CFPB Issues Interim Final Rule Targeting Eviction-Related Debt Collectors

On April 19, 2021, the Bureau of Consumer Financial Protection (“CFPB”) issued a new interim final rule under the Fair Debt Collection Practices Act, which will require debt collectors to notify tenants of their rights under the Centers for Disease Control and Prevention (“CDC”)’s moratorium on residential evictions for nonpayment of rent.

The CDC’s order prohibiting evictions nationwide on the basis of nonpayment of rent was initially set to expire at the end of 2020 but has been renewed three times and is currently set to expire on June 30, 2021. The order generally prohibits a landlord from evicting tenants for non-payment of rent if tenants submit a written declaration that their financial situation prohibits them from making payments, among other verified statements. Courts are actively hearing cases regarding the constitutionality of the CDC’s order, and you should consult a lawyer about the status in your jurisdiction.

Under the CFPB’s new rule, landlords and other debt collectors may not file an eviction action for nonpayment of rent without disclosing, in writing on the same date as the earliest termination notice or eviction notice, that the tenant may be eligible for protection under the CDC’s order. Landlords are also prohibited from implying that a tenant may be ineligible for legal protection under the CDC’s order. The CFPB encourages landlords to use the following approved sample language to comply with the rule: “Because of the global COVID-19 pandemic, you may be eligible for temporary protection from eviction under Federal law. Learn the steps you should take now: visit www.cfpb.gov/eviction or call a housing counselor at 800-569-4287.”

The rule clarifies that a landlord is not required to provide notice of the CDC’s moratorium to tenants to whom the moratorium does not apply. However, landlords may be subject to penalties if they are incorrect about the moratorium’s applicability. There is no consequence to providing the notice to all tenants regardless of the moratorium’s applicability.

The rule goes into effect on May 3, 2021.

If you have questions concerning this new rule, its potential applicability to you or your business, or strategies for compliance, please reach out to the Ice Miller COVID-19 Task Force for more information.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.