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COVID debt collection practices final rule from Bureau of Consumer Financial Protection

The Bureau of Consumer Financial Protection (CFPB) recently issued an Interim Final Rule (IFR), effective May 3, 2021. This IFR relates to the existing Center for Disease Control (CDC) Moratorium on evictions for nonpayment and applies to “debt collectors,” defined under the Fair Debt Collection Practices Act (FDCPA). As a federal rule, this IFR applies to all states.

Under the IFR, debt collectors must include in any termination notice for nonpayment to tenants a disclosure regarding the CDC moratorium of evictions. This requirement will remain in effect for the duration of the CDC Moratorium. Currently the moratorium expires after June 30, 2021.

A landlord may not in every case be a “debt collector” as defined by the IFR. Nevertheless, landlords should be aware of this obligation and are encouraged to include this disclosure in any termination notice for nonpayment.

Disclosure Requirements:

The IFR requires that any termination notice for nonpayment include a disclosure that the tenant may be eligible for federal protections under the CDC order.

If, as of May 3, 2021 a debt collector has provided a nonpayment notice but not yet filed an eviction, they may provide the disclosure to the tenant upon filing for eviction.

The IFR suggests the following language for the disclosure:

“Because of the global COVID-19 pandemic, you may be eligible for temporary protection from eviction under Federal law. Learn the steps you should take now: visit www.cfpb.gov/eviction or call a housing counselor at 800-569-4287”

Penalties:

The IFR provides two causes of actions for a tenant in the event a debt collector violates this requirement.

First if a debt collector files an eviction without any required disclosures, a tenant may make a claim under Section 808 of the FDCPA.

Second, if a debt collector falsely implies or represents the tenant is not eligible for the CDC moratorium, the tenant may make a claim under section 807 of the FDCPA.

Conclusion:

Landlords may not in all cases be required to include the disclosure outlined in this IFR. However, landlords are encouraged to include the above referenced disclosure in any termination notice of nonpayment issued to tenants. Doing so can help avoid potential liability under sections 807 and 808 of the FDCPA. The Forms Committee of Multifamily NW will consider strategies to help members' compliance.

Landlords should also be aware that this rule is temporary. The requirement will expire upon the expiration of the CDC moratorium, which unless extended will expire after June 30, 2021.

This article is not intended as legal advice. Please obtain advice of an attorney for any policy change or decisions regarding residential and commercial Landlord-Tenant matters.