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Financial Services Law Insights and Observations

Democratic Senators ask CFPB to reconsider debt collection rulemaking

Federal Issues Agency Rule-Making & Guidance CFPB Debt Collection U.S. Senate

Federal Issues

On June 6, twenty six Democratic Senators sent a letter to the CFPB requesting that the Bureau reconsider the recent debt collection rulemaking proposal to “pursue more meaningful reforms that put consumers . . . first.” As previously covered by InfoBytes, in May, the CFPB released its highly anticipated debt collection rulemaking, which regulates debt collection communications and disclosures and addresses related practices by debt collectors. Among other things, the proposed rule would (i) require debt collectors to provide consumers with a validation notice containing specific information regarding the debt; (ii) restrict debt collectors from calling consumers regarding a particular debt more than seven times within a seven-day-period and prohibit telephone contact for seven days after the debt collector has had a conversation with the consumer; (iii) allow for consumers to unsubscribe from various communication channels with debt collectors, including text or email; and (iv) prevent debt collectors from contacting consumers on their workplace email addresses or through public-facing social media platforms.

In the letter, the Senators argue that the proposed rule as currently written “will only exacerbate and increase troubling harassment tactics” by debt collectors. The Senators note that the Bureau received 81,500 consumer debt collection complaints, and the FTC received nearly 458,000 such complaints in 2018, and argue that the proposed rule does not do enough to address the particular abusive practices that those complaints raised. The Senators allege that the proposed rule “permits collectors to overwhelm consumers with intrusive communications” because it allows for unlimited text messages and emails and allows for collectors to call consumers seven times per week, per debt. Additionally, the Senators argue that the proposed rule “could encourage collectors to practice willful ignorance about the status of the debt they collect,” as it only “prohibits filing or threatening to file a lawsuit if the collector ‘knows or should know’ that the debt is not enforceable.” Lastly, the Senators assert that the Bureau should hold attorneys who engage in debt collection to a “higher standard, [they should] not be granted a safe harbor to engage in abusive and deceptive practices.”

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