The Consumer Financial Protection bureau has placed the
topic of debt collection at the forefront of their priorities as soon as the
period of Advance Notice of Proposed Rulemaking ends. What this means for the debt collection
industry is that 2014 might become one of the most important years for the collection
industry since the FDCPA was passed in 1977.
Some of the changes announced by the agency include
increased regulations for debt collection practices. These regulations could include restrictions
placed on the originating creditors, as well as better accuracy on forms or
documents that are shared between collection parties, debt buyers and
settlement companies. The potential also
exists for updated rules on the limit and scope of communication that must
transpire between a collection agency or collection attorneys and a debtor,
including communication via text messaging.
The biggest changes, according to senior CFPB officials,
will likely occur for creditors that both originate -and collect on debt. Currently, the Fair Debt Collection Practices
Act only places restrictions on third-party collectors. These changes proposed this year by the CFPB
could affect first-party creditors in much the same way that the Fair Debt
Collection Practices Act affects current third-party collectors. It could also give the Consumer Financial
Protection Bureau the authority to supervise larger debt collectors that are
not affiliated with a bank; although banks are also under fire for their
current debt collection practices, as well.
This past July, American
Banker interviewed Paul Joseph, the director of business development for
McCarthy, Burgess & Wolff, a debt collection firm. In that interview, Joseph stated: “You can't
ignore this. It's a freight train. I have no doubt they're going to eventually
come after everything [with regard to consumer debt].” If his conclusions are
true, the ARM industry might be in for a rude awakening when the dust settles
and the new regulations are in place.
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