Consumer Debt Collection

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Recently, the Bureau of Consumer Financial Protection (Bureau) issued an Advance Notice of Proposed Rulemaking (Notice) seeking comment, data and information about debt collection practices affecting consumers.

The Notice is 114 pages in length. It discusses the Fair Debt Collection Practices Act, which was passed in 1977 and governs third-party debt collectors (collection agencies). The Bureau is concerned not only with third-party debt collectors but also with the collection practices of original creditors. As stated in the Notice, the Bureau expects to “address concerns related to debt collection using its authority under the Dodd-Frank Act to issue regulations concerning unfair, deceptive, and abusive acts or practices and to establish disclosures to assist consumers in understanding the costs, benefits, and risks associated with consumer financial products and services.”

The Bureau is seeking answers to the 162 questions posed in the Notice. Many of the questions suggest that additional restraints and requirements will be imposed on consumer debt collectors, including original creditors that collect the obligations due them. Consumer advocates can be expected to respond to many of the questions by encouraging the Bureau to limit the rights of both first-party and third-party debt collectors.

Banks that make consumer loans particularly those that undertake their own collection efforts, should review the Notice and respond to the Bureau. If the Bureau adopts stringent debt-collection rules, consumer credit may be more expensive and the collection process may be hampered.

The Notice may be found at:
http://files.consumerfinance.gov/f/201311_cfpb_anpr_debtcollection.pdf