CFPB Proposal: A Game Changer For Debt Collectors & Debtors
On Friday, February 21, 2020, the Consumer Financial Protection Bureau (CFPB), announced the issuing of a Notice of Proposed Rule Making (NPRM), in order to enforce the Fair Debt Collection Practices Act. The enactment of this proposal will have a major effect on how debt collectors are now able to do business as well as how debtors will be able to respond to their collection practices.
What Is The Fair Debt Collection Practices Act?
The Fair Debt Collection Practices Act (FDCPA), is an amendment that passed in September of 1977 and was established to provide legal protection to consumers regarding possible abusive and unfair practices on the part of debt collectors. The FDCPA advocates “fair debt collection,” which serves to aid consumers within the collection process, so they’re able to obtain specific information regarding their debt, as well as provide them with legal direction in order to dispute the debt if necessary. Furthermore, the act outlines specific legal guidelines for all debt collectors to follow to the letter, for the purpose of performing their collection practices fairly, appropriately and without the utilization of abusive techniques or deception of any kind. Although the FDCPA was passed in the seventies, the CFPB has received innumerable consumer complaints against debt collectors over more recent years and feels it is now time to put unfair and abusive debt collection practices to an end, once and for all.
Changes Expected
When and if the proposed rule passes, debt collectors and consumers alike can expect to see some very meaningful changes. For instance, collectors will be limited to no more than seven call attempts and one actual conversation with the debtor, per week. On the plus side for collectors, they’ll be provided with safe harbor for accidental third party disclosures within emails and texts, provided they’ve followed all rules and procedures correctly. Collectors will no longer be able to sue or threaten to sue a debtor, if the collector is or should be aware that the statute of limitations applies to the debt in question. Also, collectors will not be able to report a debt to credit bureaus without first having communicated with the debtor. Moreover, debtors will be granted the ability to opt out of specific communication avenues, such as, telephone numbers and email addresses.
Comment Period
There is a comment period that is currently taking place before the CFPB is actually able to implement the Fair Debt Collection Practices Act. This is provided in order to give everyone involved the opportunity and time necessary to read and understand the proposed rule, as well as comment or ask questions. The comment period will come to an end on September 18, 2020, at which time the CFPB will be free to carry out its proposal.
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Joyce Hope is a writer who specializes in merchant accounts. She has worked for First Card Payments since 2017.
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