Of all the items proposed in the Consumer Financial Protection Bureau's (Bureau or CFPB) Notice of Proposed Rulemaking (NPRM), the ability to request advisory opinions was one that created a lot of hope for debt collectors. In a world where collection organizations are constantly bombarded with compliance questions—mainly due to a prolific and creative plaintiffs' bar—this section felt like a bright light. However, with the changes the Bureau made in the final rule, is the advisory opinion option now more of a pipe dream?
In the NPRM, the advisory opinion section of Appendix C specifically listed to whom debt collectors should send requests and pertinent information. In contrast, the final rule states that debt collectors may submit requests for advisory opinions through one of the Bureau's already-established advisory opinion programs.
Seems like a harmless change of wording, right? Not quite.
The CFPB's pilot advisory opinion program
In June of this year, the Bureau launched its pilot advisory opinion program, which is likely the resource the final rule intends debt collectors to use. In its introduction of the program, the Bureau provides a list of factors that will be considered to determine whether it would accept a request for an advisory opinion.
To determine whether an advisory opinion is appropriate, the CFPB will weigh certain factors, such as:
- The issue in question has been noted during prior CFPB examinations as one that could benefit from regulatory clarity;
- The issue is of substantive importance or impact, or whose clarification would provide significant benefit;
- The issue relates to an ambiguity that has not already been addressed by the CFPB through an interpretive rule or other authoritative sources.
Issues that factor against the appropriateness of an advisory opinion include:
- That the issue is subject to an ongoing investigation or enforcement action;
- That the issue is subject to ongoing rulemaking;
- The issue is better-suited for the notice-and-comment process;
- The issue could be addressed through a compliance aid;
- There is clear precedent already available to the public on the issue.
What does this mean for debt collection advisory opinions?
If the pilot program is how the Bureau intends debt collectors to request advisory opinions, it appears that the industry has an uphill battle. In light of the final rule and the process used to get here, several of the factors weigh against the Bureau accepting debt collector requests.
First, we now have this massive "interpretive rule" on debt collection that took the Bureau 7 years to sort-of complete (with the remainder coming in December 2020). This was a long and arduous process for the Bureau, with a lot of back-and-forth between the agency, the industry, and consumer advocates. In other words, the Bureau already expended a lot of effort on providing us the final rule, and this might weigh against putting further effort into debt collector advisory opinion requests unless it is something desperately in need of clarification.
Second, despite the voluminous feedback from industry, which informed the Bureau that its proposed rule was ambiguous in certain respects and included many requests for further clarity, the Bureau went ahead and released the final rule as we now have it—clarifying some things but making others even more confusing than they were before. If this was the Bureau's response to requests for further clarity, can we rely on the advisory opinion program to do better? Will the Bureau think that they already responded to these requests raised in the rule comment period, and not want to answer them again?
Third, what if the CFPB decides that enforcement actions are the way to go with some of these issues? Take, for example, the meaningful attorney involvement issue. There was a whole section in the NPRM on meaningful attorney involvement that was deleted from the final rule. However, the CFPB mentioned that it believes the FDCPA provides the groundwork for the concept of meaningful attorney involvement, and the Bureau does not anticipate a stop to the lawsuits on the issue (p. 361 of the final rule)—could they also mean their own enforcement lawsuits?
We all very clearly remember when Weltman, Weinberg, & Reis (WWR) successfully defended itself against the CFPB's enforcement action related to this issue back in mid-2018. The win was a landslide: not only did the jury find in WWR's favor, so did the judge in a separate decision. Shortly after this loss, the CFPB filed another lawsuit against a different collection law firm on this issue.
In conclusion, only time will tell
At the end of the day, we'll find out how welcoming the Bureau is to industry advisory opinion requests once the first such requests are submitted. While the final rule provides some clarity, there are also significant deviations from what was proposed in the NPRM, and there are now many open questions waiting for answers.