The Consumer Financial Protection Bureau’s annual report to Congress updates the current status of proposed debt collection rules and lists four key themes that emerged from the more than 23,000 comments received after the CFPB’s 2013 debt collection Advanced Notice of Proposed Rulemaking.
There remains no timeline for when a debt collection proposed rule will be released but the next step is expected to involve the CFPB convening a small business advocacy review panel as required by the Small Business Regulatory Enforcement Fairness Act. Interestingly, though, the report to Congress raises the possibility that there could be more than one SBREFA panel convened for collection rulemaking.
The report discusses changing technology and debt collection communications, including:
- Based on feedback from third-party collectors and consumer groups, the report states that itt would be useful for the CFPB to address the use of newer technologies since the enactment of the Fair Debt Collection Practices Act in 1977, although there were many differences among commenters as to how the CFPB should address them.
- First- vs. third-party collection issues. Many consumer groups responding to the CFPB prefer rules that would apply to first-party collectors "because harm from first-party collectors can be equally problematic for the consumer. In contrast, credit unions and several industry groups stated that an extension of debt collection rules to first-party collectors could impose significant burdens and increase consumer confusion and aren't necessary."
- Communication issues: “Many consumer groups and industry members supported rules addressing or clarifying a wide variety of issues relating to the proper time, place and manner of debt collection communications, offering diverse views as to how the bureau should approach these issues."
- Information accuracy and flow: Consumer groups, debt collectors and state Attorneys General commented that additional information should be documented when debt is sold while noting that it is important to consider the "burden of requiring particular types of information."
The CFPB is continuing research projects to better understand the credit and collection markets and the impact of collections on consumers. The consumer-focused research includes a survey to obtain data about consumers’ experiences with debt and debt collection while including the use of cognitive interviews, to learn about the effect of collection disclosures.
For the industry, the CFPB is conducting a survey of collection firms through a questionnaire sent to 60 collection agencies and phone interviews with more than 30 agencies and vendors.
"The objective of the study is to obtain a baseline understanding of the operational costs of debt collection firms, and the bureau anticipates using the results of the study to better understand the likely impact on the debt collection industry of any potential regulations," according to the report.