Removing Barriers Blog

CUNA explains the credit union difference prior to hearing on abusive debt collection practices
Posted September 27, 2019 by CUNA Advocacy

Prior to yesterday’s House Financial Services Committee (HFSC) hearing on abusive debt collection practices, CUNA wrote to Chairwoman Waters and Ranking Member McHenry advocating against legislation that would expand the scope of the Fair Debt Collection Practices Act (FDPA) to first-party debt collectors.  

CUNA’s letter details how Congress limited the scope of the FCDPA to third-party collectors in recognition that a creditor-borrower relationship depends on maintaining goodwill long after the debt payment process has been concluded, and this dynamic has not changed.

“As not-for-profit, member-owned financial cooperatives, credit unions’ stakeholders are their members who have the ultimate interest in ensuring the credit union can take appropriate steps to collect debts owed by their fellow members.  After all, credit union members will pay the cost of uncollected debts as well as the cost of debt collection practices through higher interest rates on loans, lower rates on savings and higher fees on products and services. Expanding the scope to creditors could have damaging affects including disrupting the ability to actively manage lending portfolios, increasing the cost of credit and reducing access to credit,” said CUNA President/CEO Jim Nussle. 

Last week, CUNA wrote to the Consumer Financial Protection Bureau in response to their proposed rule on debt collection.  The letter urges the CFPB to avoid impacts on first-party debt collectors in its rulemakings. The proposal would make certain amendments to third-party debt collector rules under the Fair Debt Collection Practices Act (FCDPA).