ABA and two other trade groups expressed their support for the CFPB’s goal of modernizing rules under the Fair Debt Collection Practices Act. However, the groups opposed “the wholesale extension of the FDCPA to first-party creditors using the Bureau’s rulemaking authority … to prohibit unfair, deceptive, or abusive acts and practices.”
Explaining that the collection of delinquent debt is vital to the availability and affordability of consumer credit, the groups urged the CFPB to “prioritize and sequence its policy initiatives, beginning with those issues that present the greatest risk to consumers…. Given that complaint data show that consumer concerns are several times more likely to be expressed about third-party debt collectors than first-party creditors, priority should be assigned to reforming that segment of the industry first.”
The groups also underscored the importance of customer engagement with banks from the earliest stages of delinquency to help customers avoid late fees, minimize negative impacts to their credit report, avoid account closures, and take advantage of loss mitigation. “[I]t is essential that any new rules promote, not inhibit, customer engagement,” the groups wrote.
The CFPB issued an advance notice of proposed rulemaking in November seeking information on debt collection. The notice included 162 questions that cover the debt collection industry and procedures, collectors’ interactions with borrowers and issues relating to state law and the federal FDCPA, which the Dodd-Frank Act amended in order to give the CFPB rulemaking authority.
Read the letter.