Removing Barriers Blog

We Are Grateful That CFPB's SBREFA Proposals Recognize the Differences Between 1st and 3rd Party Debt Collectors
Posted September 09, 2016 by CUNA Advocacy

In response to a SBREFA panel focused on third party debt collection held in August, and discussion proposals released prior, we sent a letter to the CFPB expressing credit union concerns. 

The letter thanked the CFPB for recognizing the very significant differences between the relationships consumers have with first party creditors versus third party debt collectors, as indicated by the exclusion of first party creditors in the initial debt collection SBREFA process. We hope this reflects the CFPB’s understanding that Congress purposefully exempted first party creditors, including credit unions, from the FDCPA and therefore, it would be unlawful to extend any rulemaking pursuant to this statute over credit unions. 

The letter further states that it is essential for credit unions to communicate with their members about account information and help them manage debt in responsible ways. If a member is notified early about a late payment, it is likely his or her other credit options will not detrimentally impacted. Limiting the frequency of these types of communications would not be beneficial to members.  

The letter also points out that when Congress enacted the FDCPA, and for decades since, it has clearly recognized that including credit unions in rules addressing abusive debt collection practices is not necessary. Credit unions are already highly regulated and supervised, and have a built-in and longstanding relationships with their members.  

The letter also again reiterates to the CFPB that 75 percent of the US Congress has urged the agency to tailor its rules, so that financial institutions who act responsibly are not unnecessarily hampered by additional compliance requirements. 

We expect that small credit unions will have the opportunity to participate in the SBREFA process for debt collection at some point in the next few months. We will also continue to seek feedback from credit unions who believe these rules will impact their operations.