CFPB hearing focuses on debt collection for now
CFPB unveiled a proposed rule on debt collection yesterday at the Consumer Financial Protection Bureau (CFPB) field hearing in Sacramento, CA. The 117-page proposal, released a day early, impacts collection agencies, debt buyers, collection law firms, and loan servicers. At this time, credit unions were not impacted by this proposal. The agency said it plans to create a separate small business review panel in the next few months for banks, credit card companies, and other first-party creditors.
However, CFPB also says it plans to deal with first-party debt collectors, such as credit unions and other financial institutions “soon, but on a separate track.” That separate rulemaking may include financial institutions that perform collection on defaulted or delinquent debt.
League sources say key components of the proposal, as it stands, include:
- Placement of the burden of proof for outstanding debt on collectors.
- Debt collectors must share information provided by consumers with other collectors to whom the debt may be sold.
- Requirements for collectors to communicate a statement of rights to debtors, along with information about what they owe and how to “navigate” repayment.
- May require collectors to cease pursuit if there are “warning signs” regarding validity of the debt, such as missing personal information or a number of disputes over the debt.
- The rule as proposed will apply to debt collectors under the definition provided by the Fair Debt Collection Practices Act. This statute does not cover original creditors, such as credit unions and banks, when they collect on their own behalf and in their own name.
No dates for the comment period have been announced. For more go to CU Journal.