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Regulatory Alert: Debt Collection

Posted in Regulatory and Compliance

Among the announcements in its Spring 2017 rulemaking agenda, which was just released on July 20, the Consumer Financial Protection Bureau (CFPB) announced that later this year it plans to issue a Notice of Proposed Rulemaking (NPRM) regarding debt collectors’ communications and disclosure practices.

The CFPB’s guidance is notable both for indicating a proposed timeframe for the first NPRM and for confirming that the CFPB still plans to bifurcate the agency’s actions in this area.  As Director Richard Cordray described in his remarks at the meeting of CFPB’s Consumer Advisory Board on June 8, 2017, the CFPB plans to:

  • Propose a rule that addresses “information third-party collectors must disclose to people about the debt collection process and their rights as consumers;” and then
  • “[C]onsolidate all the issues of ‘right consumer, right amount’ into [a] separate rule [the CFPB] will be developing for first-party creditors, which will now cover these intertwined issues for third-party collectors and debt buyers as well.”

Kelly Cochran, Assistant Director for Regulations, published Spring 2017 rulemaking agenda as a CFPB blog. The relevant section on debt collection reads as follows:

“We are also engaged in rulemaking activities regarding the debt collection market, which continues to be the single largest source of complaints to the federal government of any industry. We are concerned that because consumers cannot choose their debt collectors or “vote with their feet,” they have less ability to protect themselves from harmful practices. In January 2017, we published the results of a survey of consumers about their experiences with debt collection. We have also received encouragement from industry to engage in rulemaking to make the standards clear and address issues of concern under the Fair Debt Collection Practices Act (FDCPA), such as the application of the FDCPA to modern communication technologies under the 40-year-old statute. We released an outline of proposals under consideration in July 2016 concerning practices by companies that are ‘debt collectors’ under the FDCPA, in advance of convening a panel under the Small Business Regulatory Enforcement Fairness Act (SBREFA) in conjunction with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy to consult with representatives of small businesses that might be affected by the rulemaking. Building on feedback received through the SBREFA panel, we have decided to issue a proposed rule later in 2017 concerning debt collectors’ communications practices and consumer disclosures. We intend to follow up separately at a later time about concerns regarding information flows between creditors and FDCPA collectors and about potential rules to govern creditors that collect their own debts.” (Emphasis added.)

Notably, and also on July 20, the Office of Information and Regulatory Affairs, Office of Management and Budget’s webpage was updated with a more definitive date for the CFPB’s debt collection NPRM – September 2017 (“09/00/2017”). It’s not clear if that is an official date or a convenient placeholder until the CFPB actually releases the NPRM.