CFPB Proposes New Regulations To Better Protect Debtors

The Consumer Financial Protection Bureau (“CFPB”) recently released new proposed regulations designed to provide consumers more protection against abusive debt collection practices. The proposed rules, which would apply to third-party debt collectors and debt-buyers only, seek to prevent debt collectors from pushing consumers to pay debts they do not owe, as well as require collectors to inform borrowers of their rights and limit the number of calls to consumers each week.

The Consumer Financial Protection Bureau (“CFPB”) recently released new proposed regulations designed to provide consumers more protection against abusive debt collection practices. The proposed rules, which would apply to third-party debt collectors and debt-buyers only, seek to prevent debt collectors from pushing consumers to pay debts they do not owe, as well as require collectors to inform borrowers of their rights and limit the number of calls to consumers each week.

Regulators estimate that roughly 70 million consumers are contacted by debt collectors each year. More consumers submit complaints to state and federal agencies about unfair or deceptive debt collection practices than any other part of the consumer financial system. In 2015, the leading complaint to the Bureau was that consumers were being contacted for debts they report they do not owe.

The Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, prohibits debt collectors from harassing, oppressing or abusing consumers when collecting or attempting to collect alleged debts.  The proposed regulations would strengthen the FDCPA and provide the most significant changes to the debt collection industry since Congress passed the Act nearly 40 years ago.

• Substantiate debts before contacting consumers by confirming identities and amount owed, as well as checking for payments made after a default;
• Limit the number of collection calls to debtors to six attempts per week;
• Wait at least 30 days after a consumer dies before contacting family members;
• Disclose specific information to consumers, such as when an outstanding debt is past the statute of limitations for collection;
• Make it easier for consumers to dispute and pay debt through tear-off coupons on the bottoms of collection letters/notices; and
• Send information to other collectors when transferring debt so that previous disputes do not get buried—thereby eliminating or reducing the need for consumers to resubmit disputes to the new collector.

The proposed changes now proceed to a panel of small business owners for review.

Wanta Thome Jozwiak & Wanta is currently investigating cases involving unlawful debt collection practices. Our consumer protection attorneys are experienced in litigating and pursing the rights of consumers and debtors. Contact our lawyers for a free initial consultation.