Four months after it began accepting debt collection complaints, the Consumer Financial Protection Bureau has issued an Advance Notice of Proposed Rulemaking seeking information on debt collection. In particular, the CFPB stressed information accuracy, consumer rights and communication methods as areas of concern. The 114-page ANPR seeks input from consumers and industry participants on 162 different questions.
The ANPR and its 90-day comment period are the first step toward possible new regulation for the debt collection market. Citing the “heavy volume of consumer complaints” received by the bureau since July, CFPB Director Richard Cordray said it was time “to look closely at how we can improve and modernize existing measures that were written before the internet, before social media, and before many other new communication technologies.
Besides updating the 1977 Fair Debt Collection Practices Act to take modern technology into account, the CFPB wants “to examine whether rules covering the conduct of creditors collecting in their own names on their own debts that arise out of consumer credit transactions are warranted.”
Currently, most creditors collecting in their own names are not subject to the FDCPA. However, the CFPB has emphasized before that it wants first-party collectors to abide by FDCPA regulations as well. In a bulletin issued in July, the bureau said that “any entity subject to the Consumer Financial Protection Act of 2010, 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.”
ACA International, a debt collection trade-group based in Minneapolis, issued a press release agreeing with Cordray’s assessment of current legislation as outdated, saying that it causes uncertainty and leaves “consumers and the industry susceptible to unnecessary litigation. ACA members advocate for clear definitions to collection laws to help ensure compliance while reducing unproductive litigation.”
Since July, the CFPB has amassed 5,000 consumer debt collection complaints which it will add to its public database. Debt collection is currently tied with mortgages as the greatest source of complaint, with each accounting for approximately 30 percent.