Access the various formats of the model validation notice now to simplify the process of formatting them by the Reg F compliance deadline.
New formats of the Consumer Financial Protection Bureau’s model validation notice (MVN) required under Reg F are now available online through the bureau.
The newly available alternate formats—especially the Microsoft Word version—of the MVN should make it easier to incorporate the MVN into existing systems and make formatting and other permissible changes, e.g., optional disclosures, by the Nov. 30 effective date for Reg F. The additional formats of the MVN that the CFPB has provided are intended to facilitate compliance with Reg F.
As a refresher, highlights of the new rule on validation information and the MVN include:
- The CFPB’s final debt collection rule imposes new requirements for validation notices, which will be codified at 12 C.F.R. 1006.34.
- The final rule provides a safe harbor for debt collectors who use the MVN, which will be codified at 12 C.F.R. 1006 Appendix B, Model Form B-1 (“Model Form for Validation Notice”).
- Those who use the MVN or a “substantially similar form,” as permitted by the rule will fall within the protections of this safe harbor, although the contours of the “substantially similar” standard will likely be subject to some litigation for those who choose to make changes to the MVN not expressly discussed in the final rule.
- The CFPB’s section-by-section analysis notes in footnote 145 of the December 2020 rule, that the rule’s reference to “specified variations of the model notice” refers to “specifically enumerated versions of the model notice that receive a safe harbor pursuant to [Section] 1006.34(d)(2)(i) and (ii) (i.e., notices that are the same as, or substantially similar to, the model notice but for: omitting some or all of the optional disclosures that appear on the model notice; including optional disclosures that do not appear on the model notice; or including certain disclosures on a separate page as permitted by § 1006.34(c)(2)(viii) and (5)).”
Official Comment 34(d)(2)(iii) provides several examples of “permissible changes” that will fall within the “substantially similar” standard, including:
Modifications to remove language that could suggest liability for the debt if such language is not applicable. For example, if a debt collector sends a validation notice to a person who is authorized to act on behalf of the deceased consumer’s estate (see comment 34(a)(1)–1), and that person is not liable for the debt, the debt collector may use the name of the deceased consumer instead of “you:”
Relocating the consumer-response information required by Section 1006.34(c)(4) to facilitate mailing;
- Adding barcodes or QR codes, as long as the inclusion of such items does not violate Section 1006.38(b);
- Adding the date the form is generated; and
- Embedding hyperlinks, if delivering the form electronically.
- In response to ACA International’s comments that the MVN would not work for certain types of debt, e.g., medical debt, the final rule clarifies that the bureau has “modified the model-form-safe-harbor framework … to afford debt collectors more flexibility to customize validation information to accommodate their business practices and the types of debts they collect.”
- In response to ACA’s concerns about litigation over disclosing interest and fees, the CFPB adopted an official interpretation—comment 34 (c)(2)(ix-1)—that makes clear that “the current amount of the debt is the amount of the debt as of the date that the validation information is provided.” This interpretation allows ACA members to satisfy the requirements of Section 1006.34(c)(2)(ix) without providing a dynamic balance or increasing interest or fee disclosure.
- Official comment 104–1 states that “the FDCPA and the corresponding provisions of Regulation F do not annul, alter, or affect, or exempt any person subject to these requirements from complying with a disclosure requirement under applicable State law that describes additional protections.” This comment goes on to clarify that “a disclosure required by State law is not inconsistent with the FDCPA or Regulation F if the disclosure describes a protection such law affords any consumer that is greater than the protection provided by the FDCPA or Regulation F.”
- The final rule does not adopt mandatory Spanish-language or other foreign-language disclosures, although it notes that consumers with limited English proficiency may benefit from translated validation notices. The CFPB makes clear, however, that debt collectors who provide “the optional disclosure described in § 1006.34(d)(3)(vi) must honor a consumer’s request for a translated validation notice or risk violating FDCPA section 807.
Debt collectors using the MVN should be aware that it includes the optional Spanish-language disclosures, which the debt collector may remove without sacrificing the safe-harbor provided by the rule.
ACA knows its members have been working on updating their policies and procedures to comply with Reg F and is here to help with its ACA How: Reg F Implementation video series as well as a series of Hot Topic courses on Reg F topics in September and October..