``first SBA letter''). The Acting Chief Counsel for
                Advocacy of the Small Business Administration also filed a public
                comment letter on the February 2020 supplemental proposed rule that
                discusses both the IRFA and the proposed requirements (the ``second SBA
                letter''). This section first responds to comments on the IRFA and then
                responds to the substantive comments on the proposed rule's provisions.
                 The first SBA letter notes that the proposed rule could impose
                costs to read and understand the rule and to train employees in new
                practices. The Bureau had discussed these costs in the context of some
                specific provisions but has added a more general discussion of these
                costs to section E of the FRFA, below.
                 The first SBA letter also notes that the Bureau claims some
                provisions will cause no significant impact because those provisions
                are already part of debt collectors' business practices, and argues
                that the Bureau should clarify what the benefit of such provisions is
                to consumers if they will not change debt collector practices. As
                discussed in part V above and the section 1022(b)(2) analysis of the
                proposed rule, the Bureau believes that, by clarifying the FDCPA's
                requirements, the rule will benefit both consumers and debt collectors,
                including small entities. Many market participants have identified a
                need for greater clarity in interpreting many of the FDCPA's
                provisions. For example, a trade group commenter emphasized that
                ambiguities in the FDCPA lead to unnecessary and costly litigation. The
                Bureau believes that there is a benefit to providing additional clarity
                about the FDCPA's requirements even where the vast majority of debt
                collectors follow practices that meet those requirements. The
                additional clarity helps those debt collectors to avoid unnecessary
                litigation and to have confidence in what practices do and do not
                violate the FDCPA. The additional clarity also makes it easier to
                establish when less scrupulous debt collectors have violated the
                statute and to hold them accountable, which benefits consumers as well
                as debt collectors who do comply with the law.
                [[Page 5851]]
                 The first SBA letter points out that the proposed rule's Paperwork
                Reduction Act (PRA) section estimates 1,029,500 burden hours and argues
                that this could translate into millions of dollars in recordkeeping and
                reporting costs. Most of this burden is not attributable to the rule
                itself but rather to the requirements of the FDCPA. As discussed in the
                supporting statement accompanying the Bureau's information collection
                request, the PRA estimates include the burden not only of complying
                with the new requirements introduced by the final rule but also of
                complying with the FDCPA itself. These burdens had not previously been
                accounted for under the PRA. Thus, the large majority of the estimated
                burden hours represent the burden of complying with existing FDCPA
                provisions that exist independent of the rule, in particular the
                requirement to provide a validation notice under Sec. 809(a) of the
                FDCPA and the requirement to respond to consumer disputes under Sec.
                809(b) of the FDCPA. There are, of course, burdens associated with
                other information collections that are being introduced or modified by
                the final rule, and those burdens are discussed in this FRFA as well as
                in the supporting statement.
                 The SBA letters also expressed several concerns about specific
                provisions of the proposed rule and recommended changes to those
                provisions. These concerns and recommendations, and the Bureau's
                response, are discussed in the section-by-section analysis of the
                relevant provisions in part V above.
                D. Description and, Where Feasible, Provision of an Estimate of the
                Number of Small Entities to Which the Final Rule Will Apply
                 As discussed in the Small Business Review Panel Report, for the
                purposes of assessing the impacts of this final rule on small entities,
                ``small entities'' is defined in the RFA to include small businesses,
                small nonprofit organizations, and small government jurisdictions.\480\
                A ``small business'' is determined by application of SBA regulations in
                reference to the North American Industry Classification System (NAICS)
                classifications and size standards.\481\ Under such standards, the
                Small Business Review Panel (Panel) identified four categories of small
                entities that may be subject to the final rule: Collection agencies
                (NAICS 561440) with annual receipts at or below the SBA size standard
                (currently $16.5 million), debt buyers (NAICS 522298) with annual
                receipts at or below the size standard (currently $41.5 million),
                collection law firms (NAICS 541110) with annual receipts at or below
                the size standard (currently $12 million), and servicers who acquire
                accounts in default. These servicers include depository institutions
                (NAICS 522110, 522120, and 522130) with assets at or below the size
                standard (currently $600 million) or non-depository institutions (NAICS
                522390) with annual receipts at or below the size standard (currently
                $22 million). The Panel did not meet with small nonprofit organizations
                or small government jurisdictions.\482\
                ---------------------------------------------------------------------------
                 \480\ 5 U.S.C. 601(6).
                 \481\ The current SBA size standards are found on SBA's website,
                http://www.sba.gov/content/table-small-business-size-standards.
                 \482\ Small Business Review Panel Report, supra note 40, at 29.
                ---------------------------------------------------------------------------
                 The following table provides the Bureau's estimate of the number
                and types of entities that may be affected by the final rule:
                 Table 1--Estimated Number of Affected Entities and Small Entities by Category
                ----------------------------------------------------------------------------------------------------------------
                 Estimated
                 Estimated number of
                 total number small-entity
                 Category NAICS Small-entity threshold of debt debt
                 collectors collectors
                 within within
                 category category
                ----------------------------------------------------------------------------------------------------------------
                Collection agencies............ 561440................. $16.5 million in 9,000 8,800
                 annual receipts.
                Debt buyers.................... 522298................. $41.5 million in 330 300
                 annual receipts.
                Collection law firms........... 541110................. $12.0 million in 1,000 950
                 annual receipts.
                Loan servicers................. 522110, 522120, and $600 million in annual 700 200
                 522130 (depositories); receipts for
                 522390 (non- depository
                 depositories). institutions; $22.0
                 million or less for
                 non-depositories.
                ----------------------------------------------------------------------------------------------------------------
                 Descriptions of the four categories:
                 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.'' \483\ According to the Census Bureau, in 2012 (the
                most recent year for which detailed data are available), there were
                approximately 4,000 collection agencies with paid employees in the
                United States. Of these, the Bureau estimates that 3,800 collection
                agencies have $16.5 million or less in annual receipts and are
                therefore small entities.\484\ 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.
                ---------------------------------------------------------------------------
                 \483\ As defined by the U.S. Census Bureau, collection agencies
                include entities that collect only commercial debt, and the proposed
                rule would apply only to debt collectors of consumer debt. However,
                the Bureau understands that relatively few collection agencies
                collect only commercial debt.
                 \484\ The U.S. 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 one-half of the firms with 100 to 499 employees are
                small entities, which implies approximately 3,800 firms.
                ---------------------------------------------------------------------------
                 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.\485\ Many debt buyers--particularly those that are small
                entities--also collect debt on behalf of other debt owners.\486\
                ---------------------------------------------------------------------------
                 \485\ The Receivables Management Association, the largest trade
                group for debt buyers, states that it has approximately 300 debt
                buyer members and believes that 90 percent of debt buyers are
                current members.
                 \486\ The Bureau understands that debt buyers are generally
                nondepositories that specialize in debt buying and, in some cases,
                debt collection. The Bureau expects that debt buyers that are not
                collection agencies would be classified by the U.S. Census Bureau
                under ``all other nondepository credit intermediation'' (NAICS Code
                522298).
                ---------------------------------------------------------------------------
                 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
                [[Page 5852]]
                consumer debt or regularly collect consumer debt owed to others, so
                that the proposed rule would apply to them. The Bureau estimates that
                95 percent of such law firms are small entities.\487\
                ---------------------------------------------------------------------------
                 \487\ The primary trade association for collection attorneys,
                the National Creditors Bar Association (NCBA), 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 NCBA members and that a similar fraction
                of non-member law firms are small entities.
                ---------------------------------------------------------------------------
                 Loan servicers. Loan servicers would be covered by the final rule
                if they are covered by the FDCPA because, among other things, they
                acquire the right to service loans already in default.\488\ 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
                final rule are small.\489\
                ---------------------------------------------------------------------------
                 \488\ 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 final rule.
                 \489\ Based on the December 2015 Call Report data as compiled by
                SNL Financial (with respect to insured depositories) and December
                2015 data from the Nationwide Mortgage Licensing System and Registry
                (with respect to non-depositories), the Bureau estimates that there
                are approximately 9,000 small entities engaged in mortgage
                servicing, of which approximately 100 service more than 5,000 loans.
                See 81 FR 72160, 72363 (Oct. 19, 2016). 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.
                ---------------------------------------------------------------------------
                E. Projected Reporting, Recordkeeping, and Other Compliance
                Requirements of the Rule, Including an Estimate of Classes of Small
                Entities That Will Be Subject to the Requirements and the Type of
                Professional Skills Necessary for the Preparation of the Report or
                Record
                 The final rule will not impose new reporting or recordkeeping
                requirements, but it will impose new compliance requirements on small
                entities subject to the rule.\490\ The requirements and the costs
                associated with them are discussed below. In addition to the specific
                costs discussed below, all small entities will incur costs to read the
                rule and incorporate its provisions into their policies and procedures,
                and small entities with employees will need to train employees in new
                policies and procedures. The extent of training required will depend on
                debt collectors' existing practices and on the roles performed by
                individual employees. Debt collectors employ an estimated 123,000
                workers.\491\ If, on average, the rule required an additional hour of
                training for each of these employees, at an average cost of $22 per
                hour, the total training cost would be approximately $2,700,000.\492\
                ---------------------------------------------------------------------------
                 \490\ While the final rule does not include new recordkeeping
                requirements, the Bureau notes that, by introducing a new compliance
                requirement, the rule may increase the cost of complying with
                recordkeeping requirements of the November 2020 Final Rule. This is
                because debt collectors would need to retain evidence of compliance
                with any additional compliance requirement.
                 \491\ 2020 FDCPA Annual Report, supra note 12, at 7.
                 \492\ The estimated hourly cost is based on an estimated wage of
                $15 per hour and taxes, benefits, and incentives of $7 per hour. See
                CFPB Debt Collection Operations Study, supra note 37, at 17
                (describing estimated debt collector wages ranging from $10 to $20
                per hour).
                ---------------------------------------------------------------------------
                 In evaluating the potential impacts of the rule on small entities,
                the Bureau takes as a baseline conduct in debt collection markets under
                the current legal framework governing debt collection. This includes
                debt collector practices as they currently exist, responding to the
                requirements of the FDCPA as currently interpreted by courts and law
                enforcement agencies, other Federal laws, and the rules and statutory
                requirements promulgated by the States. This baseline represents the
                status quo from which the impacts of this rule will be evaluated.
                 The Bureau requested that interested parties provide data and
                quantitative analysis of the benefits, costs, or impacts of the
                proposed rule on small entities but did not receive any comments on
                this subject.
                 The Bureau believes that, except where otherwise noted, the impacts
                discussed in part VII would apply to small entities to the same extent
                as to larger entities.
                F. Description of Any Significant Alternatives to the Rule That
                Accomplish the Stated Objectives of the Applicable Statutes and
                Minimize Any Significant Economic Impact of the Rule on Small Entities
                 Section 604(a)(6) of the RFA requires the Bureau to describe in the
                FRFA any significant alternatives to the rule that accomplish the
                stated objectives of applicable statutes and that minimize any
                significant economic impact of the rule on small entities.\493\ In
                developing the rule, the Bureau has considered alternative provisions
                and believes that none of the alternatives considered would be as
                effective at accomplishing the stated objectives of the FDCPA and the
                applicable provisions of title X of the Dodd-Frank Act while minimizing
                the impact of the rule on small entities. Some of these alternatives
                are discussed in part V, above.
                ---------------------------------------------------------------------------
                 \493\ 5 U.S.C. 604(a)(6).
                ---------------------------------------------------------------------------
                G. Discussion of Impact on Cost of Credit for Small Entities
                 Section 603(d) of the RFA requires the Bureau to consult with small
                entities regarding the potential impact of the proposed rule on the
                cost of credit for small entities and related matters.\494\ To satisfy
                these statutory requirements, the Bureau provided notification to the
                Chief Counsel for Advocacy of the Small Business Administration (Chief
                Counsel) that the Bureau would collect the advice and recommendations
                of the same small entity representatives identified in consultation
                with the Chief Counsel through the SBREFA process concerning any
                projected impact of the proposed rule on the cost of credit for small
                entities. The Bureau sought to collect the advice and recommendations
                of the small entity representatives during the Small Business Review
                Panel meeting regarding the potential impact on the cost of business
                credit because, as small debt collectors with credit needs, the small
                entity representatives could provide valuable input on any such impact
                related to the proposed rule.
                ---------------------------------------------------------------------------
                 \494\ 5 U.S.C. 603(d).
                ---------------------------------------------------------------------------
                 The Bureau's Small Business Review Panel Outline asked small entity
                representatives to comment on how the proposals under consideration
                would affect the cost of credit to small entities. During the SBREFA
                process, several small entity representatives said that the proposals
                under consideration at that time, which included time-barred debt
                disclosures among several other proposals, could have an impact on the
                cost of credit for them and for their small business clients. Some
                small entity representatives said that they use lines of credit in
                their business and that regulations that raise their costs or reduce
                their revenue could mean they are unable to meet covenants in their
                loan agreements, causing lenders to reduce access to capital or
                increase their borrowing costs.
                 The Bureau believes that the disclosures in the final rule will
                have little impact on the cost of credit to small entities. The Bureau
                does recognize that consumer credit could become more expensive and
                less available as a result of requirements that restrict the collection
                of debt; however, the Bureau does not anticipate that the requirements
                of this final rule will have any significant impact on the cost or
                availability of consumer credit. Many
                [[Page 5853]]
                small entities affected by the disclosures in the final rule use
                consumer credit as a source of credit and may, therefore, see costs
                rise if consumer credit availability decreases. The Bureau does not
                expect this to be a large effect and does not anticipate measurable
                impact.
                IX. Paperwork Reduction Act
                 Under the Paperwork Reduction Act of 1995 (PRA),\495\ Federal
                agencies are generally required to seek approval from the Office of
                Management and Budget (OMB) for information collection requirements
                prior to implementation. Under the PRA, the Bureau may not conduct or
                sponsor, and, notwithstanding any other provision of law, a person is
                not required to respond to, an information collection unless the
                information collection displays a valid control number assigned by OMB.
                ---------------------------------------------------------------------------
                 \495\ 44 U.S.C. 3501 et seq.
                ---------------------------------------------------------------------------
                 As part of its continuing effort to reduce paperwork and respondent
                burden, the Bureau conducts a preclearance consultation program to
                provide the general public and Federal agencies with an opportunity to
                comment on the information collection requirements in accordance with
                the PRA. This helps ensure that the public understands the Bureau's
                requirements or instructions, respondents can provide the requested
                data in the desired format, reporting burden (time and financial
                resources) is minimized, collection instruments are clearly understood,
                and the Bureau can properly assess the impact of collection
                requirements on respondents.
                 The final rule amends 12 CFR part 1006 (Regulation F), which
                implements the FDCPA. The Bureau's OMB control number for Regulation F
                is 3170-0056; it expires April 30, 2022. This final rule along with the
                November 2020 Final Rule would revise the information collection
                requirements contained in Regulation F that OMB has approved under that
                OMB control number.
                 Under the final rule, the Bureau requires two information
                collection requirements in Regulation F beyond those required by the
                November 2020 Final Rule:
                 1. Validation notices (final rule Sec. 1006.34).
                 2. Communication with consumers prior to furnishing information
                (final rule Sec. 1006.30(a)).
                 These information collections are required to provide benefits for
                consumers and will be mandatory. Because the Bureau does not collect
                any information, no issue of confidentiality arises. The likely
                respondents are for-profit businesses that are FDCPA debt collectors.
                 The collections of information contained in this rule, and
                identified as such, as well as the information collections contained in
                the November 2020 final rule have been submitted to OMB for review
                under section 3507(d) of the PRA. A complete description of the
                information collection requirement, including the burden estimate
                methods, is provided in the information collection request (ICR)
                supporting statement that the Bureau has submitted to OMB under the
                requirements of the PRA. The Bureau will publish a separate notice in
                the Federal Register when these information collections have been
                approved by OMB.
                 Please send your comments to the Office of Information and
                Regulatory Affairs, OMB, Attention: Desk Officer for the Bureau of
                Consumer Financial Protection. Send these comments by email to
                [email protected] or by fax to (202) 395-6974. If you wish to
                share your comments with the Bureau, please send a copy of these
                comments as described in the Addresses section above. The ICR submitted
                to OMB requesting approval under the PRA for the information collection
                requirements contained herein is available at www.regulations.gov as
                well as on OMB's public-facing docket at www.reginfo.gov.
                 Title of Collection: Regulation F: Fair Debt Collection Practices
                Act.
                 OMB Control Number: 3170-0056.
                 Type of Review: Revision of a currently approved collection.
                 Affected Public: Private Sector.
                 Estimated Number of Respondents: 12,027.\496\
                ---------------------------------------------------------------------------
                 \496\ The Bureau shares enforcement authority under the FDCPA
                with the Federal Trade Commission. To avoid double-counting, the
                Bureau allocates to itself half of the estimated paperwork burden
                under the final rule by dividing the burden hours even between the
                agencies. However, since the Bureau has joint authority over the
                respondents themselves, the Bureau retains the entity count of all
                affected respondents as shown above.
                ---------------------------------------------------------------------------
                 Estimated Total Annual Burden Hours: 881,000.
                 The Bureau has a continuing interest in the public's opinion of its
                collections of information. At any time, comments regarding the burden
                estimate, or any other aspect of the information collection, including
                suggestions for reducing the burden, may be sent to the Consumer
                Financial Protection Bureau (Attention: PRA Office), 1700 G Street NW,
                Washington, DC 20552, or by email to [email protected].
                 Where applicable, the Bureau will display the control number
                assigned by OMB to any documents associated with any information
                collection requirements adopted in this rule.
                X. Congressional Review Act
                 Pursuant to the Congressional Review Act,\497\ the Bureau will
                submit a report containing this rule and other required information to
                the U.S. Senate, the U.S. House of Representatives, and the Comptroller
                General of the United States at least 60 days prior to the rule's
                published effective date. The Office of Information and Regulatory
                Affairs has designated this rule as a ``major rule'' as defined by 5
                U.S.C. 804(2).
                ---------------------------------------------------------------------------
                 \497\ 5 U.S.C. 801 et seq.
                ---------------------------------------------------------------------------
                XI. Signing Authority
                 The Director of the Bureau, Kathleen L. Kraninger, having reviewed
                and approved this document, is delegating the authority to
                electronically sign this document to Grace Feola, a Bureau Federal
                Register Liaison, for purposes of publication in the Federal Register.
                List of Subjects in 12 CFR Part 1006
                 Administrative practice and procedure, Consumer protection, Credit,
                Debt collection, Intergovernmental relations.
                Authority and Issuance
                 For the reasons set forth above, the Bureau is further amending
                Regulation F, 12 CFR part 1006, as revised on November 30, 2020, at 85
                FR 76734, effective November 30, 2021, as set forth below:
                PART 1006--DEBT COLLECTION PRACTICES (REGULATION F)
                0
                1. The authority citation for part 1006 continues to read as follows:
                 Authority: 12 U.S.C. 5512, 5514(b), 5532; 15 U.S.C. 1692l(d),
                1692o, 7004.
                Subpart A--General
                0
                2. Section 1006.1 is amended by adding paragraph (c)(2) to read as
                follows:
                Sec. 1006.1 Authority, purpose, and coverage.
                * * * * *
                 (c) * * *
                 (2) Section 1006.34(c)(2)(iii) and (c)(3)(iv) applies to debt
                collectors only when they are collecting debt related to a consumer
                financial product or service as defined in Sec. 1006.2(f).
                0
                3. Section 1006.2 is amended by revising paragraph (e) and adding
                paragraph (f) to read as follows:
                Sec. 1006.2 Definitions.
                * * * * *
                [[Page 5854]]
                 (e) Consumer means any natural person, whether living or deceased,
                obligated or allegedly obligated to pay any debt. For purposes of Sec.
                1006.6, the term consumer includes the persons described in Sec.
                1006.6(a).
                 (f) Consumer financial product or service has the same meaning
                given to it in section 1002(5) of the Dodd-Frank Act (12 U.S.C.
                5481(5)).
                * * * * *
                Subpart B--Rules for FDCPA Debt Collectors
                0
                4. Section 1006.26 is added to read as follows:
                Sec. 1006.26 Collection of time-barred debts.
                 (a) Definitions. For purposes of this section:
                 (1) Statute of limitations means the period prescribed by
                applicable law for bringing a legal action against the consumer to
                collect a debt.
                 (2) Time-barred debt means a debt for which the applicable statute
                of limitations has expired.
                 (b) Legal actions and threats of legal actions prohibited. A debt
                collector must not bring or threaten to bring a legal action against a
                consumer to collect a time-barred debt. This paragraph (b) does not
                apply to proofs of claim filed in connection with a bankruptcy
                proceeding.
                0
                5. Section 1006.30 is amended by adding paragraph (a) to read as
                follows:
                Sec. 1006.30 Other prohibited practices.
                 (a) Required actions prior to furnishing information--(1) In
                general. Except as provided in paragraph (a)(2) of this section, a debt
                collector must not furnish to a consumer reporting agency, as defined
                in section 603(f) of the Fair Credit Reporting Act (15 U.S.C.
                1681a(f)), information about a debt before the debt collector:
                 (i) Speaks to the consumer about the debt in person or by
                telephone; or
                 (ii) Places a letter in the mail or sends an electronic message to
                the consumer about the debt and waits a reasonable period of time to
                receive a notice of undeliverability. During the reasonable period, the
                debt collector must permit receipt of, and monitor for, notifications
                of undeliverability from communications providers. If the debt
                collector receives such a notification during the reasonable period,
                the debt collector must not furnish information about the debt to a
                consumer reporting agency until the debt collector otherwise satisfies
                this paragraph (a)(1).
                 (2) Special rule--information furnished to certain specialty
                consumer reporting agencies. Paragraph (a)(1) of this section does not
                apply to a debt collector's furnishing of information about a debt to a
                nationwide specialty consumer reporting agency that compiles and
                maintains information on a consumer's check writing history, as
                described in section 603(x)(3) of the Fair Credit Reporting Act (15
                U.S.C. 1681a(x)(3)).
                * * * * *
                0
                6. Section 1006.34 is added to read as follows:
                Sec. 1006.34 Notice for validation of debts.
                 (a) Validation information required--(1) In general. Except as
                provided in paragraph (a)(2) of this section, a debt collector must
                provide a consumer with the validation information required by
                paragraph (c) of this section either:
                 (i) By sending the consumer a validation notice in the manner
                required by Sec. 1006.42:
                 (A) In the initial communication, as defined in paragraph (b)(2) of
                this section; or
                 (B) Within five days of that initial communication; or
                 (ii) By providing the validation information orally in the initial
                communication.
                 (2) Exception. A debt collector who otherwise would be required to
                send a validation notice pursuant to paragraph (a)(1)(i)(B) of this
                section is not required to do so if the consumer has paid the debt
                prior to the time that paragraph (a)(1)(i)(B) of this section would
                require the validation notice to be sent.
                 (b) Definitions. For purposes of this section:
                 (1) Clear and conspicuous means readily understandable. In the case
                of written and electronic disclosures, the location and type size also
                must be readily noticeable and legible to consumers, although no
                minimum type size is mandated. In the case of oral disclosures, the
                disclosures also must be given at a volume and speed sufficient for the
                consumer to hear and comprehend them.
                 (2) Initial communication means the first time that, in connection
                with the collection of a debt, a debt collector conveys information,
                directly or indirectly, regarding the debt to the consumer, other than
                a communication in the form of a formal pleading in a civil action, or
                any form or notice that does not relate to the collection of the debt
                and is expressly required by:
                 (i) The Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.);
                 (ii) Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 through
                6827); or
                 (iii) Any provision of Federal or State law or regulation mandating
                notice of a data security breach or privacy risk.
                 (3) Itemization date means any one of the following five reference
                dates for which a debt collector can ascertain the amount of the debt:
                 (i) The last statement date, which is the date of the last periodic
                statement or written account statement or invoice provided to the
                consumer by a creditor;
                 (ii) The charge-off date, which is the date the debt was charged
                off;
                 (iii) The last payment date, which is the date the last payment was
                applied to the debt;
                 (iv) The transaction date, which is the date of the transaction
                that gave rise to the debt; or
                 (v) The judgment date, which is the date of a final court judgment
                that determines the amount of the debt owed by the consumer.
                 (4) Validation notice means a written or electronic notice that
                provides the validation information required by paragraph (c) of this
                section.
                 (5) Validation period means the period starting on the date that a
                debt collector provides the validation information required by
                paragraph (c) of this section and ending 30 days after the consumer
                receives or is assumed to receive the validation information. For
                purposes of determining the end of the validation period, the debt
                collector may assume that a consumer receives the validation
                information on any date that is at least five days (excluding legal
                public holidays identified in 5 U.S.C. 6103(a), Saturdays, and Sundays)
                after the debt collector provides it.
                 (c) Validation information. Pursuant to paragraph (a)(1) of this
                section, a debt collector must provide the following validation
                information.
                 (1) Debt collector communication disclosure. The statement required
                by Sec. 1006.18(e).
                 (2) Information about the debt. Except as provided in paragraph
                (c)(5) of this section:
                 (i) The debt collector's name and the mailing address at which the
                debt collector accepts disputes and requests for original-creditor
                information.
                 (ii) The consumer's name and mailing address.
                 (iii) If the debt collector is collecting a debt related to a
                consumer financial product or service as defined in Sec. 1006.2(f),
                the name of the creditor to whom the debt was owed on the itemization
                date.
                 (iv) The account number, if any, associated with the debt on the
                itemization date, or a truncated version of that number.
                 (v) The name of the creditor to whom the debt currently is owed.
                 (vi) The itemization date.
                 (vii) The amount of the debt on the itemization date.
                [[Page 5855]]
                 (viii) An itemization of the current amount of the debt reflecting
                interest, fees, payments, and credits since the itemization date. A
                debt collector may disclose the itemization on a separate page provided
                in the same communication with a validation notice, if the debt
                collector includes on the validation notice, where the itemization
                would have appeared, a statement referring to that separate page.
                 (ix) The current amount of the debt.
                 (3) Information about consumer protections. (i) The date that the
                debt collector will consider the end date of the validation period and
                a statement that, if the consumer notifies the debt collector in
                writing on or before that date that the debt, or any portion of the
                debt, is disputed, the debt collector must cease collection of the
                debt, or the disputed portion of the debt, until the debt collector
                sends the consumer either verification of the debt or a copy of a
                judgment.
                 (ii) The date that the debt collector will consider the end date of
                the validation period and a statement that, if the consumer requests in
                writing on or before that date the name and address of the original
                creditor, the debt collector must cease collection of the debt until
                the debt collector sends the consumer the name and address of the
                original creditor, if different from the current creditor.
                 (iii) The date that the debt collector will consider the end date
                of the validation period and a statement that, unless the consumer
                contacts the debt collector to dispute the validity of the debt, or any
                portion of the debt, on or before that date, the debt collector will
                assume that the debt is valid.
                 (iv) If the debt collector is collecting debt related to a consumer
                financial product or service as defined in Sec. 1006.2(f), a statement
                that informs the consumer that additional information regarding
                consumer protections in debt collection is available on the Bureau's
                website at www.cfpb.gov/debt-collection.
                 (v) If the debt collector sends the validation notice
                electronically, a statement explaining how a consumer can, as described
                in paragraphs (c)(4)(i) and (ii) of this section, dispute the debt or
                request original-creditor information electronically.
                 (4) Consumer-response information. The following information,
                segregated from the validation information required by paragraphs
                (c)(1) through (3) of this section and from any optional information
                included pursuant to paragraphs (d)(3)(i) and (ii), (d)(3)(iii)(A),
                (d)(3)(iv) and (v), (d)(3)(vi)(A), and (d)(3)(vii) and (viii) of this
                section, and, if provided on a validation notice, located at the bottom
                of the notice under the headings, ``How do you want to respond?'' and
                ``Check all that apply:'':
                 (i) Dispute prompts. The following statements, listed in the
                following order, and using the following phrasing or substantially
                similar phrasing, each next to a prompt:
                 (A) ``I want to dispute the debt because I think:'';
                 (B) ``This is not my debt.'';
                 (C) ``The amount is wrong.''; and
                 (D) ``Other (please describe on reverse or attach additional
                information).''
                 (ii) Original-creditor information prompt. The statement, ``I want
                you to send me the name and address of the original creditor.'', using
                that phrase or a substantially similar phrase, next to a prompt.
                 (iii) Mailing addresses. Mailing addresses for the consumer and the
                debt collector, which are the debt collector's and the consumer's names
                and mailing addresses as disclosed pursuant to Sec. 1006.34(c)(2)(i)
                and (ii).
                 (5) Special rule for certain residential mortgage debt. For
                residential mortgage debt, if a periodic statement is required under
                Regulation Z, 12 CFR 1026.41, at the time a debt collector provides the
                validation notice, a debt collector need not provide the validation
                information required by paragraphs (c)(2)(vi) through (viii) of this
                section if the debt collector:
                 (i) Provides the consumer, in the same communication with the
                validation notice, a copy of the most recent periodic statement
                provided to the consumer under Regulation Z, 12 CFR 1026.41(b); and
                 (ii) Includes on the validation notice, where the validation
                information required by paragraphs (c)(2)(vi) through (viii) of this
                section would have appeared, a statement referring to that periodic
                statement.
                 (d) Form of validation information--(1) In general. The validation
                information required by paragraph (c) of this section must be clear and
                conspicuous.
                 (2) Safe harbor--(i) In general. Model Form B-1 in appendix B to
                this part contains the validation information required by paragraph (c)
                of this section and certain optional disclosures permitted by paragraph
                (d)(3) of this section. A debt collector who uses Model Form B-1
                complies with the information and form requirements of paragraphs (c)
                and (d)(1) of this section, including if the debt collector:
                 (A) Omits any or all of the optional disclosures shown on Model
                Form B-1; or
                 (B) Adds any or all of the optional disclosures described in
                paragraph (d)(3) of this section that are not shown on Model Form B-1,
                provided that any such optional disclosures are no more prominent than
                any of the validation information required by paragraph (c) of this
                section.
                 (ii) Certain disclosures on a separate page. A debt collector who
                uses Model Form B-1 as described in paragraph (d)(2)(i) of this section
                and who, pursuant to paragraph (c)(2)(viii) or (c)(5) of this section,
                includes certain disclosures on a separate page in the same
                communication with the validation notice and, on the notice, the
                required statement referring to those disclosures, receives a safe
                harbor for compliance with the information and form requirements of
                paragraphs (c) and (d)(1) of this section except with respect to the
                disclosures on the separate page.
                 (iii) Substantially similar form. A debt collector who uses Model
                Form B-1 as described in paragraph (d)(2)(i) or (ii) of this section
                may make changes to the form and retain a safe harbor for compliance
                with the information and form requirements of paragraphs (c) and (d)(1)
                of this section provided that the form remains substantially similar to
                Model Form B-1.
                 (3) Optional disclosures. A debt collector may include any of the
                following information when providing the validation information
                required by paragraph (c) of this section. A debt collector who
                includes any of the following information receives the safe harbor
                described in paragraph (d)(2) of this section, provided that the debt
                collector otherwise uses Model Form B-1 in appendix B to this part, or
                a variation of Model Form B-1, as described in paragraph (d)(2) of this
                section.
                 (i) Telephone contact information. The debt collector's telephone
                contact information.
                 (ii) Reference code. A number or code that the debt collector uses
                to identify the debt or the consumer.
                 (iii) Payment disclosures. Either or both of the following phrases:
                 (A) The statement, ``Contact us about your payment options.'',
                using that phrase or a substantially similar phrase; and
                 (B) Below the consumer-response information required by paragraphs
                (c)(4)(i) and (ii) of this section, the statement, ``I enclosed this
                amount:'', using that phrase or a substantially similar phrase, payment
                instructions after that statement, and a prompt.
                 (iv) Disclosures under applicable law--(A) Disclosures on the
                reverse of the validation notice. On the reverse of
                [[Page 5856]]
                the validation notice, any disclosures that are specifically required
                by, or that provide safe harbors under, applicable law and, if any such
                disclosures are included, a statement on the front of the validation
                notice referring to those disclosures. Any such disclosures must not
                appear directly on the reverse of the consumer-response information
                required by paragraph (c)(4) of this section.
                 (B) Disclosures on the front of the validation notice. If a debt
                collector is collecting time-barred debt, on the front of the
                validation notice below the disclosure required by paragraph (c)(2)(ix)
                of this section, any time-barred debt disclosure that is specifically
                required by, or that provides a safe harbor under, applicable law,
                provided that applicable law specifies the content of the disclosure.
                 (v) Information about electronic communications. The following
                information:
                 (A) The debt collector's website and email address.
                 (B) If the validation information is not provided electronically, a
                statement explaining how a consumer can, as described in paragraphs
                (c)(4)(i) and (ii) of this section, dispute the debt or request
                original-creditor information electronically.
                 (vi) Spanish-language translation disclosures. Either or both of
                the following disclosures regarding a consumer's ability to request a
                Spanish-language translation of a validation notice:
                 (A) The statement, ``P[oacute]ngase en contacto con nosotros para
                solicitar una copia de este formulario en espa[ntilde]ol'' (which means
                ``Contact us to request a copy of this form in Spanish''), using that
                phrase or a substantially similar phrase in Spanish. If providing this
                optional disclosure, a debt collector may include supplemental
                information in Spanish that specifies how a consumer may request a
                Spanish-language validation notice.
                 (B) With the consumer-response information required by paragraph
                (c)(4) of this section, the statement ``Quiero este formulario en
                espa[ntilde]ol'' (which means ``I want this form in Spanish''), using
                that phrase or a substantially similar phrase in Spanish, next to a
                prompt.
                 (vii) The merchant brand, affinity brand, or facility name, if any,
                associated with the debt.
                 (viii) If a debt collector is collecting debt other than debt
                related to a consumer financial product or service as defined in Sec.
                1006.2(f), the information specified in paragraph (c)(2)(iii) or
                (c)(3)(iv) of this section.
                 (4) Validation notices delivered electronically. If a debt
                collector delivers a validation notice electronically, a debt collector
                may, at its option, format the validation notice as follows:
                 (i) Prompts. Any prompt required by paragraph (c)(4)(i) or (ii) or
                paragraph (d)(3)(iii)(B) or (d)(3)(vi)(B) of this section may be
                displayed electronically as a fillable field.
                 (ii) Hyperlinks. Hyperlinks may be embedded that, when clicked:
                 (A) Connect a consumer to the debt collector's website;
                 (B) Connect a consumer to the Bureau's debt collection website as
                disclosed pursuant to paragraph (c)(3)(iv) of this section; or
                 (C) Permit a consumer to respond to the dispute and original-
                creditor information prompts required by paragraphs (c)(4)(i) and (ii)
                of this section.
                 (e) Translation into other languages--(1) In general. A debt
                collector may send a consumer a validation notice completely and
                accurately translated into any language if the debt collector:
                 (i) Sends the consumer an English-language validation notice in the
                same communication as the translated validation notice; or
                 (ii) Previously provided the consumer an English-language
                validation notice, in which case the debt collector need not send the
                consumer an English-language validation notice in the same
                communication as the translated validation notice.
                 (2) Spanish-language validation notice--requirement to provide
                after optional disclosure. A debt collector who includes in the
                validation information either or both of the optional disclosures
                described in paragraph (d)(3)(vi) of this section, and who thereafter
                receives a request from the consumer for a Spanish-language validation
                notice, must provide the consumer a validation notice completely and
                accurately translated into Spanish.
                0
                7. Section 1006.38 is amended by revising paragraphs (a)(2), (b), and
                (c) to read as follows:
                Sec. 1006.38 Disputes and requests for original-creditor information.
                 (a) * * *
                 (2) Validation period has the same meaning given to it in Sec.
                1006.34(b)(5).
                 (b) Overshadowing of rights to dispute or request original-creditor
                information--(1) Prohibition. During the validation period, a debt
                collector must not engage in any collection activities or
                communications that overshadow or are inconsistent with the disclosure
                of the consumer's rights to dispute the debt and to request the name
                and address of the original creditor.
                 (2) Safe harbor. A debt collector who uses Model Form B-1 in
                appendix B to this part in a manner described in Sec. 1006.34(d)(2)
                has not thereby violated paragraph (b)(1) of this section.
                 (c) Requests for original-creditor information. Upon receipt of a
                request for the name and address of the original creditor submitted by
                the consumer in writing within the validation period, a debt collector
                must cease collection of the debt until the debt collector:
                 (1) In general. Sends the name and address of the original creditor
                to the consumer in writing or electronically in the manner required by
                Sec. 1006.42; or
                 (2) Special rule if the current creditor and the original creditor
                are the same. In lieu of taking the actions described in paragraph
                (c)(1) of this section, reasonably determines that the original
                creditor is the same as the current creditor, notifies the consumer of
                that fact in writing or electronically in the manner required by Sec.
                1006.42, and refers the consumer to the validation information
                previously provided pursuant to Sec. 1006.34(a)(1).
                * * * * *
                0
                8. Section 1006.42 is amended by revising paragraphs (a)(2) and (b) to
                read as follows:
                Sec. 1006.42 Sending required disclosures.
                 (a) * * *
                 (2) Exceptions. A debt collector need not comply with paragraph
                (a)(1) of this section when sending the disclosure required by Sec.
                1006.6(e) or Sec. 1006.18(e) in writing or electronically, unless the
                disclosure is included on a notice required by Sec. 1006.34(a)(1)(i)
                or Sec. 1006.38(c) or (d)(2).
                 (b) Requirements for certain disclosures sent electronically. To
                comply with paragraph (a) of this section, a debt collector who sends
                the notice required by Sec. 1006.34(a)(1)(i)(B), or the disclosures
                described in Sec. 1006.38(c) or (d)(2)(i), electronically must do so
                in accordance with section 101(c) of the Electronic Signatures in
                Global and National Commerce Act (E-SIGN Act) (15 U.S.C. 7001(c)).
                0
                9. Appendix B to part 1006 is added to read as follows:
                Appendix B to Part 1006--Model Forms
                B-1 Model Form for Validation Notice
                BILLING CODE 4810-AM-P
                [[Page 5857]]
                [GRAPHIC] [TIFF OMITTED] TR19JA21.028
                BILLING CODE 4810-AM-C
                0
                10. In supplement I to part 1006:
                0
                a. Under Section 1006.30--Other Prohibited Practices, the headings
                30(a) Required actions prior to furnishing information, and 30(a)(1) In
                general, and paragraphs 1 and 2 are added.
                0
                b. Section 1006.34--Notice for Validation of Debts is added.
                0
                c. Under Section 1006.38--Disputes and Requests for Original-Creditor
                Information, the introductory text before 38(a) Definitions is revised.
                0
                d. Under Section 1006.100--Record Retention, 100(a) In general,
                including the heading, is revised.
                0
                e. Section 1006.104--Relation to State Laws is added.
                 The additions and revisions read as follows:
                Supplement I to Part 1006--Official Interpretations
                * * * * *
                Subpart B--Rules for FDCPA Debt Collectors
                * * * * *
                Section 1006.30--Other Prohibited Practices
                 30(a) Required actions prior to furnishing information.
                 30(a)(1) In general.
                 1. About the debt. Section 1006.30(a)(1) provides, in relevant
                part, that a debt collector must not furnish to
                [[Page 5858]]
                a consumer reporting agency, as defined in section 603(f) of the Fair
                Credit Reporting Act (15 U.S.C. 1681a(f)), information about a debt
                before taking one of the actions described in Sec. 1006.30(a)(1)(i) or
                (ii). Each of the actions includes conveying information ``about the
                debt'' to the consumer. The validation information required by Sec.
                1006.34(c), including such information if provided in a validation
                notice, is information ``about the debt.''
                 2. Reasonable period of time. Section 1006.30(a)(1)(ii) provides,
                in relevant part, that a debt collector who places a letter about a
                debt in the mail, or who sends an electronic message about a debt to
                the consumer, must wait a reasonable period of time to receive a notice
                of undeliverability before furnishing information about the debt to a
                consumer reporting agency. The reasonable period of time begins on the
                date that the debt collector places the letter in the mail or sends the
                electronic message. A period of 14 consecutive days after the date that
                the debt collector places a letter in the mail or sends an electronic
                message is a reasonable period of time.
                 3. Notices of undeliverability. Section 1006.30(a)(1)(ii) provides,
                in relevant part, that, if a debt collector who places a letter about a
                debt in the mail, or who sends an electronic message about a debt to
                the consumer, receives a notice of undeliverability during the
                reasonable period of time, the debt collector must not furnish
                information about the debt to a consumer reporting agency until the
                debt collector otherwise satisfies paragraph (a)(1) of this section. A
                debt collector who does not receive a notice of undeliverability during
                the reasonable period and who thereafter furnishes information about
                the debt to a consumer reporting agency does not violate paragraph
                (a)(1) of this section even if the debt collector subsequently receives
                a notice of undeliverability. The following examples illustrate the
                rule:
                 i. Assume that, on May 1, a debt collector mails the consumer a
                validation notice as described in Sec. 1006.34(a)(1)(i)(A). On May 10,
                the debt collector receives a notice of undeliverability and, without
                taking any additional action described in Sec. 1006.30(a)(1),
                subsequently furnishes information regarding the debt to a consumer
                reporting agency. The debt collector has violated Sec. 1006.30(a)(1).
                 ii. Assume that, on May 1, a debt collector mails the consumer a
                validation notice as described in Sec. 1006.34(a)(1)(i)(A). On May 10,
                the debt collector receives a notice of undeliverability. On May 11,
                the debt collector mails the consumer another validation notice as
                described in Sec. 1006.34(a)(1)(i)(A). From May 11 to May 24, the debt
                collector permits receipt of, monitors for, and does not receive, a
                notice of undeliverability and thereafter furnishes information
                regarding the debt to a consumer reporting agency. The debt collector
                has not violated Sec. 1006.30(a)(1).
                 iii. Assume that, on May 1, a debt collector mails the consumer a
                validation notice as described in Sec. 1006.34(a)(1)(i)(A). From May 1
                to May 14, the debt collector permits receipt of, monitors for, and
                does not receive, a notice of undeliverability and thereafter furnishes
                information regarding the debt to a consumer reporting agency. After
                furnishing the information, the debt collector receives a notice of
                undeliverability. The debt collector has not violated Sec.
                1006.30(a)(1) and, without taking any further action, may furnish
                additional information about the debt to a consumer reporting agency.
                * * * * *
                Section 1006.34--Notice for Validation of Debts
                 34(a) Validation information required.
                 34(a)(1) In general.
                 1. Deceased consumers. Section 1006.34(a)(1) generally requires a
                debt collector to provide the validation information required by Sec.
                1006.34(c) either by sending the consumer a validation notice in the
                manner required by Sec. 1006.42, or by providing the information
                orally in the debt collector's initial communication. If the debt
                collector knows or should know that the consumer is deceased, and if
                the debt collector has not previously provided the validation
                information to the deceased consumer, a person who is authorized to act
                on behalf of the deceased consumer's estate operates as the consumer
                for purposes of Sec. 1006.34(a)(1). In such circumstances, to comply
                with Sec. 1006.34(a)(1), a debt collector must provide the validation
                information to an individual that the debt collector identifies by name
                who is authorized to act on behalf of the deceased consumer's estate.
                 34(b) Definitions.
                 34(b)(2) Initial communication.
                 1. Bankruptcy proofs of claim. Section 1006.34(b)(2) defines
                initial communication and states that the term does not include a
                communication in the form of a formal pleading in a civil action. A
                proof of claim that a debt collector files in a bankruptcy proceeding
                in accordance with the requirements of the United States Bankruptcy
                Code (Title 11 of the U.S. Code) is a communication in the form of a
                formal pleading in a civil action and therefore is not an initial
                communication for purposes of Sec. 1006.34.
                 34(b)(3) Itemization date.
                 1. In general. Section 1006.34(b)(3) defines itemization date for
                purposes of Sec. 1006.34. Section 1006.34(b)(3) states that the
                itemization date is any one of five reference dates for which a debt
                collector can ascertain the amount of the debt. The reference dates are
                the last statement date, the charge-off date, the last payment date,
                the transaction date, and the judgment date. A debt collector may
                select any of these dates as the itemization date to comply with Sec.
                1006.34. Once a debt collector uses a reference date for a debt in a
                communication with a consumer, the debt collector must use that
                reference date for that debt consistently when providing the
                information required by Sec. 1006.34(c) to that consumer. For example,
                if a debt collector uses the last statement date to determine and
                disclose the account number associated with the debt pursuant to Sec.
                1006.34(c)(2)(iv), the debt collector may not use the charge-off date
                to determine and disclose the amount of the debt pursuant to Sec.
                1006.34(c)(2)(vii).
                 2. Subsequent debt collectors. When selecting an itemization date
                pursuant to Sec. 1006.34(b)(3), a debt collector may use a different
                reference date than a prior debt collector who attempted to collect the
                debt.
                 Paragraph 34(b)(3)(i).
                 1. Last statement date. Under Sec. 1006.34(b)(3)(i), the last
                statement date is the date of the last periodic statement or written
                account statement or invoice provided to the consumer by a creditor.
                For purposes of Sec. 1006.34(b)(3)(i), the last statement may be
                provided by a creditor or a third party acting on the creditor's
                behalf, including a creditor's service provider. However, a statement
                or invoice provided by a debt collector is not a last statement for
                purposes of Sec. 1006.34(b)(3)(i), unless the debt collector is also a
                creditor.
                 Paragraph 34(b)(3)(iii).
                 1. Last payment date. Under Sec. 1006.34(b)(3)(iii), the last
                payment date is the date the last payment was applied to the debt. A
                third-party payment applied to the debt, such as a payment from an auto
                repossession agent or an insurance company, can be a last payment for
                purposes of Sec. 1006.34(b)(3)(iii).
                 Paragraph 34(b)(3)(iv).
                 1. Transaction date. Section 1006.34(b)(3)(iv) provides that the
                itemization date may be the date of the transaction that gave rise to
                the debt.
                [[Page 5859]]
                The transaction date is the date that the good or service that gave
                rise to the debt was provided or made available to the consumer. For
                example, the transaction date for a debt arising from a medical
                procedure may be the date the medical procedure was performed, and the
                transaction date for a consumer's gym membership may be the date the
                membership contract was executed. In some cases, a debt may have more
                than one transaction date. This could occur, for example, if a contract
                for a service is executed on one date and the service is performed on
                another date. If a debt has more than one transaction date, a debt
                collector may use any such date as the transaction date for purposes of
                Sec. 1006.34(b)(3)(iv), but the debt collector must use whichever
                transaction date is selected consistently, as described in comment
                34(b)(3)-1.
                 34(b)(5) Validation period.
                 1. Assumed receipt of validation information. Section 1006.34(b)(5)
                defines the validation period as the period starting on the date that a
                debt collector provides the validation information required by Sec.
                1006.34(c) and ending 30 days after the consumer receives or is assumed
                to receive it. Section 1006.34(c)(3)(i) through (iii) requires
                statements that specify the end date of the validation period. If a
                debt collector provides the validation information in writing or
                electronically, then, at the time that the debt collector calculates
                the validation period end date, the debt collector will know only the
                date on which the consumer is assumed to receive the validation
                information. In such cases, the debt collector may use that date to
                calculate the validation period end date even if the debt collector
                later learns that the consumer received the validation information on a
                different date.
                 2. Updated validation period. If a debt collector sends a
                subsequent validation notice to a consumer because the consumer did not
                receive the original validation notice and the consumer has not
                otherwise received the validation information required by Sec.
                1006.34(c), the debt collector must calculate the end date of the
                validation period specified in the Sec. 1006.34(c)(3) disclosures
                based on the date the consumer receives or is assumed to receive the
                subsequent validation notice. For example, assume a debt collector
                sends a consumer a validation notice on January 1, and that notice is
                returned as undeliverable. After obtaining accurate location
                information, the debt collector sends the consumer a subsequent
                validation notice on January 15. Pursuant to Sec. 1006.34(b)(5), the
                end date of the validation period specified in the Sec. 1006.34(c)(3)
                disclosures is based on the date the consumer receives or is assumed to
                receive the validation notice sent on January 15.
                 34(c) Validation information.
                 34(c)(1) Debt collector communication disclosure.
                 1. Statement required by Sec. 1006.18(e). Section 1006.34(c)(1)
                provides that validation information includes the statement required by
                Sec. 1006.18(e). Section 1006.18(e)(1) requires a debt collector to
                disclose in its initial communication that the debt collector is
                attempting to collect a debt and that any information obtained will be
                used for that purpose. Section 1006.18(e)(2) requires a debt collector
                to disclose in each subsequent communication that the communication is
                from a debt collector. A debt collector who provides a validation
                notice as described in Sec. 1006.34(a)(1)(i)(A) complies with Sec.
                1006.34(c)(1) by providing on the validation notice the disclosure
                required by Sec. 1006.18(e)(1). A debt collector who provides a
                validation notice as described in Sec. 1006.34(a)(1)(i)(B) complies
                with Sec. 1006.34(c)(1) by providing either the disclosure required by
                Sec. 1006.18(e)(1) or the disclosure required by Sec. 1006.18(e)(2).
                The following example illustrates the rule:
                 i. ABC debt collector has an initial communication with the
                consumer by telephone. Within five days of that initial communication,
                ABC debt collector sends the consumer a validation notice using Model
                Form B-1 in appendix B to this part. ABC debt collector has complied
                with Sec. 1006.34(c)(1) even though Model Form B-1 includes the
                disclosure described in Sec. 1006.18(e)(1) rather than the disclosure
                described in Sec. 1006.18(e)(2).
                 34(c)(2) Information about the debt.
                 Paragraph 34(c)(2)(i).
                 1. Debt collector's name. Section 1006.34(c)(2)(i) provides, in
                part, that validation information includes the debt collector's name. A
                debt collector may disclose its trade or doing-business-as name,
                instead of its legal name.
                 2. Debt collector's mailing address. Section 1006.34(c)(2)(i)
                provides, in part, that validation information includes the mailing
                address at which the debt collector accepts disputes and requests for
                original-creditor information. A debt collector may disclose a vendor's
                mailing address, if that is an address at which the debt collector
                accepts disputes and requests for original-creditor information.
                 Paragraph 34(c)(2)(ii).
                 1. Consumer's name. Section 1006.34(c)(2)(ii) provides, in part,
                that validation information includes the consumer's name. To satisfy
                the requirement to provide this validation information, a debt
                collector must disclose the version of the consumer's name that the
                debt collector reasonably determines is the most complete and accurate
                version of the name about which the debt collector has knowledge. A
                debt collector does not disclose the most complete and accurate version
                of the consumer's name if the debt collector omits known name
                information in a manner that creates a false, misleading, or confusing
                impression about the consumer's identity. For example, assume the
                creditor provides the consumer's first name, middle name, last name,
                and name suffix to the debt collector. In this scenario, the debt
                collector would reasonably determine that the most complete and
                accurate version of the consumer's name about which the debt collector
                has knowledge includes the first name, middle name, last name, and name
                suffix. If the debt collector omits any of this information, the debt
                collector has not satisfied the requirement to provide the consumer's
                name pursuant to Sec. 1006.34(c)(2)(ii).
                 Paragraph 34(c)(2)(iii).
                 1. Creditor's name. Section 1006.34(c)(2)(iii) provides that, if a
                debt collector is collecting debt related to a consumer financial
                product or service as defined in Sec. 1006.2(f), validation
                information includes the name of the creditor to whom the debt was owed
                on the itemization date. Pursuant to Sec. 1006.34(c)(2)(iii), a debt
                collector may disclose this creditor's trade or doing-business-as name,
                instead of its legal name.
                 Paragraph 34(c)(2)(iv).
                 1. Account number truncation. Section 1006.34(c)(2)(iv) provides
                that validation information includes the account number, if any,
                associated with the debt on the itemization date, or a truncated
                version of that number. If a debt collector uses a truncated account
                number, the account number must remain recognizable. For example, a
                debt collector may truncate a credit card account number so that only
                the last four digits are provided.
                 Paragraph 34(c)(2)(v).
                 1. Creditor's name. Section 1006.34(c)(2)(v) provides that
                validation information includes the name of the creditor to whom the
                debt currently is owed. A debt collector may disclose this creditor's
                trade or doing-business-as name, instead of its legal name.
                 Paragraph 34(c)(2)(vii).
                 1. Amount of the debt on the itemization date. Section
                1006.34(c)(2)(vii) provides that validation information includes the
                amount of the debt on the itemization
                [[Page 5860]]
                date. The amount of the debt on the itemization date includes any fees,
                interest, or other charges owed as of that date.
                 Paragraph 34(c)(2)(viii).
                 1. Itemization of the debt. Section 1006.34(c)(2)(viii) provides
                that validation information includes an itemization of the current
                amount of the debt reflecting interest, fees, payments, and credits
                since the itemization date. If providing a validation notice, a debt
                collector must include fields in the notice for all of these items even
                if none of the items have been assessed or applied to the debt since
                the itemization date. A debt collector may indicate that the value of a
                required field is ``0,'' ``none,'' or may state that no interest, fees,
                payments, or credits have been assessed or applied to the debt; a debt
                collector may not leave a required field blank.
                 2. Itemization required by other applicable law. If a debt
                collector is required by other applicable law to provide an itemization
                of the current amount of the debt with the validation information, the
                debt collector may comply with Sec. 1006.34(c)(2)(viii) by disclosing
                the itemization required by other applicable law in lieu of the
                itemization described in Sec. 1006.34(c)(2)(viii), if the itemization
                required by other applicable law is substantially similar to the
                itemization that appears on Model Form B-1 in appendix B to this part.
                 3. Itemization on a separate page. Section 1006.34(c)(2)(viii)
                provides that a debt collector may disclose the itemization of the
                current amount of the debt on a separate page provided in the same
                communication with a validation notice if the debt collector includes
                on the validation notice, where the itemization would have appeared, a
                statement referring to that separate page. A debt collector may comply
                with the requirement to refer to the separate page by, for example,
                including on the validation notice the statement, ``See the enclosed
                separate page for an itemization of the debt,'' situated next to the
                information about the current amount of the debt required by Sec.
                1006.34(c)(2)(ix).
                 4. Debt collectors collecting multiple debts. A debt collector who
                combines multiple debts on a single validation notice complies with
                Sec. 1006.34(c)(2)(viii) by disclosing either a single, cumulative
                itemization on the validation notice or a separate itemization of each
                debt on a separate page or pages provided in the same communication as
                the validation notice.
                 Paragraph 34(c)(2)(ix).
                 1. Current amount of the debt. Section 1006.34(c)(2)(ix) provides
                that validation information includes the current amount of the debt
                (i.e., the amount as of when the validation information is provided).
                For residential mortgage debt subject to Regulation Z, 12 CFR 1026.41,
                a debt collector may comply with the requirement to provide the current
                amount of the debt by providing the consumer the total balance of the
                outstanding mortgage, including principal, interest, fees, and other
                charges.
                 2. Debt collectors collecting multiple debts. A debt collector who
                combines multiple debts on a single validation notice complies with
                Sec. 1006.34(c)(2)(ix) by disclosing on the validation notice a single
                cumulative figure that is the sum of the current amount of all the
                debts.
                 34(c)(3) Information about consumer protections.
                 Paragraph 34(c)(3)(v).
                 1. Electronic communication media. Section 1006.34(c)(3)(v)
                provides that, if the debt collector provides the validation notice
                electronically, validation information includes a statement explaining
                how a consumer can, as described in paragraphs (c)(4)(i) and (ii) of
                this section, dispute the debt or request original-creditor information
                electronically. A debt collector may provide the information required
                by Sec. 1006.34(c)(3)(v) by including the statements, ``We accept
                disputes electronically at,'' using that phrase or a substantially
                similar phrase, followed by an email address or website portal that a
                consumer can use to take the action described in Sec.
                1006.34(c)(4)(i), and ``We accept original creditor information
                requests electronically,'' using that phrase or a substantially similar
                phrase, followed by an email address or website portal that a consumer
                can use to take the action described in Sec. 1006.34(c)(4)(ii). If a
                debt collector accepts electronic communications from consumers through
                more than one medium, such as by email and through a website portal,
                the debt collector is required to provide information regarding only
                one of these media but may provide information on any additional media.
                 34(c)(4) Consumer-response information.
                 1. Prompts. If the validation information is provided in writing or
                electronically, a prompt required by Sec. 1006.34(c)(4) may be
                formatted as a checkbox as in Model Form B-1 in appendix B to this
                part.
                 34(c)(5) Special rule for certain residential mortgage debt.
                 1. In general. Section 1006.34(c)(5) provides that, for residential
                mortgage debt, if a periodic statement is required under Regulation Z,
                12 CFR 1026.41, at the time a debt collector provides the validation
                notice, a debt collector need not provide the validation information
                required by Sec. 1006.34(c)(2)(vi) through (viii) if the debt
                collector provides the consumer, in the same communication with the
                validation notice, a copy of the most recent periodic statement
                provided to the consumer under 12 CFR 1026.41(b), and the debt
                collector includes on the validation notice, where the validation
                information required by paragraphs (c)(2)(vi) through (viii) of this
                section would have appeared, a statement referring to that periodic
                statement. A debt collector may comply with the requirement to refer to
                the periodic statement in the validation notice by, for example,
                including on the validation notice the statement, ``See the enclosed
                periodic statement for an itemization of the debt.''
                 34(d) Form of validation information.
                 34(d)(2) Safe harbor.
                 1. In general. A debt collector who provides a validation notice
                that is neither a notice described in Sec. 1006.34(d)(2)(i) or (ii),
                nor a substantially similar notice as described in Sec.
                1006.34(d)(2)(iii), does not receive a safe harbor for compliance with
                the information and form requirements of Sec. 1006.34(c) and (d)(1).
                 34(d)(2)(i) In general.
                 1. Disclosure required by Sec. 1006.18(e). Section 1006.18(e)(1)
                requires a debt collector to disclose in its initial communication that
                the debt collector is attempting to collect a debt and that any
                information obtained will be used for that purpose. Section
                1006.18(e)(2) requires a debt collector to disclose in each subsequent
                communication that the communication is from a debt collector. Model
                Form B-1 in appendix B to this part includes the disclosure required by
                Sec. 1006.18(e)(1). A debt collector who uses Model Form B-1 to
                provide a validation notice as described in Sec. 1006.34(a)(1)(i)(B)
                may replace the disclosure required by Sec. 1006.18(e)(1) with the
                disclosure required by Sec. 1006.18(e)(2) without losing the safe
                harbor described in Sec. 1006.34(d)(2). See comment 34(c)(1)-1 for
                further guidance related to providing the disclosure required by Sec.
                1006.18(e) on a validation notice.
                 34(d)(2)(iii) Substantially similar form.
                 1. Substantially similar form. Pursuant to Sec.
                1006.34(d)(2)(iii), a debt collector who uses Model Form B-1 as
                described in Sec. 1006.34(d)(2)(i) may make changes to the form and
                retain the safe harbor for compliance with the information and form
                requirements of
                [[Page 5861]]
                Sec. 1006.34(c) and (d)(1) provided that the form remains
                substantially similar in substance, clarity, and meaningful sequence to
                Model Form B-1. Permissible changes include, for example:
                 i. Modifications to remove language that could suggest liability
                for the debt if such language is not applicable. For example, if a debt
                collector sends a validation notice to a person who is authorized to
                act on behalf of the deceased consumer's estate (see comment 34(a)(1)-
                1), and that person is not liable for the debt, the debt collector may
                use the name of the deceased consumer instead of ``you'';
                 ii. Relocating the consumer-response information required by Sec.
                1006.34(c)(4) to facilitate mailing;
                 iii. Adding barcodes or QR codes, as long as the inclusion of such
                items does not violate Sec. 1006.38(b);
                 iv. Adding the date the form is generated; and
                 v. Embedding hyperlinks, if delivering the form electronically.
                 34(d)(3) Optional disclosures.
                 34(d)(3)(i) Telephone contact information.
                 1. In general. Section 1006.34(d)(3)(i) permits a debt collector to
                include telephone contact information. Telephone contact information
                may include, for example, a telephone number as well as the times that
                the debt collector accepts consumer telephone calls.
                 34(d)(3)(iv) Disclosures under applicable law.
                 34(d)(3)(iv)(A) Disclosures on the reverse of the validation
                notice.
                 1. In general. Section 1006.34(d)(3)(iv)(A) permits, in relevant
                part, a debt collector to include on the reverse of the validation
                notice any disclosures that are specifically required by, or that
                provide safe harbors under, applicable law. If a debt collector
                provides a validation notice in the body of an email, the debt
                collector may, in lieu of including the disclosures permitted by Sec.
                1006.34(d)(3)(iv)(A) on the reverse of the validation notice, include
                them in the same communication below the content of the validation
                notice. Disclosures permitted by Sec. 1006.34(d)(3)(iv)(A) include,
                for example, specific disclosures required by Federal, State, or
                municipal statutes or regulations, and specific disclosures required by
                judicial or administrative decisions or orders, including
                administrative consent orders. Such disclosures could include, for
                example, time-barred debt disclosures and disclosures that the current
                amount of the debt may increase or vary due to interest, fees, or other
                charges, provided that such disclosures are specifically required by
                applicable law.
                 2. Statement referring to disclosures. If a debt collector includes
                disclosures pursuant to Sec. 1006.34(d)(3)(iv)(A), the debt collector
                must include a statement on the front of the validation notice
                referring to those disclosures. A debt collector may comply with the
                requirement to refer to the disclosures by including on the front of
                the validation notice the statement, ``Notice: See reverse side for
                important information,'' or a substantially similar statement. If, as
                permitted by comment 34(d)(3)(iv)(A)-1, a debt collector places the
                disclosures below the content of the validation notice, the debt
                collector may comply with the requirement to refer to the disclosures
                by stating, ``Notice: See below for important information,'' or a
                substantially similar statement.
                 34(d)(3)(iv)(B) Disclosures on the front of the validation notice.
                 1. In general. Section 1006.34(d)(3)(iv)(B) provides, in relevant
                part that, if a debt collector is collecting time-barred debt, the debt
                collector may include on the front of the validation notice any time-
                barred debt disclosure that is specifically required by, or that
                provides a safe harbor under, applicable law, provided that applicable
                law specifies the content of the disclosure. For example, if applicable
                State law requires a debt collector who is collecting time-barred debt
                to disclose to the consumer that the law limits how long a consumer can
                be sued on a debt and that the debt collector cannot or will not sue
                the consumer to collect it, the debt collector may include that
                disclosure on the front of the validation notice. See Sec.
                1006.26(a)(2) for the definition of time-barred debt. For purposes of
                Sec. 1006.34(d)(3)(iv)(B), time-barred debt disclosures may include
                disclosures about revival of debt collectors' right to bring a legal
                action to enforce the debt.
                 34(d)(3)(vi) Spanish-language translation disclosures.
                 Paragraph 34(d)(3)(vi)(A).
                 1. Supplemental information in Spanish. Section
                1006.34(d)(3)(vi)(A) permits a debt collector to include supplemental
                information in Spanish that specifies how a consumer may request a
                Spanish-language validation notice. For example, a debt collector may
                include a statement in Spanish that a consumer can request a Spanish-
                language validation notice by telephone or email, if the debt collector
                accepts consumer requests through those communication media.
                 Paragraph 34(d)(3)(vii).
                 1. Merchant brand. Section 1006.34(d)(3)(vii) permits a debt
                collector to include the merchant brand, if any, associated with debt.
                For example, assume that a debt collector is attempting to collect a
                consumer's credit card debt. The credit card was issued by ABC Bank and
                was co-branded XYZ Store. ``XYZ Store'' is the merchant brand.
                 2. Affinity brand. Section 1006.34(d)(3)(vii) permits a debt
                collector to include the affinity brand, if any, associated with the
                debt. For example, assume that a debt collector is attempting to
                collect a consumer's credit card debt. The credit card was issued by
                ABC Bank, and the logo for the College of Columbia appears on the
                credit card. ``College of Columbia'' is the affinity brand.
                 3. Facility name. Section 1006.34(d)(3)(vii) permits a debt
                collector to include the facility name, if any, associated with the
                debt. For example, assume that a debt collector is attempting to
                collect a consumer's medical debt. The medical debt relates to a
                treatment that the consumer received at ABC Hospital. ``ABC Hospital''
                is the facility name.
                 34(e) Translation into other languages.
                 1. Safe harbor for complete and accurate translation. Section
                1006.34(e) provides, among other things, that, if a debt collector
                sends a consumer a validation notice translated into a language other
                than English, the translation must be complete and accurate. The
                language of a validation notice that a debt collector obtains from the
                Bureau's website is considered a complete and accurate translation.
                Debt collectors are permitted to use other validation notice
                translations if they are complete and accurate.
                Section 1006.38--Disputes and Requests for Original-Creditor
                Information
                 1. In writing. Section 1006.38 contains requirements related to a
                dispute or request for the name and address of the original creditor
                timely submitted in writing by the consumer. A consumer has disputed
                the debt or requested the name and address of the original creditor in
                writing for purposes of Sec. 1006.38(c) or (d)(2) if the consumer, for
                example:
                 i. Mails the written dispute or request to the debt collector;
                 ii. Returns to the debt collector the consumer-response form that
                Sec. 1006.34(c)(4) requires to appear on the validation notice and
                indicates on the form the dispute or request;
                 iii. Provides the dispute or request to the debt collector using a
                medium of electronic communication through which the debt collector
                accepts
                [[Page 5862]]
                electronic communications from consumers, such as an email address or a
                website portal; or
                 iv. Delivers the written dispute or request in person or by courier
                to the debt collector.
                * * * * *
                 3. Deceased consumers. If the debt collector knows or should know
                that the consumer is deceased, and if the consumer has not previously
                disputed the debt or requested the name and address of the original
                creditor, a person who is authorized to act on behalf of the deceased
                consumer's estate operates as the consumer for purposes of Sec.
                1006.38. In such circumstances, to comply with Sec. 1006.38(c) or
                (d)(2), respectively, a debt collector must respond to a request for
                the name and address of the original creditor or to a dispute timely
                submitted in writing by a person who is authorized to act on behalf of
                the deceased consumer's estate.
                * * * * *
                Subpart D--Miscellaneous
                Section 1006.100--Record Retention
                * * * * *
                 100(a) In general.
                 1. Records that evidence compliance. Section 1006.100(a) provides,
                in part, that a debt collector must retain records that are evidence of
                compliance or noncompliance with the FDCPA and this part. Thus, under
                Sec. 1006.100(a), a debt collector must retain records that evidence
                that the debt collector performed the actions and made the disclosures
                required by the FDCPA and this part, as well as records that evidence
                that the debt collector refrained from conduct prohibited by the FDCPA
                and this part. If a record is of a type that could evidence compliance
                or noncompliance depending on the conduct of the debt collector that is
                revealed within the record, then the record is one that is evidence of
                compliance or noncompliance, and the debt collector must retain it.
                Such records include, but are not limited to, records that evidence
                that the debt collector's communications and attempts to communicate in
                connection with the collection of a debt complied (or did not comply)
                with the FDCPA and this part. For example, a debt collector must
                retain:
                 i. Telephone call logs as evidence of compliance or noncompliance
                with the prohibition against harassing telephone calls in Sec.
                1006.14(b)(1); and
                 ii. Copies of documents provided to consumers as evidence that the
                debt collector provided the information required by Sec. Sec. 1006.34
                and 1006.38 and met the delivery requirements of Sec. 1006.42.
                * * * * *
                Section 1006.104--Relation to State Laws
                 1. State law disclosure requirements. The Act and the corresponding
                provisions of Regulation F do not annul, alter, or affect, or exempt
                any person subject to these requirements from complying with a
                disclosure requirement under applicable State law that describes
                additional protections under State law that are not inconsistent with
                the Act and Regulation F. A disclosure required by State law is not
                inconsistent with the FDCPA or Regulation F if the disclosure describes
                a protection that such law affords any consumer that is greater than
                the protection provided by the FDCPA or Regulation F.
                 Dated: December 18, 2020.
                Grace Feola,
                Federal Register Liaison, Bureau of Consumer Financial Protection.
                [FR Doc. 2020-28422 Filed 1-15-21; 8:45 am]
                BILLING CODE 4810-AM-P