The CFPB’s Most Troubling Proposal?

November 19, 2013 at 8:20 am Leave a comment

Much of what the CFPB has done so far is mandated by Congress.  We will start to see just how far reaching its powers are when it comes to promulgating changes to regulations that aren’t mandated by Congress but  harm the Bureau’s sensibilities.  I’m concerned that the Bureau is asking itself how a statute would have been implemented had it only been around.

Which brings us to the CFPB’s request for information about debt collection practices under the Fair Debt Collection Practices Act (FDCPA) in a wide-ranging ANPR published in the Federal Register on November 12 (  Judging by its questions and the tone of the ANPR, there is a very real risk that a new regulatory regime on debt collection practices will impose mandates similar to those already burdening mortgage servicers and originators.

Most troubling to me is how the Bureau feels that regulations have to be promulgated to curb the alleged excesses of creditors — meaning your employees who have the audacity to call up members behind on their car payments and mortgage loans.  As explained by the Bureau:

Congress excluded such creditors in 1977 because it concluded that the risk of reputational harm would be sufficient to deter creditors from engaging in harmful debt collection practices.[FN51] However, experience since passage of the FDCPA suggests that first-party collections are in fact a significant concern in their own right. For instance, the FTC receives tens of thousands of debt collection complaints each year concerning creditors.[FN52] The Bureau likewise has brought a debt collection enforcement action against a creditor,[FN53] and it recently issued a supervisory bulletin emphasizing that collectors, including creditors, need to ensure that they are not engaging in unfair, deceptive, or abusive, acts and practices. . .

What kind of regulations would creditors face?  Judging by the questions posed in the ANPR, virtually everything is on the table ranging from the federal registering of debt collectors to enhanced notice requirements for the debtors.

All this has been proposed in the name of protecting people who have steadfastly refused to repay their debts.  Furthermore, with or without regulations, pop FDCPA into any legal database and you quickly find out that there is no shortage of lawyers willing to extend protections to debtors who are wronged by an overly aggressive debt collector.

We are just in the preliminary stages of the regulatory process and I know you have a million other thing to do.  But, please do yourself a favor and weigh in on the ANPR both to educate the CFPB about how credit union creditors don’t need more regulations and how this is no time to be imposing a whole new regulatory regime on financial institutions.


Entry filed under: Advocacy, Compliance, Regulatory. Tags: , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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