ARLINGTON, Va.—Looking for any impact on credit unions, NAFCU is analyzing the CFPB’s outline of proposals under consideration that would place restrictions on how debt collectors communicate with debtors and would simplify the process for those debtors who want to dispute their debt.
Under the proposals being considered—outlined Thursday by the Bureau during a public field hearing on debt collection in Sacramento, Calif.—debt collectors would be required to have more and better information about the debt before they collect. As they are collecting, companies would be required to limit communications, clearly disclose debt details, and make it easier to dispute the debt. When responding to disputes, collectors would be prohibited from continuing to pursue debt without sufficient evidence. These requirements and restrictions would follow the debt if it were sold or transferred.
“While CFPB’s outline is targeted toward third-party debt collectors, NAFCU is analyzing the provisions under consideration to assess any direct or indirect impact on credit unions,” said NAFCU Director of Regulatory Affairs Alexander Monterrubio. “Credit unions are good actors that engage in responsible, fair debt collection practices and work to make sure their members’ financial needs and goals are met.”
NAFCU noted that a survey by its research team this June on credit union debt collection practices found that 80% of respondents had waived late fees, interest or fines for delinquent accounts due to member hardship during the last year.
During Thursday’s public field hearing a representative from Schools First Federal Credit Union shared concerns about credit unions possibly being swept under the rule’s requirements even though these proposals only address third-party debt collectors; he said credit unions should be exempt from the rulemaking. The CFPB has told NAFCU that the Bureau will address first-party debt collection later.
The outlined proposals would apply to debt collectors as defined by the Fair Debt Collection Practices Act, NAFCU explained. The Bureau Thursday also released the report, “Study of Third-Party Debt Collection Operations,” which is based on results from a written survey that was sent to debt collection firms, telephone interviews with a subset of the survey respondents and telephone interviews with vendors to the debt collection industry.