Removing Barriers Blog

CFPB Changes Course on Debt Collection Proposals

At the Consumer Advisory Board (CAB) meeting at the CFPB this week, Director Cordray indicated that the debt collection proposals that were discussed in a SBREFA panel last August could be altered. He noted that the CFPB has now decided to consolidate all the issues of right consumer, right amount into the separate rule we will be developing for first-party creditors. 

He stated

“As we evaluated the feedback we received on the proposals under consideration, one thing became clear. Writing rules to make sure debt collectors have the right information about their debts is best handled by considering solutions from first-party creditors and third-party collectors at the same time. First-party creditors like banks and other lenders create the information about the debt, and they may use it to collect the debt themselves. Or they may provide it to companies that collect the debt on their behalf or buy the debt outright. Either way, those actually collecting on the debts need to have the correct and accurate information. All of these parties must work together to ensure they are collecting the right amount of debt from the right consumer. 

But breaking the different aspects of the informational issues into pieces in two distinct rules was shaping up to be troublesome in various ways. So we have now decided to consolidate all the issues of “right consumer, right amount” into the separate rule we will be developing for first-party creditors, which will now cover these intertwined issues for third-party collectors and debt buyers as well. That way, we can address this entire set of considerations, market-wide.”  

In his statements, he indicated that the CFPB will move forward with issuing a third-party proposed rule without this aspect of the SBREFA proposals. He stated, “In the meantime, we will be able to move forward more quickly with a proposed rule focused on the remaining issues. These issues, again, are information third-party collectors must disclose to people about the debt collection process and their rights as consumers, and ensuring that third-party collectors treat people with the dignity and respect they deserve.” 

The CFPB has not yet held a SBREFA panel for first party creditors, who collect their own debt. CUNA has encouraged the CFPB to seek feedback from both the NCUA and small credit unions before moving forward with any SBREFA proposals or other policies impacting first party-creditors collecting debts. CUNA has also highlighted that neither the FDCPA, nor the Dodd-Frank Act, has been changed to include first-party creditors, and the CFPB should consider this Congressional directive and the major differences between credit unions and for-profit third-party debt collectors before moving forward.