By Jeff Bater
The head of the Consumer Financial Protection Bureau signaled it will move forward with plans to regulate debt collectors in remarks made just before the House passed a bill that would sharply reduce the agency’s rulemaking and enforcement powers.
Richard Cordray discussed debt collection in remarks for a CFPB consumer advisory board meeting June 8 and said the bureau “will be able to move forward more quickly with a proposed rule” on certain issues involving collectors. The bureau announced draft proposals on part of the debt collection market in 2016.
Cordray’s announcement came the same day the House approved the Choice Act, a Republican bill that would repeal much of the Dodd-Frank Act, including key CFPB powers. The bill would eliminate the bureau’s supervisory functions and its authority to act against unfair, deceptive, or abusive acts and practices (UDAAP), and do away with its single-director structure and independent funding.
Amid efforts to scale back the bureau, Cordray has been digging in, defending the CFPB’s enforcement practices in a May 31 speech and providing an update June 8 to its debt collection rulemaking process.
Debt collection remains the single largest source of complaints to the federal government of any area of consumer finance, Cordray said, adding that the governing law in that market, the Fair Debt Collection Practices Act, is now four decades old.
”Writing new regulations in this area makes a great deal of sense. Both industry and consumer groups are pressing for updated interpretations of the law because so much is happening in this marketplace that the law cannot easily keep pace with developments,” he said, adding that the 1977 statute was written with landline phones and postal mail in mind. “Many of today’s consumers are adept in using the Internet, email, and social media, yet debt collectors are uncertain how to address many issues involving these new technologies.”
Last July, the CFPB outlined proposals under consideration that would apply to third-party debt collectors and debt buyers. It also announced the intention to move forward with a separate rule for first-party creditors, such as banks and other lenders, who collect on their own accounts.
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To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
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