Debt collection rules should not affect first-party collectors

The Consumer Financial Protection Bureau (CFPB) should ensure its debt collection rulemakings do not extend unwarranted regulatory requirements to first-party debt collectors, CUNA wrote Tuesday in response to a CFPB proposal. The proposal would amend Regulation F to require debt collectors to make certain disclosures when collecting time-barred debts (debts for which the applicable statute of limitations has expired).

“We respectfully recommend the Bureau continue to rely solely on its Fair Debt Collection Practices Act (FDCPA) authority when promulgating rules governing the practice of debt collection,” the letter reads. “The FDCPA provides the Bureau with ample ability to achieve its desired limitations on third-party collections without exposing credit unions that collect their own debts to expanded regulatory compliance and litigation burden.”

The letter also calls for the CFPB to:

  • Acknowledge the complex patchwork of state debt collection laws governing time-barred debts and adopt a “knowledge” standard for determining prohibited communications;
  • Avoid mandating any disclosures that assert legal interpretations or provide legal advice, which may ultimately confuse consumers, and instead establish disclosures that provide information on time-barred debts in a general manner so the consumer can pursue additional information regarding their specific situation;
  • Provide a safe harbor for debt collectors making a good faith attempt to accurately determine the status of a debt and provide the relevant disclosure to a debtor; and
  • Clarify expectations for required disclosures in states where there are already time-barred debt disclosure requirements in place.