In response to the lawsuit filed against the State of Nevada, and after receiving feedback from the federal Judge hearing the case, the Financial Institutions Divisions (FID) has issued a draft set of regulations attempting to remedy the conflicts between S.B. 248 and the Fair Debt Collection Practices Act (FDCPA). 
Issued to offer clarification on the interplay between the new Nevada law and the FDCPA, the FID continues to take the position that the mandated 60-day notice required by S.B. 248 is not a “communication” under the FDCPA, and therefore, does not require inclusion of any FDCPA disclosures.
Faced with stark conflicts between following S.B. 248 and FDCPA requirements, the FID provided some specific guidance:
  1. Recognizing that consumers that receive debt collection notices call collectors with questions, the FID’s suggested regulations allow a collection agency that receives an incoming call from a consumer to provide clarification on the contents of the 60-day notice. 
  2. The FID also suggests that collection agencies may provide verification of the debt during the 60-day breather (no-collection) period, if asked for by the consumer. (Left unsaid is how the consumer would know to ask, when the FDCPA disclosures are not given).
  3. The regs confirm that the sending of a payment is permitted during the 60-day “breather” period when voluntary payments are made.
  4. Apparently acknowledging the economic burden on debt collectors for being required to use certified or registered mail for the 60-day notice, the expensive notice would only have to be issued by the first collection agency, as subsequent collectors would not be required to re-send the notice. But, downstream agencies collectors must have written confirmation from the first debt collector that the notice was sent.
  5. The proposal provides “safe harbor” language that collection agencies would be required to provide explaining the requirements in Section 7 of S.B. 248, as included in the 60-day certified or registered mail notice.
If adopted, there is one important change: the regs revised the letter review process so that Nevada licensees are no longer required to secure FID approval of letters prior to use. Instead, the submission of letters for approval would be required only if requested by the FID or during an examination or investigation.
The proposed regulations make no attempt to fix the legal preemption conflict between S.B. 248 and the Fair Credit Reporting Act, and instead doubles-down on the prohibition of credit reporting any medical debt in Nevada for 60 days, all despite the FCRA control over credit reporting.
The regulations as published are drafts and it is unknown whether the FID will be applying the new regulations immediately as there are multiple levels of review before becoming final. In its filings with the Court, the State estimated a minimum of 6 months before any regulations become final, while acknowledging that final approval could take a year or longer.
As of this Blast, there is no ruling from the Court regarding the injunction proceeding that was filed by the ACA and other parties seeking to enjoin the enforcement of S.B. 248. A hearing with witnesses was held in Las Vegas federal court on Monday, August 16, 2021.
The Sessions Firm is counsel for the ACA, and other other non-Nevada plaintiff debt collectors and a debt buyer, along with Brownstein Hyatt Farber Schreck, which is representing the Nevada Debt Collection Association and Nevada based debt collectors.
Stay tuned as the drafts undergo review and possible revisions and we await the Court’s ruling. We are here to help!
The full text of the draft regulations can be found here.
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