Calling all those in the debt management industry: now is the time to share your insights with the Consumer Financial Protection Bureau (CFPB). On November 12, the CFPB published an advance notice of proposed rulemaking (ANPR) in the Federal Register requesting information from the public on a wide range of debt collection practices and related issues. This information will guide the CFPB in what is expected to be new rulemaking in this area.
Since its inception, the CFPB has placed reforming collections and recovery practices high on its priority list. In October 2012, the CFPB brought its first enforcement action involving misleading debt collection practices, mandating a substantial $85 million refund to consumers. During the same month, the CFPB issued its Larger Participant Rule, establishing supervisory authority over 175 debt collectors with more than $10 million in annual receipts resulting from consumer debt collection. In doing so, the CFPB became the first federal agency to routinely supervise debt collectors, including: firms that may buy defaulted debt and collect the proceeds for themselves; firms that may collect defaulted debt owned by another company in return for a fee; and attorneys who collect debts through litigation.
More recently, in July 2013, the CFPB published two bulletins addressing debt management practices and also began accepting complaints from consumers. The first bulletin makes clear that any entity, whether a third-party collector or a creditor collecting its own debts, can be held accountable for any unfair, deceptive, or abusive practices in collecting a consumer’s debts. The second warns companies to avoid deceptive statements concerning the impact of paying a debt on a consumer’s credit score, credit report, or creditworthiness.
The 2010 Dodd-Frank Act not only gave the CFPB rulemaking authority over the Fair Debt Collections Practices Act (FDCPA) but also provided the agency with broad powers to issue rules ensuring that business practices are not unfair, deceptive, or abusive. Armed with this broad regulatory authority, it is not surprising that the CFPB’s ANPR contains a thorough 162 questions covering much of the debt collection landscape. The ANPR questions can be placed into three broad categories: (1) data integrity and flow; (2) appropriate consumer disclosures; and (3) communication tactics, including the use of new technology.
If you wish to comment, you have until February 10 to do so. While the ANPR is just the first step towards regulatory reform, it is vitally important that industry weigh in—not only on the areas that require increased consumer protections, but also to ensure that the rules are modernized to allow for more widespread use of new technology that is reflective of the way consumers today interact and communicate. While an ANPR will never be confused with a best seller, in this case a little “regulatory” reading might enable you to get a jump-start on the New Year.