Insight

The Debt Collector’s New Decision: Whether to Adopt the Model Initial Validation Notice of Regulation F

Banking and Finance

Kevin Trost

Kevin Trost

August 12, 2023 12:36 AM

This article provides background on an important recent update to federal law and why many collection agencies are electing to adopt the model validation notice outlined in Regulation F.

One of the federal laws regulating collection agencies is the Federal Debt Collection Practices Act (FDCPA). The FDCPA was created in 1977 to eliminate abusive debt collection practices utilized by some debt collectors, to ensure that debt collectors who employ legal debt collection methods are not competitively disadvantaged, and to promote consistent actions throughout the states to protect consumers from abusive debt collection practices. In order to more effectively and consistently interpret and enforce the FDCPA, a government agency called the Consumer Financial Protection Bureau (CFPB) was created in 2011.

In late 2020, the CFPB issued amendments to 12 CFR part 1006, regarding the implementation of the FDCPA. These amendments, commonly referred to as Regulation F, prohibit certain debt collection conduct, such as suing or threatening to sue in an attempt to collect debt that is past the statute of limitations. These amendments also provide guidance on the permitted use of newer channels of communication, such as text messaging, email and voicemail, during the collection of debt.

One of the most important components of these recent amendments relates to debt collectors’ initial notices to debtors. These initial notices are frequently scrutinized by debtors’ attorneys who subsequently file lawsuits claiming the notices are unclear or do not contain all of the required disclosures. To create clarity for consumers and to prevent debtors’ attorneys from pursuing technical legal claims, the CFPB created a model notice for debt collectors to utilize in their initial communications with debtors. As part of creating this model notice, the CFPB utilized a consumer survey company to assess consumer understanding. The company’s work found that eighty-eight percent of its consumer study participants rated the final model validation notice as “very easy” or “easy” to understand. Moreover, no participant in the study rated the notice as “difficult” or “very difficult.”

The content of the model notice provides additional information beyond the information that has been traditionally included in an initial notice. The current notice must include the balance due as of the date of the letter. The model notice must include the same information but must also include the balance due as of an “itemization date.” Furthermore, the notice must detail how the balance has changed by itemizing interest, fees, payments, and credits since the itemization date. The itemization date is defined as one of the following five dates: 1) last statement date; 2) charge-off date; 3) last payment date; 4) transaction date; or 5) judgment date. It is important that the debt collector and creditor work together to determine the most applicable itemization date to use for a particular account.

There are benefits for debt collectors and their clients when the debt collector utilizes the model notice. The amendments to Regulation F provide a safe harbor from liability related to the initial validation notice where a collector follows the requirements of the model notice as long as the provisions of the notice are “clear and conspicuous” and the content is “substantially similar” to what is prescribed by the amendment.

Collection agencies who elect to adopt the model notice will require additional account information from their clients. Providing this important supplemental information will reap dividends through lower legal expenditures and less time invested fighting legal claims. Furthermore, account holders will have a better understanding of their past due unpaid balances. In summary, debt collectors and their clients who carefully adhere to the CFPB’s model notice should find that they are the subject of far fewer frivolous lawsuits by consumer attorneys focused on the content of the initial validation notice.

These articles, legal alerts, and videos are for informational purposes only. We are not providing legal advice or creating an attorney/client relationship with this information. Furthermore, the law is constantly changing and these materials may no longer be current. Please consult legal counsel regarding your specific legal situation.

Trending Articles

The 2024 Best Lawyers in Spain™


by Best Lawyers

Best Lawyers is honored to announce the 16th edition of The Best Lawyers in Spain™ and the third edition of Best Lawyers: Ones to Watch in Spain™ for 2024.

Tall buildings and rushing traffic against clouds and sun in sky

Best Lawyers Expands Chilean 2024 Awards


by Best Lawyers

Best Lawyers is pleased to announce the 14th edition of The Best Lawyers in Chile™ and the inaugural edition of Best Lawyers: Ones to Watch in Chile™, honoring the top lawyers and firms conferred on by their Chilean peers.

Landscape of city in Chile

The Best Lawyers in Spain™ 2023


by Best Lawyers

Announcing Spain's recognized lawyers for 2023.

Flag of Spain

Announcing The Best Lawyers in South Africa™ 2024


by Best Lawyers

Best Lawyers is excited to announce the landmark 15th edition of The Best Lawyers in South Africa™ for 2024, including the exclusive "Law Firm of the Year" awards.

Sky view of South Africa town and waterways

Announcing the 2023 The Best Lawyers in America Honorees


by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

The Best Lawyers in Portugal™ 2024


by Best Lawyers

The 2024 awards for Portugal include the 14th edition of The Best Lawyers in Portugal™ and 2nd edition of Best Lawyers: Ones to Watch in Portugal™.

City and beach with green water and blue sky

The Best Lawyers in Peru™ 2024


by Best Lawyers

Best Lawyers is excited to announce the landmark 10th edition of The Best Lawyers in Peru, the prestigious award recognizing the country's lop legal talent.

Landscape of Peru city with cliffside and ocean

The Best Lawyers in South Africa™ 2023


by Best Lawyers

Best Lawyers proudly announces lawyers recognized in South Africa for 2023.

South African flag

The Best Lawyers in Chile™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms in Chile.

White star in blue box beside white box with red box on bottom

The Best Lawyers in Colombia™ 2024


by Best Lawyers

Best Lawyers is honored to announce the 14th edition of The Best Lawyers in Colombia™ for 2024, which honors Colombia's most esteemed lawyers and law firms.

Cityscape of Colombia with blue cloudy sky above

Announcing the 2024 Best Lawyers in Puerto Rico™


by Best Lawyers

Best Lawyers is proud to announce the 11th edition of The Best Lawyers in Puerto Rico™, honoring the top lawyers and firms across the country for 2024.

View of Puerto Rico city from the ocean

Best Lawyers: Ones to Watch in America for 2023


by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

The 2023 Best Lawyers in Portugal™


by Best Lawyers

Announcing the elite group of lawyers recognized in Portugal for 2023.

Green and red Portuguese flag

Unwrapping Shrinkflation


by Justin Smulison

Through the lens of the United States, we take a closer look at the global implication of companies downsizing products while maintaining and often raising prices.

Chocolate bar being unwrapped from foil

2021 Best Lawyers: The Global Issue


by Best Lawyers

The 2021 Global Issue features top legal talent from the most recent editions of Best Lawyers and Best Lawyers: Ones to Watch worldwide.

2021 Best Lawyers: The Global Issue

What the Courts Say About Recording in the Classroom


by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?