Appeals Court Throws Wrench Into CFPB Debt Collection Rewrite

A federal appeals court may have thrown a wrench into the Consumer Financial Protection Bureau’s plans to allow debt collectors to validate consumer debts through text messages, email and other electronic communications.

The U.S. Court of Appeals for the Seventh Circuit on Aug. 8 found that using hyperlinks to direct consumers to a debt validation notice does not comply with the Fair Debt Collection Practices Act. The decision in Lavallee v. Med-1 Solutions LLC comes as the CFPB is taking comments on a May proposal for the first-ever federal rules for debt collection.

One provision of the proposal would let ...