WASHINGTON—The CFPB’s director has indicated it will be proposing new rules on debt collection practices it says are designed to enhance the power of consumers in dealing with collectors. The objective is specifically aimed at providing a reprieve to consumers targeted by calls for debts they often don’t even know they owe.
Separately, the CFPB’s Kathy Kraninger also outlined a broader overview of the agency’s direction in the years ahead.
CFPB Director Kathy Kraninger said the new collection rules represent the first broad effort in 40 years to update regulations governing debt-collection practices, with the current rules enacted before cellphones, email, and robocalls.
Kraninger said the proposed rule would protect consumers with a “clear, bright-line limits” on the number of calls collectors can make in a week and spell out how they can communicate with consumers using newer technologies such as email and text messages, the Wall Street Journal reported.
Other Requirements
Collectors, according to Kraninger, would also be required to provide consumers with more and better information at the outset of collection that helps consumers identify debts and understand options, including rights to dispute debts or obtain payment obligations.
The new rule would focus on “third-party” debt collectors—those who operate on behalf of creditors—and debt buyers. Rules relevant to first-party collectors—those who collect directly from their own customers and include banks—may be addressed at a later date, the Journal said.
Kraninger didn’t provide additional details. She said the CFPB last year handled 81,500 consumer complaints related to debt collection. The agency took six public-enforcement actions over debt-collection practices in 2018, and several more cases are under investigation, the agency said.
Vision Outlined
Meanwhile, in her first policy speech since being confirmed as director, Kraninger outlined a vision for the agency that focuses on prevention and holding “bad actors” accountable, saying the moves will prevent harm to consumers.
“My interest in effectively and efficiently using all of the tools Congress gave the Bureau to prevent consumer harm,” Kraninger said at a gathering at the Bipartisan Policy Center. “As Benjamin Franklin said, ‘An ounce of prevention is worth a pound of cure.’ If we can keep harm from falling upon consumers, we will be doing our job. It is my hope that this focus on prevention will drive us toward that outcome. And to protect America’s consumers, we will use all the tools Congress gave us, all of this agency’s energy and expertise, and all our measured judgment, applied with humility and without fear or favor.”
‘There Will be Bad Actors’
Kraninger emphasized that enforcement is an essential tool Congress gave the Bureau.
“Particularly because education, rulemaking, and supervision will not prevent every violation. There will always be bad actors who don’t comply with the law,” she said. “Ensuring that justice is served in the public interest – that is our goal in using the enforcement tool. Further, a purposeful enforcement regime can foster compliance, help prevent consumer harm, and right wrongs.
“My point about the importance of education is relevant as we think about enforcement – even if we applied all the Bureau’s resources to enforcement, the Bureau still could not investigate every potential violation, file a suit against every bad actor, or make every harmed consumer whole,” continued Kraninger. “For that reason, purposeful enforcement is about utilizing robust resources most effectively to focus on the right cases to reinforce clear rules of the road and prevent harm by making sure bad actors know they will be held to account. Public, decisive action against wrongdoers sends a clear message to the marketplace that should deter unlawful behavior and support a level playing field – all while reaching a just outcome for harmed consumers in those particular actions.”
CUNA’s Response
In response to Kraninger’s remarks, CUNA Chief Advocacy Officer Ryan Donovan said, “We are encouraged by the approach that Director Kraninger laid out today as well as her engagement with credit unions in the first few months of her term. We look forward to engaging her more in an effort to reduce regulatory burden and put an end to one-size-fits-all regulation.”
Kraninger also announced that the Bureau will convene a series of public symposia this year to engage with stakeholders. The first topic will be clarifying UDAAP, specifically the "abusiveness" standard as it is not as well understood as the other components.