5 Takeaways from the Consumer Financial Protection Bureau Rule Making Regarding Debt Collection
Attorney Michael Hynum discusses the outline of debt collection regulations recently released by the Consumer Financial Protection Bureau. For your convenience, the transcription for the video is included below.
5 Takeaways from the Consumer Financial Protection Bureau Rule Making Regarding Debt Collection
“Hi, this is Mike Hynum, attorney with Hynum Law in Harrisburg Pennsylvania. And today I’d like to talk to you a little bit about the Consumer Financial Protection Bureau’s rulemaking regarding debt collection.
The Consumer Financial Protection Bureau: Debt Collection Rules
The CFPB (Consumer Financial Protection Bureau) was formed, as some of you may know, as part of the Dodd-Frank reforms that were the result of changes to the federal statutes related to the federal banking, mortgage, and debt crisis.
The CFPB has long been thought, or expected, to release new rules related to debt collection. Since 2011, there has been talk that the release of new rules would be eminent. Finally within the last couple of months, the CFPB released what they call an outline of what will be the rules that will be finally issued in terms of regulations related to debt collection by the CFPB.
There’s still meetings to be had with certain business leader groups that will be discussed before finalizing the rules; but there are five main takeaways that came out of the proposed rulemaking agenda and that’s what I would like to talk to you about today.
Data Quality
The first is addressing data quality. In other words, collecting the correct debt. Debt collectors are now going to be required to make sure, more than ever, that they’re going after the correct debtor – and that the person they are trying to collect from actually owes the debt.
Validation Notice and Statement of Consumer Rights
Second, new validation notice and statement of the rights of the consumer. There’s a new collection letter that has been circulated by the CFPB that now is more clear and gives consumers the clear right to request validation or dispute sections or portions of the alleged debt.
Third-Party Collector Communication Changes
Third, frequency of communication changes. There is a proposal that we will now only be able to, as third-party collectors, contact consumers about six times a week: whether it be through email, phone calls, texts, or etc.
Statute of Limitation for Debts
New disclosures on out of statue debts prior to litigation. There must be a clear disclosure now that a debt is no longer within the valid statute of limitations. If something is sent to a consumer with notice prior to going into litigation.
Requisite Prior Communication
Finally, a warning period before sending any collections to credit reporting agencies. Many times, debts were just sent into the credit reporting agencies such as Experian or Transunion. Now, there will actually be a requirement that there is communication with the alleged debtor and some other requirements before debts can actually be sent in and reported to credit reporting agencies.
Stay Updated for Upcoming Changes
As of now, these changed are only going to be applied to third-party collectors. But the CFPB has stated that they intend to continue to pursue transitioning the unfair, deceptive, or abusive acts or practices to take the penalties that have heretofore been set for third-party collectors and extend them to first-party collectors: meaning those who are trying to collect their own debts.
So stay tuned, continue to watch our website for updated videos on this topic. In the meantime, if you have questions about the CFPB, the proposed rulemaking, or any issues related to debt collection, please don’t hesitate to give us a call at (717) 801-1105 or contact us at Hynum Law; here in Harrisburg, Pennsylvania: www.hynumlaw.com. Thank you for watching.”