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Debt collection regulations and more enforcement on horizon

Posted in Debt Collection

The CFPB is poised to further ramp up its oversight of the debt collection industry.  According to a Bloomberg report by Carter Dougherty, Director Cordray said in an interview earlier this week that the CFPB “will be looking to write” new regulations under the Fair Debt Collection Practices Act (FDCPA) and will “continue to pursue a lot of enforcement work we’ve been doing.”  The Dodd-Frank Act gave the Bureau FDCPA rulemaking authority. 

The CFPB’s rulemaking and enforcement plans are consistent with the steadily-escalating pressure the CFPB has been placing on the debt collection industry.  In January 2013, the CFPB’s debt collection larger participant rule became effective.  In July 2013, the CFPB took three significant actions directed at debt collection.  First, it issued two bulletins.  One bulletin addressed the standards the CFPB uses to determine whether collection–related conduct constitutes an “unfair, deceptive or abusive” act or practice prohibited by the Dodd-Frank Act and the other bulletin targeted potentially deceptive representations about how paying debts can affect credit reports, credit scores, and creditworthiness.    

Second, the CFPB issued five action letter templates for consumers to use when corresponding with debt collectors.  Third, the CFPB announced that its complaint system had begun taking debt collection complaints.  Those complaints are undoubtedly now being used by the CFPB to identify targets for examination and enforcement. 

The message seems clear: there will be no respite from CFPB scrutiny for the debt collection industry.