Adjusting Policies and Procedures for the Deceased Consumer


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ACA attorney member Caren Enloe provides insights on preparing for compliance with the CFPB’s debt collection rule.

3/25/2021 12:00

By Caren D. Enloe

Section 1692a(3) of the Fair Debt Collection Practices Act defines a consumer as any natural person obligated or allegedly obligated to pay a consumer debt. The final debt collection rule from the Consumer Financial Protection Bureau (Reg F) interprets the definition of “consumer” to include deceased natural consumers. Looking toward a Nov. 30, 2021, effective date, here are some key items that may require adjustments to your policies and procedures.

Initial Skip Traces

Because the rule now addresses communications regarding deceased consumers, it’s important to review skiptracing policies and ensure policies are in place that will provide the debt collector with ample information as to the deceased consumer’s estate. Therefore, collection agencies will want to examine their skiptracing policies and procedures to ascertain whether they adequately identify estates and the representatives of those estates wherever possible. According to the CFPB, acceptable means for identifying estates would include searching public records and using location information communications.

Location Information

The rule will allow debt collectors to seek location information concerning persons authorized to act on behalf of the deceased consumer’s estate. While neither the FDCPA nor the rule allows the debt collector to disclose the debt, the rule’s Official Commentary provides directed guidance on what content is acceptable in location information communications. Specific to deceased consumers, the comments indicate a debt collector may state “that the debt collector is seeking to identify and locate the person who is authorized to act on behalf of the deceased consumer’s estate” or “that the debt collector is seeking to identify and locate the person handling the financial affairs of the deceased consumer.” See Comment 10(b)(2)-1. Collection agencies should consider incorporating this language into their skiptracing and location inquiries. While not a per se safe harbor, adherence to the comments’ language provides some persuasive authority for compliance.

Debt Validation Notice 

For purposes of debt validation, the rule makes clear that if the debt collector knows or should know that the consumer is deceased, and if the debt collector has not previously provided the validation notice to the deceased consumer, the debt collector must provide the debt validation notice to a person authorized to act on behalf of the deceased consumer’s estate. Under the CFPB’s interpretation, this would include executors, administrators and personal representatives.

The “should know” standard should give debt collectors pause to consider what tools they have at their disposal that would or should allow them to know a consumer is deceased. Debt collectors should establish policies and procedures that address when and to whom a debt validation notice should be sent when the consumer is deceased and processes for identifying estates and the appropriate representative of the estate.

Debt collectors should be mindful of the specificity required when sending validation notices to the representative of a deceased consumer. Comment 34(a)(1)-1 requires that the debt collector identifies by name the person who is authorized to act on behalf of the deceased person. It is not enough to simply address the debt validation to the “Estate of John Smith.” Instead, the debt collector will need to identify the specific person authorized to act on behalf of the deceased consumer’s estate and, where the validation notice has not previously been provided, provide it addressed to the appropriate representative.

Permissive Parties for Communication

For all other communications and consistent with this expansive interpretation of who is a consumer, the rule likewise includes as permissive third parties for communication the deceased consumer’s spouse, parent (if the consumer is a minor), legal guardian, executor or administrator, and confirmed successor in interest (as defined Regulation X).

Moreover, the comments clarify that the terms “executor” and “administrator” include less formal personal representatives. See Comment 6(a)(4)-1. “Persons with such authority may include personal representatives under the informal probate and summary administration procedures…, persons who sign declarations or affidavits to effectuate the transfer of estate assets, and persons who dispose of the deceased consumer’s financial assets or other assets of monetary value extrajudicially.”

Collection agencies should be mindful of this clarification and should begin reviewing their policies, procedures and scripts to evaluate whether they are sufficiently robust to adequately identify such parties

Because the rule takes a more expansive view of what defines a consumer, collection agencies should begin reviewing their policies, procedures, scripts and letter contents to ensure they are properly communicating with estates’ appropriate representatives. Skiptracing and location contacts should be updated to identify deceased consumers and those authorized to act on behalf of the deceased consumer’s estate. Debt validation notices should be similarly updated to send to the appropriate named representative of the estate. And finally, policies and procedures should be updated to identify the appropriate third parties for further communications concerning the debt when the consumer is deceased.

Caren Enloe, an ACA International member, leads Smith Debnam’s consumer financial services litigation and compliance group.

Editor’s note: This content is published with permission from Smith Debnam Narron Drake Saintsing & Myers LLP. This article is provided for informational purposes and is not intended nor should it be taken as legal advice. The views and opinions expressed in this article are those of the author in his individual capacity and do not reflect the official policy or position of their partners, entities, or clients they represent.

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