CBA Joint Comment Letter to CFPB on Debt Collection ANPR

Re: Advance Notice of Proposed Rulemaking on Debt Collection Practices; Docket No. CFPB-2013-0033, RIN 3170-AA41

Dear Ms. Jackson:

The American Bankers Association,  the Consumer Bankers Association, and the Financial Services Roundtable (collectively, the Associations) appreciate the opportunity to comment on the Consumer Financial Protection Bureau’s (Bureau) advance notice of proposed rulemaking on debt collection practices (ANPR).

I. Summary of Comment

We support the Bureau’s decision to issue an ANPR as it initiates this rulemaking. The number and range of the questions asked underscore the breath of issues, industries, and individuals potentially affected. Today, outstanding consumer debt stands at $11.8 trillion, including mortgage debt, and the collection of this debt plays an important role in the functioning of the consumer credit market. The collection of delinquent debt reduces creditors’ losses from non-repayment and helps promote the availability and affordability of consumer credit, holding down the cost of credit to borrowers who honor their commitments. Promoting responsible borrowing ensures future access to credit, which is vital to millions of consumers because it makes it possible for them to manage their future income so that they can purchase goods and services that might otherwise be out of reach if they had to pay the entire cost at the time of purchase. In addition, retailers, utilities, and service providers, large and small, all depend on recovering balances due for goods and services provided. Thus, the Bureau’s policy choices will be felt across the U.S. economy.

Considering the importance of these issues, the Associations appreciate the fact that the Bureau seeks to build on the record developed by the Federal Trade Commission (FTC) and to understand current debt collection practices, consumer experiences with those practices, and challenges and opportunities presented by technological and operational advances. A fundamental finding of the FTC’s 2013 study of the debt buying industry is that consumers dispute only 3.2% of the debts that debt buyers attempt to collect. 6 Thus, in more than 95% of collections, consumers recognize the debt as their own and do not challenge the amount being collected. This fact provides significant context for addressing the questions posed in the ANPR. It suggests that for the overwhelming majority of debt collections the emphasis should be on facilitating how, as the Bureau notes, “collection efforts indirectly support responsible borrowing by underscoring the obligation of consumers to repay their debts and by incenting consumers to do so.” In other words, for the millions of customers who from time to time rely upon debt for a variety of purposes, debt collection reform should be about encouraging and enabling borrowers to overcome the obstacles that interfere with their ability to meet their admitted obligations. 

For the remaining three percent of cases that represent disputed debts, the reform effort should (i) assure fair and dignified treatment of debtors who assert their disputes in good faith and (ii) facilitate both informal resolution methods and expedited invocation of third party adjudication options that can vindicate the parties’ respective due process rights. 

The Associations and our members fully support the Bureau’s goals of updating the Fair Debt Collection Practices Act (FDCPA),8 modernizing its communication provisions, and generally enhancing genuine consumer protections in debt collection. In that context, we hope that as the Bureau moves forward with its work it will be guided by the following considerations: 

To read the full Comment Letter, please download the PDF.