Change Your Reg. F Initial Demand Letter? Court Says No Obligation to Use Model Notice

In a contract dispute, not a consumer defense case, a federal trial court in Illinois just confirmed what was suspected but not entirely clear in Regulation F – the CFPB model notice is more of a suggestion than a legal requirement.

In Collection Professionals Inc. vs. McDonough District Hospital, the facts were not exactly what would be expected for the first decision on the need to use the Reg. F model notice. This case involved a contract dispute between a hospital and its debt collector, rather than a consumer’s collection lawsuit. The hospital argued that the debt collector was contractually required to comply with the FDCPA – the debt collector’s refusal to use the model notice for its initial written communication meant the debt collector was breaching its contractual obligations.

The case required the court to answer the question of whether a debt collector is required by Reg. F to use the model notice. The debt collector argued that its initial letter contained all of the information required by the FDCPA and Reg. F, and so it was contractually complying with the FDCPA.  

The court agreed that debt collectors are not required to use the model notice to comply with either the FDCPA or Reg. F, stating: “While the amended complaint hints at a dispute over whether Regulation F requires use of the model form . . . it clearly does not. The phrase “safe harbour” indicates that use of the form is sufficient but not necessary for compliance. See 12 C.F.R. Section 1006.34(d)(2). A debt collector may comply by using a different form so long as the required information is provided in a clear and conspicuous manner.”

What does this mean? This case provides some support for the idea that debt collectors are free to stray from the model form, provided that the information and disclosures required by the FDCPA and Reg. F are included in the letter. In other words, other language can be added to the initial letter as long as the basic requirements are included.

Cautionary note: This case was a contract dispute and so the “least sophisticated” consumer standard was not applied.

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