Mixed Reactions to CFPB’s Debt Collection Rulemaking
The Consumer Financial Protection Bureau (CFPB) released last week a notice of proposed rulemaking that would establish new rules on debt collection, primarily for third-party debt collectors. Reactions from industry participants and consumer advocacy groups have been mixed.
Industry groups have generally praised the proposal while expressing hope that the CFPB will modify it to address outstanding concerns. For instance, Mark Neeb, CEO of the Association of Credit and Collection Professionals, known as ACA International, stated, “We think there are several areas that need to be clarified and improved upon before the rule is finalized, including the arbitrary limit on call attempts that could unnecessarily impede communications with consumers.”
The President of ACA International, Jack Brown III, provided a nuanced view, saying that the rulemaking would clarify the rules around debt collection while falling short on some outstanding issues. “If enacted, this rule will give debt collectors some reliable parameters within which to try and collect valid consumer debts without the threat of technical litigation around debt validation notices and the uncertainty about voicemails that have plagued the industry for years,” said Brown. “But other issues that have been the subject of troublesome litigation recently, such as the collection of time-barred debt, are not necessarily resolved by the proposed rule.”
On the other hand, consumer groups have expressed concern. “We’re very upset and very concerned — I think outraged might be the right word for it,” said Margot Saunders, senior counsel at the National Consumer Law Center. “Almost everything that the industry wanted, the bureau gave them.”
Melissa Stegman, senior policy counsel at the Center for Responsible Lending, stated that the proposed rule would expand “the authorized ways debt collectors can communicate by adding text messages and e-mail. Consumers will now bear the burden of opting out of these new communications.”
Although permitting the use of electronic communications, the CFPB proposal would also require debt collectors to communicate with the customer a “clear and conspicuous statement describing one or more ways the consumer can opt out of further electronic communications.”
Due to the hyperbole surrounding this part of the rule, the CFPB issued a statement clarifying that the proposal does not allow a debt collector to send unlimited texts or emails. “Contrary to what is being reported, the proposed rule does not allow debt collectors to send an unlimited number of text messages or emails,” said the CFPB. “Both the proposed rule (and the FDCPA) make clear that a collector who texts or emails too frequently faces liability if the consequence of the communications is harassment, oppression, or abuse of any person.”
In the end, the CFPB’s proposed rule spawned mixed reactions. It must now go through an open comment period. Those interested in submitting comments will have 90 days to submit comments once the proposal is published in the Federal Register.