Sunday, March 29, 2015

CFPB Annual Report on the FDCPA Offers Glimpse of Future Rulemaking

The CFPB issued its annual report on the FDCPA to Congress this week.  Much of what the Report contains has been previously reported.  See FTC Report to CFPB ; Supervisory Highlights.   What is new, however, is that the Report offers further insight as to what the CFPB rulemaking on debt collection may address. 

As was reported a few week ago, the CFPB and FTC are working together to formulate proposed rules addressing the FDCPA and it is widely expected that the proposed rules will be issued before the end of the year.  In the fall of 2013, the Bureau took the first steps toward rulemaking by issuing an Advanced Notice of Proposed Rulemaking (the “ANPR”).  The ANPR set forth a series of questions on which the CFPB sought comments.  According to the Annual Report, the ANPR resulted in more than 23,000 comments.  The Annual Report indicates the Bureau will take into account the comments received, its further discussions with stakeholders, as well as further research before it issues a notice of proposed rulemaking.

The Annual Report indicates that, a year after the comment period closed, the Bureau is still reviewing the comments received in response to the ANPR.  In addition, the Bureau has initiated a series of research projects to help it better understand the collection market and its impact on consumers.  Specifically, the Bureau disclosed that it has mailed a survey to more than 10,000 consumers asking questions about their experience with debt collection.  The Bureau indicated that it is also conducting “qualitative testing”, including focus groups and cognitive interviews to assist the Bureau in assessing the disclosures of debt collectors, specifically: (a) information about the debt and its owner; (b) disclosures that the communication is from a debt collector; and (c) the debtor’s right to dispute a debt.  The Bureau also disclosed that it is engaging stake holders in roundtable discussions about specific debt collection issues that it has flagged as troublesome- e.g., debt collection in Latino communities and the collection and credit reporting of medical debt.

While the Annual Report does not provide a time table for release of the notice of proposed rulemaking, it does offer insight to particular themes which are likely to be addressed in any proposed rules:

·       New Technology:  The FDCPA was adopted in the early 1970s and does not take into account new technologies.  The Annual Report suggests that it is likely that the proposed rules will address newer technologies, including email communications.

·       Documentation of Debt:  While noting a contraction in the debt buying market, the Annual Report notes that the sufficiency of documentation substantiating a debt was a common theme in the comments received in response to the ANPR.  It appears from the Annual Report, however, that the Bureau is aware that there may need to be a balancing of interests in this regard and that the level of documentation necessary to support a debt may vary as to product type.

·       Communication Issues:  The Bureau is likely to address communication issues. In its Annual Report, the Bureau identifies communication tactics as the second most common complaint in 2014.  The Bureau also noted that in the comments received in response to the ANPR, “[m]any consumer groups and industry members supported rules  addressing or clarifying a wide variety of issues related to the proper time, place, and manner of debt collection communications.”  Based upon the Bureau’s comments throughout the Annual Report, it would not be surprising to see rules proposed that provide clarification of validation rights, what documentation is necessary in response to a dispute, and clarification as to the frequency of calls.

·       First vs. Third Party Debt Collection Issues: The Bureau acknowledged that it received comments advocating for first party debt collection regulation.  While the Bureau did not indicate its views on the same, it has previously indicated that it believes that first parties are subject to similar standards as those set forth in the FDCPA and therefore it is likely that any proposed rulemaking will attempt to include first party collections.  See CFPB Bulletin 2013-07.

The Annual Report can be found here: Annual Report to Congress.

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