Colorado Clarifies Intersection Between Regulation F and State Disclosure Requirement

On December 20, 2021, the Administrator of the Colorado Uniform Consumer Credit Code (an assistant attorney general) published an Advisory Opinion clarifying the State’s interpretation of the Colorado Fair Debt Collection Practices Act and its intersection with Regulation F.  Like a handful of other States, Colorado adopted its own state law FDCPA.  When describing a debt collector’s obligation to provide validation notice disclosures to consumers, the Colorado FDCPA uses nearly identical language to the federal Fair Debt Collection Practices Act.  Compare 15 U.S.C. § 1692g to C.R.S. §5-16-109(1).  For decades, the collection industry used the same language – affectionately referred to as “the g notice” or “validation notice” - to comply with both Colorado law and federal law.  Enter stage right: Regulation F, which changed the validation notice language and created confusion about whether the new language offered by the Bureau’s Model Validation Notice satisfied Colorado law. 

Colorado law and the FDCPA both require a debt collector, under specific circumstances, to explain to consumers “ . . . unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector …” C.R.S. §516-109(1), 15 U.S.C. § 1692g.  To satisfy this requirement, the decades-old validation notice used by the collection industry repeated this language almost verbatim, i.e. “Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof . . .”  Regulation F and the Bureau’s Model Validation Notice abandons this language in favor of a requirement that debt collectors provide consumers with a specific date on which the consumer’s verification rights expire.  The Bureau’s new language is, “Call or write to us by [insert specific date], to dispute all or part of the debt.  If you do not, we will assume that our information is correct.”  This textual change gave rise to legitimate questions about whether the Bureau’s new requirement to provide a specific date (and its corresponding model language) satisfies Colorado’s identical disclosure requirement.  If the Bureau’s language did not satisfy Colorado law, then debt collectors would be required to include different state specific disclosure language on the reverse side of the Model Validation Notice to describe the same consumer rights – no doubt leading to significant consumer confusion and putting debt collectors at risk of defending civil ligation asserting false representation and deceptive collection practices.

The Advisory Opinion fixes the confusion . . .mostly.  The Administrator makes clear that the validation notice disclosure requirements of Colorado law and the federal FDCPA use “nearly identical language.”  The opinion then confirms that a debt collector or a collection agency “may, but are not required to” comply with the Colorado validation notice requirements “by providing Colorado consumers with the date certain that a consumer’s validation period ends, if that date certain is consistent with the validation period as defined in Regulation F.”  Attempting to comfort debt collectors, the Administrator confirms that no regulatory action will be taken against a collection agency or debt collector who uses a date certain to satisfy their requirement to provide notice about a consumer’s right to dispute within “30 days after receipt of the notice.”  This Advisory Opinion provides additional legal safety to those relying on it because Colorado law, like federal law, affords safe harbor from legal liability to those relying in good faith on the opinion and conforming their behavior consistent therewith.  C.R.S. § 5-16-113(6).

Had the opinion stopped here, the rule would be clear, and consumers and debt collectors would bear matching expectations. . . but it didn’t.  Instead, the Administrator felt compelled to add an “Illustration” to the end of the opinion attempting to demonstrate an application of the opinion to a specific fact pattern.  In racing parlance, this is where the “rear-end gets a little loose.”  This is the complete illustration:

Illustration:

In connection with the collection of a debt, a collection agency provides a Colorado consumer with a written notice. As required by Reg. F, the first page of the notice advises the consumer that they have until April 24, 2022 to dispute the validity of the debt. On the second page (or reverse side of the first page) of the notice, the collection agency again provides the consumer of [sic] with an April 24, 2022 deadline to dispute the validity of the debt and, further, provides the consumer with the disclosures required by section 5-16-109(1), C.R.S., and 4 C.C.R. 903-1, Rule 2.01. The debt collector has complied with section 5-16-109(1), C.R.S., and 4 C.C.R. 903-1, Rule 2.01. This written disclosure may also contain the disclosures required by section 5-16-105(3)(c) and (d), C.R.S.

Despite this inartful application, the illustration confirms one very narrow and specific issue:  giving the consumer a date certain satisfies Colorado’s requirement to explain that consumers have 30 days to dispute the validity of the debt (so long as the date conforms to the requirements of Regulation F).  Repeating that date on the reverse side of the Model Validation Notice also complies with Colorado law.  Regrettably, the opinion does not specifically answer the question of whether the remaining requirements of C.R.S. §5-16-109(1) (i.e. amount of the debt, identification of the creditor, obtaining verification or judgment copies, original creditor information requests) which mirror 15 U.S.C. §1692g are also satisfied by the Bureau’s new Model Validation Notice language.  That the Administrator acknowledges early in the opinion that the language of the FDCPA and the Colorado law use “nearly identical language,” this author can only answer the question in the affirmative – but it would have been nice if the opinion explained as much in more clear terms. 

Bottom line: this opinion confirms that using a date certain to describe the end of the validation period complies with Colorado’s requirement to explain that consumers have 30 days to dispute the validity of the debt.  For collectors seeking to take advantage of Regulation F’s safe harbor afforded the Model Validation Notice, disclosures specific to Colorado law (i.e. not also required by the FDCPA) will appear on the reverse side (not a second page) of the Model Validation Notice as permissible optional disclosures.  12 CFR. §1006.34(d)(3)(iv)