Reconciling the “Rule” Requirements with State Requirements

October 13, 2021
By Caren Enloe

law and time

Reconciling the “Rule” Requirements Where the Rubber Meets the Road

By Caren D. Enloe

For the past year, the industry’s attention has been focused on the Debt Collection Rule (the “Rule”), its changes, and the new expectations it will place on debt collectors; but as the rubber meets the road, collection agencies and other debt collectors now are turning their attention to operational impacts and, how to put the Rule into practice.  In doing so, many are now considering how to reconcile the requirements of the Rule with competing, and sometimes more restrictive or conflicting, state statutes and regulations.

Reconciling federal and state debt collection rules and statutes is not a new phenomenon for debt collectors.  Both the FDCPA and the Rule recognize that federal law is not the only player in this space.  Thus, both expressly provide that they do not annul, alter, or affect, or exempt any person subject to the FDCPA or the Rule from complying with state law except when those laws are inconsistent with the FDCPA and then only to the extent of the inconsistency.  Importantly, both also recognize that state laws may be more restrictive.  Thus, where Section 1006.14 of the Rule may allow 7 call attempts in a 7-day period, some state laws may have more restrictive call frequency limitations.  In those instances, complying with the Rule may save you from an FDCPA violation but it will not save you from a state violation unless you comply with the more restrictive state requirement.

As we near the effective date for the Rule and focus turns to the operational adjustments necessary to comply with the Rule, debt collectors once again should review competing state and federal requirements, identify where one may be more restrictive than the other or where there may be conflict, and adjust their policies and procedures to accommodate for the same.

While this is not meant to be comprehensive, here are a few of the issues agencies should be considering:

What changes are being made to the agency’s operations because of the Rule?

One of the first issues compliance department should identify is where is the Rule necessitating changes to policies, procedures, and operations?  Aside from the substantive changes to the debt validation notice, here are a few of the more obvious potential changes to consider:

  • Does the agency intend to use limited-content messages?
  • Has the agency contemplated a name change or use of an assumed name as a result of the Rule?
  • How do the new call frequency limitations impact the agency’s policies and procedures?
  • Does the agency intend to make use of electronic communications?
  • Is the agency making changes to its letter or dialing campaigns as a result of changes brought about by the Rule?
  • To the extent the agency credit reports, does the Rule impact how and when the agency will credit report?

While these are some of the more obvious impacts, compliance departments should be taking a granular look as well and identifying other operational changes brought about by the Rule.  For each change identified, compliance departments will then need to review state laws and regulations to determine whether those changes comply with state law. Where state laws are more restrictive, policies and procedures may require further alterations.

Here is an example.

The Rule introduces the concept of limited-content messages.  As suggested by their name, they contain limited content.  In fact, content is limited to a business name for the debt collector (that does not indicate the debt collector is in the debt collection business), a request that the consumer reply to the message, the name or names of one or more natural persons whom the consumer can contact, and a telephone number that the consumer can use to reply to the debt collector.  12 C.F.R. 1006.2(d).  It does not allow, for instance, the agency to identify itself as a debt collector.  Nor does it allow the agency to identify the creditor or the intended recipient of the message?

But how does that mesh with state law?  Not all states define communication to mean conveying information regarding a debt directly or indirectly to any person.”  In fact, some states don’t define communication at all.  Moreover, some state statutes require the agency identify it as a debt collector and/or the creditor in any calls or oral communications.  In those states, limited-content messages may not be practicable or may carry risk the agency is not willing to take when considering the state’s definition of communication or the state’s content requirements.

 What about the validation notice?

Section 1006.34 of the Rule implements and interprets section 1692g(a) of the FDCPA and expands the information required in the debt collector’s validation notice. In doing so, it treats state mandated disclosures as “optional” and requires most, but not all, be placed on the back of the validation notice above the tear off section.[1]

Agencies should be considering the following questions when finalizing their validation notices and considering their back side disclosures (or “backer”):

  • Are they collecting in states with state mandated disclosures?
  • If so, how do the state mandated disclosures compare to those required by the Rule?
    • Are they consistent with the Rule?
  • Do they require additional information?
  • Do they require specific language which conflicts with the Rule?
  • If so, how can you reconcile that conflict and comply with both?
  • Is there an itemization requirement under state law?
  • Is it consistent with Section 1006.34?


Where issues arise, debt collectors should consider consulting with counsel to ascertain how best to reconcile those issues.


Finally, In States Where Licensure Is Required, What Additional Impacts are Brought About by the Rule? 

Finally, in states where collection agencies are required to be licensed, it is important not to lose sight of regulator-required approvals for amended letters, communications, and scripts.  Collection agencies, therefore, should ensure any such changes are appropriately submitted to the state regulator in a timely fashion.

As the effective date of the Rule rapidly approaches, compliance departments should not lose sight of their state debt collection requirements.  The key is to identify changes, examine those changes for compliance with state law, and adapt as needed before the rubber meets the road.

[1] The exception, time barred debt disclosures, are required to be placed on the front of the notice.  Section 1006.34(d)(3)(iv)(B).



Caren Enloe

| Smith Debnam Narron Drake Saintsing & Myers, LLP
Caren Enloe leads Smith Debnam’ s consumer financial services litigation and compliance group. Caren currently serves as chair of the Debt Collection Practices and Bankruptcy subcommittee for the American Bar Association’s Consumer Financial Services committee and as co-chair of the National Creditors Bar Association’ s Bankruptcy Section. Most recently, she was elected to the Governing Committee for the Conference on Consumer Finance Law. In 2018, Caren was named one of the “20 Most Powerful Women in Collections”  by Collection Advisor, a national trade publication.  An active writer and speaker, Caren oversees a blog dedicated to consumer financial services and has been published in various publications.