Debt Collection Vendors and Clients Hang in the Balance of CFPB Rules

In Monday’s Know Your Debtor, Linda Straub-Jones, Director of Market Planning – Compliance at LexisNexis, stressed the importance of understanding how the Consumer Financial Protection Bureau defines the “service providers” working within the debt collection industry. As of April 2012, collection agencies have to think of all suppliers, subcontractors and vendors that touch any consumer data as service providers that must be supervised for regulatory compliance.

And at March’s insideCompliance webinar, Straub-Jones explained how the CFPB’s Advance Notice of Proposed Rulemaking for the debt collection industry may weave more players into the compliance web. The CFPB closed the comment period on the ANPR on February 28, and trends have already emerged from the questions and consumer comments. Specifically, when the CFPB releases its final rule (which probably won’t happen for at least a year), it may look different for different players in the collection industry, particularly first-party creditors. Many consumer groups responded to the ANPR with the position that any new rule should apply to creditors.

What’s more, right after the ANPR’s comment period closed, the CFPB sent a snail-mail survey to consumers to get more data about their experiences with the collection industry. Some of the creditor-related questions in the CFPB survey may show that officials listened to the demands of consumer advocacy groups.

“I think the difficulty that the CFPB is going to run into is with industries that are already regulated by other federal agencies,” added John Rossman,  Shareholder and Chair of the Creditors’ Remedies Practice Group at Moss & Barnett. “Look at  healthcare collection, for instance. Well, you have a whole host of federal agencies that are already regulating healthcare collections, and is the CFPB really going to step in and add another layer of regulation and potentially step on the toes of other federal regulators?”

Debt collectors, and creditors, can also expect consumer-friendly regulations from the CFPB that strictly define if, when and how they can get in touch with consumers. In a way, this is good news; it’s a chance to modernize communication practices to include the use of cell phones, email and more. On the other hand, expect practices like collecting on – or even communicating about – time-barred debt to come under fire.

The regulatory landscape is gearing up for some huge changes in 2014 and beyond. That’s why we compiled the latest news, analysis and debate from our insideCompliance webinar into one user-friendly report, To the Point: CFPB Rulemaking 2014. Get ahead of the CFPB as it takes its next steps to collect consumer data and create new rules for debt collection. This is a resource no company should be without!