To the surprise of the debt collection industry, the CFPB announced this past Friday afternoon that its final debt collection rule (Parts I and II) will take effect on November 30, 2021 as originally scheduled.
Many in the industry were expecting the CFPB to extend the effective date to January 29, 2022, consistent with its April 2021 proposal. In April 2021, the CFPB proposed the extension due to concerns that, as a result of the disruption caused by the COVID-19 pandemic, stakeholders would need additional time to review and implement the final rule.
In its Friday afternoon announcement, the CFPB stated that it determined the extension was unnecessary. According to the CFPB, the comments it received on the proposal generally did not support an extension, with most industry commenters stating that they would be prepared to comply with the final rule by November 30. The CFPB also indicated that although consumer advocate commenters generally supported an extension, they did not focus on whether additional time was needed to implement the rule but instead many argued that an extension was needed to allow reconsideration of the rule. The CFPB stated that reconsideration of the rule as the basis for an extension was beyond the scope of the proposal and could raise concerns under the Administrative Procedure Act. It also noted that the CFPB was not precluded from reconsidering the rule at a later date.
To comply with the new rule, companies must redesign their systems, policies, procedures, and compliance monitoring. The CFPB’s announcement means that any companies that have based their timetable for making the necessary changes on a January 29 effective date must now accelerate their efforts so that the necessary changes are completed in time to meet the November 30 deadline.