N.Y. regulator voices objections to CFPB's debt collection plan

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New York’s banking and insurance regulator is objecting to the Consumer Financial Protection Bureau’s debt collection proposal, saying it does not go far enough to protect consumers from excessive phone calls and unlimited emails and texts.

Linda Lacewell, New York State’s superintendent of financial services, sent a letter Wednesday to CFPB Director Kathy Kraninger outlining concerns about the bureau’s proposed regulation updating the Fair Debt Collection Practices Act of 1977.

“The current proposal would severely harm the financial futures and social well-being of millions of consumers in New York state and nationwide,” Lacewell wrote. “As currently written, a debt collector can leave an unlimited number of messages via email, text and social media, all without consumers opting in to the medium.”

The CFPB’s proposal would permit debt collectors to use email and texts without first seeking consent from a consumer. Consumers would be allowed to opt out of such communications.

Under the plan, debt collectors could phone consumers no more than seven times a week about a specific debt.

Lacewell criticized the plan for not requiring debt collectors to verify in advance that the debt they are trying to collect belongs to the person being contacted.

“The rule should provide additional protections for consumers complaining about collectors attempting to collect debts not owed, for example, by requiring debt collectors to obtain verification of the debt or a copy of the judgment and review it prior to attempting to collect on the debt,” she wrote.

The FDCPA prohibits debt collectors from making abusive, misleading or false representations and from unfair practices in the collection of a debt. The comment period for the debt collection proposal ends Sept. 18.

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