WASHINGTON—Highlighting what it says are a number of "indirect effects" on credit unions, NAFCU is offering areas where it said regulatory improvements can be made by the CFPB before it finalizes the Fair Debt Collection Practices Act.
The trade group said credit unions are not debt collectors as defined by the FDCPA, but they will nonetheless feel its effects.
NAFCU Regulatory Affairs Counsel Kaley Schafer, in a letter to the agency, stressed that credit unions "do not participate in abusive and harassing debt collection practices," but rather "operate to empower their members to get on track with outstanding debts." She also offered the association's appreciation of the Bureau's efforts to modernize the FDCPA in a transparent, balanced manner given the significant changes financial services have seen in the 40 years since the law was enacted, especially related to technology.
Recommendations for Review
To address credit unions' concerns about the third-party debt collection rule, Schafer recommended the CFPB review:
- Scope of authority: NAFCU recommends limiting the Bureau's authority for the rulemaking to the FDCPA and remove those provisions created under its unfair, deceptive, or abusive acts or practices (UDAAP) authority to remove confusion and ambiguity for creditors.
- Communication cap and UDAAP violations: The Bureau should resolve ambiguities in calculating the cap in the context of multiple outstanding debts, and remove a footnote that determines communication in excess of the cap constitutes a UDAAP violation.
- Validation notice: NAFCU is concerned about the indirect costs that debt collectors may pass on to creditors, the potential liability if an error occurs in the transfer of a previously provided opt-out notice by a creditor, and questions about whether the itemization date must be re-calibrated when a transfer of debt occurs.
- Time-barred debt: The Bureau should remove the standard "knew or should have known" from the provision to reduce ambiguity.
- Meaningful attorney involvement: To ensure the proposed rule does not interfere with the practice of law, including attorney-client privilege and work product doctrines, NAFCU recommends removing this phrase from the provision.
- Telephone Consumer Protection Act (TCPA): The proposed rule conflicts with provisions of the TCPA, including the definition of an autodialer, prior consent, and more; NAFCU recommends the Bureau work with the Federal Communications Commission (FCC) to address these conflicts.