The U.S. Department of the Treasury called for the modernization of collection laws in the financial services industry in a report issued last week in order to clarify the regulation of digital communications.
Specifically, the Treasury called on the Consumer Financial Protection Bureau to update rules on the Fair Debt Collections Practices Act (FDCPA).
“We need the law to keep up with the digital age,” Scott Weltman, managing partner of the Cleveland-based debt collection law firm Weltman, Weinberg & Reis Co., told Auto Finance News. “If the bureau came out with standards that say, ‘Debt buyers are provided A, B, and C,’ it makes it a lot clearer for debt collectors.”
The Treasury is calling on the CFPB to establish minimum federal standards governing third-party debt collectors, including a clear determination of the information needed to validate that the debt is owed. In the spring, the bureau detailed its rulemaking agenda, which includes “preparing a proposed rule focused on FDCPA collectors that may address such issues as communication practices and consumer disclosures.”
The current FDCPA rules “inadvertently” make interactions between debt collectors and consumers “needlessly cumbersome” because it prohibits debt collectors from disclosing information about a consumer’s debt to unauthorized third parties and allows consumers to terminate communication with the collector, the report states.
“Our goal is to engage in dialogue,” Weltman said. “The way a lot of the laws are structured related to the digital age — it makes that challenging.” But the bureau can be more “nimble” with the rulemaking process — unlike Congress which takes a long time to pass laws, Weltman said.
