In July, the Consumer Financial Protection Bureau (“CFPB”), the new agency created by the Obama administration, will take over regulation and supervision of debt collectors. Formerly, the Federal Trade Commission (“FTC”) had oversight of the debt collection industry; now, with the creation of the CFPB, the FTC and the CFPB will share policing duties.
The CFPB will have a weapon that the FTC never had; that is, the ability to write rules and regulations for the industry. So it comes as no surprise that the debt collection industry has been actively lobbying the CFPB for changes to existing law, in particular, to the Fair Debt Collection Practices Act (FDCPA).
ACA International, a major collection industry trade group, has submitted to the CFPB a "blueprint" suggesting proposed revisions to the FDCPA. The FDCPA was passed in 1977 and has not changed a great deal since. Many of the changes being requested by ACA concern the use of new technology to allow debt collectors to contact consumers more easily.
Below are some of the changes debt collectors want to see. The full text of the ACA blueprint can be found at the ACA International website.
- The FDCPA should be amended to allow collectors to communicate with consumers by any method of communication available.
- The law should specify the exact language a collector can use in a voice mail message without violating the law. “Such an amendment will reduce the number of calls to consumers that are terminated without a message due to concerns about third party disclosure of a consumer’s debt."
- Require validation notices to include the name of the original creditor and provide an itemization of fees and interest.
- Harmonize the debt collector’s obligations to investigate a consumer’s dispute under the FDCPA and the FCRA.
- Give equal access to all classes of litigants, including debt collectors, by not creating “heightened and unreasonable requirements” for any single class of litigants to seek redress in court.
- Amend the Truth in Lending Act to require original creditors to retain their records for seven years from date of charge off (the length of time a debt can appear on a consumer’s credit report) to help ensure that collectors can provide documentation to prove the debt.
- Adopt a seven-year statute of limitations starting from the date of the last activity on the account.
Some of the changes proposed by ACA are perfectly reasonable, and seem to have been inserted into the "blueprint" as part of the collection industry's transparent effort to improve its poor image. Other proposed changes are definitely questionable, and could leave the consumer open to abuse.
The CFPB will be under scrutiny - consumer protection is its mission, but will it fold to the hugely profitable debt collection industry?
- Sheril Stanford