As noted previously, the Consumer Financial Protection Bureau (CFPB) published an outline on July 28, 2016, of proposed debt collection rules intended to “drastically overhaul the debt collection market.” Earlier this week, CFPB Director Richard Cordray, in prepared remarks to the National Association of Federal Credit Unions, highlighted the Bureau’s efforts to overhaul the debt collection market, for both third-party and first-party debt collectors:
We also are taking steps to reform the troubled debt collection market. Our proposal under consideration would apply to the third-party debt collectors covered by the Fair Debt Collection Practices Act, including many debt buyers. As part of our overhaul, we also plan to address first-party debt collectors, and you will hear more about that soon. The basic principles we are considering are grounded in common sense. Companies should not collect debt that is not owed. They should have reliable information about the debt before they try to collect, and they should be barred from collecting on disputed debt that lacks proper documentation. They should give consumers better information and more control over the process. The same requirements would follow along with any debts that are sold or transferred to another collector.
These remarks underscore the CFPB’s continued focus on the third-party debt and first-party debt collection markets. Companies that purchase defaulted debt or assume servicing responsibilities after a loan is in default should closely follow developments concerning the CFPB’s debt collection related activities.
Stay tuned to Bradley’s Financial Services Perspectives blog for a series of in-depth articles concerning the forthcoming debt collection rules and practical advice for navigating those rules.