Legal Issues
CFPB Has (Another) New Requirement for Landlords and Other Debt Collectors By: Brownlee Whitlow & Praet, PLLC In addition to the other requirements imposed upon residential landlords in the past year, there is a new one to become familiar with. On April 19, 2021, the Consumer Financial Protection Bureau (CFPB) issued an interim final rule in support of the CDC’s eviction moratorium. The CDC eviction moratorium was extended through June 30, 2021. The CDC Order generally prohibits landlords (and other persons with a legal right to pursue eviction) from evicting tenants for non-payment of rent if the tenant submits a signed written declaration with the (most up to date) elements required by the CDC Order; although, the truthfulness of the declaration may be challenged by the landlord as permitted under state or local law. The CFPB has authority under the Fair Debt Collection Practices Act (FDCPA) to “prescribe rules with respect to the collection of debts by debt collectors.” The term “debt collector” is generally defined in the FDCPA as any person who uses any instrumentality of interstate commerce or mail in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due, or asserted to be owed or due, to another. “Debt collector” includes landlords or owners and agents or attorneys acting on behalf of a landlord or owner. The FDCPA interim final rule requires debt collectors to provide written notice to tenants of their rights under the eviction moratorium and prohibits debt collectors from misrepresenting tenants’ eligibility for protection from eviction under the moratorium or falsely implying to a consumer that the consumer is ineligible for temporary protection from eviction under the CDC Order. Specifically, before filing an eviction action for non-payment of rent against a consum-
er, if the CDC Order might reasonably apply to that consumer, a debt collector must disclose that the consumer may be eligible for temporary protection from eviction under the CDC Order. As the legal basis for the issuance of the interim rule, the CFPB found that not notifying residents about this government protection can be a violation of fair debt collection laws (unlike other government protections). The disclosure must be clear and conspicuous and in writing. Phone calls or electronic notice such as text messages or emails are not sufficient. A debt collector must provide the disclosure on the date the debt collector provides the consumer with an eviction notice or, if no eviction notice is required by law, on the date that the eviction action is filed. The term “eviction notice” is defined as the earliest written notice that the laws of any State, locality, territory, or tribal area require to be provided to a consumer before an eviction action against the consumer may be filed. A debt collector may satisfy the requirement to provide the disclosure on the same date as the eviction notice or eviction action by providing the disclosure at the same time that the debt collector provides the consumer with any eviction notice or serves the consumer with any eviction action. For example, a debt collector may provide the disclosure in the same mailing as the eviction action and does not need to provide the disclosure separately on the same date. Failure to provide the required notice to tenants is a violation of the FDCPA. Debt collectors who evict tenants who may have rights under the moratorium without providing notice of the moratorium or who misrepresent tenants’ rights under the moratorium can be prosecuted by federal agencies and state the ApartMentor 2021 | Issue 2 16
attorneys general for violations of the FDCPA and are also subject to private lawsuits by tenants. The FDCPA provides a private right of action against debt collectors, and violators can be held liable for actual damages, statutory damages, and attorney’s fees. Also, class actions may be brought under the FDCPA. Some states and localities have adopted their own eviction moratoria. Debt collectors may also be required to provide notice of these moratoria. The CFPB’s rule does not preempt more protective state law. The CFPB’s Rule took effect on May 3, 2021. The rule is applicable during the effective period of the CDC Order. The CFPB provides the following sample language to satisfy the rule’s disclosure requirements:
Because of the global COVID-19 pandemic, you may be eligible for temporary protection from eviction under the laws of your State, territory, locality, or tribal area, or under Federal law. Learn the steps you should take now: Visit www. cfpb.gov/eviction or call a housing counselor at 800-569-4287.
Ultimately, this CFPB requirement may be challenged and found unenforceable, but it is wise to examine your practices in light of the CDC Moratorium to ensure that they are in compliance and to notify debt collectors working on your behalf of the CDC Moratorium, applicable state or local moratoria, and those parties’ obligations under the FTC Act and the FDCPA, including under the CFPB’s interim final rule. This is not legal advice and should not be relied on as such. You should consult your legal counsel with your specific questions.
