CFPB Issues Proposed Third-Party Debt Collector Rules
CU trade groups say while the rule only covers third-party collectors, many CUs hire those firms.
The CFPB on Tuesday issued long-awaited proposed rules setting limits on how and when third-party debt collectors may contact debtors.
The 538-page rule implements the Fair Debt Collection Practices Act and specifies rules for third-party debt collectors covered under that law. Among other things, the rule addresses technological advances that have taken place since the law was enacted in 1977.
Credit union trade groups said that while the rule only covers third-party collectors, many credit unions hire those firms.
“We are pleased that the Bureau is taking steps to promulgate rules on a segment of the industry that has operated without adequate regulation and has been subject to judicial orders for several decades,” said CUNA Chief Advocacy Officer Ryan Donovan. “This should bring some certainty to the operation of third-party collectors and may provide consumers with additional protections.”
“We appreciate the Bureau working to ensure consumers are provided with clear, upfront disclosures on the terms, conditions and obligations of their loans,” said NAFCU Director of Regulatory Affairs, Ann Kossachev.
“The Bureau is taking the next step in the rulemaking process to ensure we have clear rules of the road where consumers know their rights and debt collectors know their limitations,” CFPB Director Kathy Kraninger said, in announcing the plan.
Agency officials said that since the bureau began in 2011, it has brought numerous cases against third-party debt collectors.
Among other things, the proposed rule would:
- Limit the number of telephone calls from debt collectors to a borrower to no more than seven per week.
- Require debt collectors to send consumers a disclosure about the debt and consumer protections. The information would be required to include an itemization of the debt and plain-language information about how the consumer may respond.
- Clarify how debt collectors may communicate with borrowers. For instance, consumers could decide that they did not want to be contacted by e-mail, voicemail messages and text messages.
- Prohibit a debt collector from suing or threatening to sue a consumer if the debt collector knows the statute of limitation has expired. Debt collectors also would be prohibited from furnishing information to a consumer reporting agency unless the debt collector has contacted the consumer.
Agency officials said they issued a Notice of Advance Proposed Rulemaking on debt collection in 2013 and have conducted extensive research into how the rule should be crafted.
They said the agency received more than 23,000 comments in response to that notice, with about 379 being “non-form comments.”