CFPB gets going on debt collection

by Brian Wolfman

The Consumer Financial Protection Bureau took two steps yesterday in the debt-collection realm.

First, it began adding complaints about debt collection to its public consumer-complaint database.

Second, it began the process of rulemaking for the debt-collection industry. The agency issued an advance notice of proposed rulemaking seeking data on many issues,
including the accuracy of information used by debt collectors, how consumers can best learn of their rights, and the current means — legal and illegal — used by debt collectors to collect debts. In the agency's press release CFPB director Richard Cordray explained the reasons behind the agency's inquiry:

For decades, many consumers have reported various unacceptable
practices in the debt collection industry. Today’s action will allow us
to hear from the public as we consider what rules are needed. We want to ensure that all players in the
industry are working with correct information, that consumers are fully
informed, and that consumers are treated fairly and with dignity.

The rules that emerge from this process could significantly change debt-collection practices. Although the federal law governing debt collection — the Fair Debt Collection Practices Act — has been around since 1977, until enactment of the Dodd-Frank financial reform law in 2010, no agency was authorized to issue legislative rules governing the conduct of the debt-collection industry (and practices were governed generally by the text of the FDCPA and court decisions interpreting it). Now, the CFPB has that authority.

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