June 8, 2017: CFPB Director Richard Cordray announced that the Bureau will combine consideration of first-party creditors and third-party debt collectors for the “right consumer, right amount” aspect of its debt collection rulemaking. They received massive feedback with concerns from the industry pointing out the verification difficulties faced by collectors who did not have the cooperation of creditors. Third-party collectors said they could not adhere to the CFPB debt substantiation and data transfer requirements without simultaneous rules also applying to their creditor clients. The announcement and the decision from the CFPB is considered a significant win for the collections industry.
Director Cordray stated, “As we evaluated the feedback we received on the proposals under consideration, one thing became clear. Writing rules to make sure debt collectors have the right information about their debts is best handled by considering solutions from first-party creditors and third-party collectors at the same time. First-party creditors like banks and other lenders create the information about the debt, and they may use it to collect the debt themselves or they may provide it to companies that collect the debt on their behalf or buy the debt outright. Either way, those actually collecting on the debts need to have the correct and accurate information. All of the parties must work together to ensure they are collecting the right amount of debt from the right consumer. But breaking the different aspects of the informational issues into pieces in two distinct rules was shaping up to be troublesome in various ways….Once we move forward with the proposed rule on these issues we will return to the subject of recovering the right amount from the right consumer, which is a key objective regardless of who is collecting the debt. And we’ll take care to get it right.”
The CFPB has also announced plans to conduct a survey of 8,000 individuals regarding the disclosure requirements to include in its proposed rule. According to the CFPB: “The survey will explore consumer comprehension and decision making in response to debt collection disclosure forms.”
ACA Members also received an email Alert. You can read more about the announcement on their website and in the following publications: