PHILADELPHIA—During a town hall meeting here, CFPB Director Kathy Kraninger offered the rationale behind the Bureau's recently released proposed rulemaking related to third-party debt collection, saying the goal is to provide transparency.
But the proposal, now out for comment, is already receiving pushback from a variety of financial services providers and industries. As CUToday.info reported here, the Bureau has issued a Notice of Proposed Rulemaking (NPRM) to implement the Fair Debt Collection Practices Act (FDCPA).
A coalition of consumer groups said the CFPB’s proposed debt collection rule opens consumers up to harassment and abuse.
Trade Groups Respond
Both CUNA and NAFCU have indicated they have concerns around how the proposal would affect third parties.
“Even though the proposed rule covers only third-party collectors, many credit unions use third-party collectors so it could indirectly impact credit unions," said CUNA's Chief Advocacy Officer Ryan Donovan. "As we review the proposal and prepare our comment, we will carefully consider the extent of this indirect impact on credit unions. However, we are pleased that the Bureau is taking steps to promulgate rules on a segment of the industry that has operated without adequate regulation and has been subject to judicial orders for several decades. This should bring some certainty to the operation of third-party collectors and may provide consumers with additional protections.”
Similarly, NAFCU Director of Regulatory Affairs Ann Kossachev said, “We appreciate the Bureau working to ensure consumers are provided with clear, upfront disclosures on the terms, conditions and obligations of their loans. However, NAFCU will carefully review the proposal to gauge any impact on our members, in particular where credit unions may work with third parties.”
Rule Provides ‘Clarity’
During the town hall in Philadelphia, Kraninger noted the rule provides clarity and balance for consumers and debt collectors, and anti-harassment provisions would still apply to communications via email and text messages under the proposed rule, reported NAFCU, which attended the event.
Kraninger was joined by Bureau staff and industry professionals to discuss numerous topics, including the cap on communications made, channels of communication, and validation notices.
In addition to financial industry worries, consumer advocates expressed their concerns over the ability to opt out of communications but no ability to opt into receiving communications via email or text message. included in the notice of proposed rulemaking.
Push for CU Exemption
NAFCU said it will continue to urge the Bureau to exempt credit unions from any rules related to first- and third-party debt collection, as credit unions “are not the bad actors in this space. Any rulemakings could have a negative impact on the credit union industry and would make it more difficult for credit unions to offer affordable, high-quality products to their members,” the trade association noted.
Kraninger, in her remarks prior to the panel, said the CFPB’s rule is intended to provide “clear rules of the road where consumers know their rights and debt collectors know their limitations,” reported CUNA, which attended the meeting.