You’ve probably heard the murmurs about new proposals to tighten regulation of the debt collection industry. Early this morning, the CFPB finally released these proposals, clearly outlining the agency’s expectations for each step of the debt collection process. They expand upon the Fair Debt Collection Practices Act.
Here’s what debt collectors need to know about these new proposals:
- It would require collectors to confirm consumers’ contact and account information before reaching out to them.
- It would limit collectors to six communication attempts per week in reaching a consumer.
- It would require collectors to include the consumer’s federal rights in initial collection notices.
- It would require collectors to include a tear-off sheet attached to the notice that consumers could send back to dispute the debt.
- It would require collectors to stop pursuing debts if consumers dispute the debt in any way.
- It would prohibit collectors who receive disputed transferred debt from collecting on it until the dispute is resolved.
The debt collection industry has been on the CFPB’s radar leading up to these proposals. As the most complained-about financial product in the CFPB’s Consumer Complaint Database, the CFPB sees debt collection practices as a major source of frustration for consumers and a ripe opportunity for regulation.
Debt collectors should stay tuned as the CFPB gathers feedback from small industry representatives and the public before finalizing the proposals. In the meantime, debt collectors need to prepare to change the way they communicate with consumers in light of these new expectations.
Download our CFPB Risk Signal Report to learn about consumer complaint trends across industries, complaint thresholds for fines, and whether your industry could be next for regulation and enforcement.