CFPB Embarks on Debt Collection Rulemaking

July 28, 2016

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.