CU’s Not Covered By Bureau’s Debt Collection Proposals…Yet

July 28, 2016 at 8:46 am 1 comment

I fully expected to tell you this morning that the CFPB was once again getting ready to wallop you with regulations by imposing new notice and collection restrictions on creditors with the audacity to collect debts from delinquent borrowers.  The Fair Debt Collection Practices Act is a federal law that regulates the conduct of third-party debt collectors (i.e. not your frontline debt collector but the party you sell or outsource your debt collection efforts out to when you have given up all hope of collecting anything from your member).

This day still may come but, having just gone over the material,  my first take is that credit unions received a stay of execution.

Today,  when the CFPB outlines its proposals for enhanced regulation of debt collection,  it won’t be seeking to make creditors subject to the FDCPA.  In addition the Bureau is publishing an outline of its potential proposals instead of proposing a new regulation. It will take   several more months before a regulation is even proposed. (A chart on page 12 outlines the major components of its proposal).

But not all is copasetic. Some of the Bureau’s proposals unveiled today would have an indirect impact on those of you who use third-party collectors.. More importantly, the Bureau signaled that it will most likely begin a separate regulatory process to address how best to regulate creditor collection activities In his prepared remarks  the Director promises “ As part of our overhaul, we also plan to address first-party debt collectors soon, but on a separate track.”

I can hardly wait. It’s almost as exciting as seeing what hacked email Donald Trump coaxes Russia to release next. Still I’m extremely surprised that the CFPB has held its fire.

According to the CFPB it’s considering regulations that would Require debt collectors  to “substantiate,” or possess a reasonable basis for, claims that a particular consumer owes a particular debt and impose  higher  standards  for substantiating debts that are litigated; Mandate the transfer of information when a debt is transferred between debt collectors; and create a new and  improved FDCPA validation notice and a Statement of Rights provided by debt collectors  “to provide consumers with the most critical information needed to determine whether they owe a particular debt and to navigate the debt collection process more generally.”

After all no CFPB proposal would be complete without new and improved disclosures.




Entry filed under: 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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