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CFPB Embarks on Debt Collection Rulemaking
On Thursday, July 28, 2016, the CFPB held a field hearing in Sacramento, CA on debt collection reforms. The Bureau also released an outline of proposals for third-party debt collectors as well as a study on its operations. The outline will be the subject of a forthcoming Small Business Regulatory Enforcement Fairness Act (SBREFA) panel for debt collectors and debt buyers. The Bureau is expected to hold a separate SBREFA process for creditors later this year.
In its outline, the CFPB presents a number of proposals, including:
- Debt substantiation requirements to be met before contacting a consumer;
- Contact frequency restrictions set on a weekly basis;
- Communication standards to mitigate consumer burdens related to inconvenient time, place and channel;
- Debt verification standards for instances where a consumer disputes a debt;
- Debt collection litigation rules on substantiating and reviewing debt before engaging in a legal proceeding;
- Disclosure rules for time-barred debt, informing consumers the debt is not legally enforceable; and
- Data and media standards for debt traveling from one third-party collector to the next.
Once the SBREFA process is complete, the CFPB will issue a rulemaking proposal for public comment.