AGs Push for New Collection Rules

In 30 states and the District of Columbia, attorneys general are urging the Consumer Financial Protection Bureau to adopt new debt collection rules that will "better protect consumers and military service members."

Among the recommendations from the state regulators in comments submitted to the CFPB: give states co-enforcement authority to address violations of collection rules; apply collection rules to original creditors as well as to debt buyers; require those who sell debts to transfer detailed original account information; require collectors to extend traditional collection protections to new modes of communication - such as cell phones and text messages; ensure collectors possess credible supporting evidence before starting collections or legal activity; and better protect service members by limiting collectors' contacts to them, particularly to those in combat zones.

The CFPB had asked for input from regulators, the collection industry and consumers about the collection system and avenues for rulemaking.

"We understand that debt collectors serve a legitimate need to collect debts, but we also must ensure that they treat consumers fairly," Iowa Attorney General Tom Miller said. "These proposed rules will help ensure that collectors are collecting the right debts from the right consumers, at the right time, for the right amount and in the right manner. We’re providing input [to the bureau] as it considers implementing new rules to ensure that debt buyers and debt collectors are following the law and that consumers are better protected."

A bill aimed at altering the CFPB's structure and limiting its powers to regulate the consumer finance industry gained approval from the House of Representatives last month but is unlikely to pass muster in the Senate.

HR 3193 calls for replacing the CFPB Director position with a five-member bipartisan commission, much like the Federal Trade Commission's makeup. It seeks to fund the agency through Congressional appropriations rather than through the Federal Reserve.

Last week, the CFPB issued a formal notice that it is sending surveys to consumers to learn about their experiences with collectors. The surveys ask whether consumers have been contacted by collectors and whether they recognized the debt being collected.

It includes questions about dealings with collectors, preferences for being contacted, opinions about potential regulations and knowledge of legal rights pertaining to collections.

This article appeared on http://www.collectionscreditrisk.com/

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Consumer banking Law and regulation
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