What Every Business Should Know About the New CFPB Rules and How They Will Change the Debt Collection Process

The Consumer Financial Protection Bureau is broadening its reach witha recently released Advance Notice of Proposed Rulemaking meant to cover a wide spectrum of topicsconcerning debt collection and how the process of debt collection should be handled by a collection agency or collection attorney. 

According to CFPB’s Robert Cordray, “Debt collection . . . has more salience today than perhaps at any time in our country’s history … and is quickly becoming the topic that draws the most complaints of all of the consumer financial products and services covered by our consumer response team.”  Cordray continues to describe regulations adopted by the CFPB that prohibit “unfair, deceptive or abusive” acts related to collecting debt. 

Earlier in 2013, the CFPB was given oversight of any company that takes in more than $10 million in receipts related to collecting on consumer debt.  This number included approximately 175 companies that are now under the auspices of the CFPB for regulation.  It is expected that the CFPB will further expand its rules, including rules enacted upon debt owners and related to their communication with third-party debt collectors. 

In an effort to settle the questions that are still on the table related to the FDCPA and the specific debts that are subject to the authority of the CFPB, the CFPB has published the Advanced Notice of Proposed Rulemaking to give the financial services industry time to weigh in on certain issues that are still to be decided by lawmakers.  The issues include:

• Should first-party collectors be given the same set of regulations as those given to third-party collectors?
• What documentationshould be included in the transfer of debt collection to a third-party collector?
• Does the consumer have a right to know when a debt is given to a third-party collection firm?
• What should be the specific content of the FDCPA validation notices and Fair Credit Reporting Act dispute processes?
• Considering changes in technology, particularly mobile phone technology, what regulations should be placed on communications between the industry and consumers?