Comments pour in on CFPB’s debt collection proposal

With 41 days left to submit feedback on the Consumer Financial Protection Bureau’s proposed amendments to the Fair Debt Collection Practices Act, more than 1,100 comments already have been filed. Of those comments, 469 were sent today.

Many of the consumer comments claim that the number of contact attempts is too high and that allowing texts and emails should require affirmative consent. What’s more noteworthy is how many of the comments are exactly the same, Buckley LLP Partner John Redding pointed out.

“Clearly, the consumer advocates have provided sample language for such comments and are working hard to try and further limit both the frequency with which and ways in which contact may be attempted,” Redding said. 

However, several industry trade groups wrote a joint letter to the bureau providing examples of data breach notifications, fraud alerts and other informational calls relating to a consumer’s account that may be blocked under the drafted proposal, thereby negatively impacting consumers the advocates are seeking to protect. 

Representatives from the Association of Credit and Collection Professionals (ACA International), the American Bankers Association, the National Association of Federally Insured Credit Unions, the American Financial Services Association, the Credit Union National Association, and the Consumer Bankers Association met with the CFPB on June 3. The trade groups discussed the fact that financial service companies initiate large volumes of calls in short time periods for purposes that are in the best interest of consumers.

“Limiting communication attempts in the manner proposed is likely to result in reduced collections and may result in the unintended consequences of increasing litigation and overall cost of credit to those who actually repay their debts,” Redding noted. 

The trade groups concurred. During the meeting, the associations provided examples of CFPB and other regulatory policies that require servicers to place calls at certain frequencies. These regulations reflect the “well-established public policy goal of initiating conversations with financially distressed borrowers early in the delinquency,” the trade groups noted. However, these communications could be impaired by the use of the call-blocking authority provided in the proposal. 

Scott Weltman, managing partner of Cleveland-based debt collection law firm Weltman, Weinberg & Reis Co., told AFN that his law firm is investing a “significant amount of time” reviewing the CFPB’s document and preparing comments. “I would expect the number of comments to increase substantially by the end of the comment period,” Weltman said. 

As anticipated, neither consumer advocates nor debt collectors are happy with the call limits, and it is doubtful both sides would ever agree on what is a “reasonable” number of contact attempts, Buckley’s Redding said.  

The comment deadline is Aug. 19.