By Timothy McTaggart and Zane Gilmer
On July 28, 2016, the Consumer Financial Protection Bureau (CFPB) released an outline of proposals and alternatives under consideration for regulating debt collection practices. The outline’s release triggers the formation of a panel pursuant to the Small Business Regulatory Enforcement Fairness Act (SBREFA), from which the CFPB will seek and receive input related to its proposals.
The outline and proposals are extensive and would represent a comprehensive reframing of debt collection practices under the Fair Debt Collections Practice Act of 1977 (FDCPA). Stinson Leonard Street’s August 10, 2016 article provides a general overview of many of the key proposals as well as a few issues that would be generated by these proposals, should they be adopted and finalized as rules.
Of particular concern to industry and consumer groups is the lack of clarity as to whether the CFPB intends to try to harmonize its new requirements with existing federal laws, especially the Telephone Consumer Protection Act. An additional concern is a lack of clarity concerning whether the CFPB intends to expressly preempt state law—or have its proposal have the effect of preempting state law—in areas such as restrictions on time-barred debt sales and other changes related to time-barred debt. This would prevent state law contractual remedies from being used, as well as involve CFPB action to treat time-barred debt as “extinguished” debt, even though state law ordinarily does not extinguish debt in such circumstances.
For a complete analysis of this topic, view our full article: “CFPB Presents New Regulatory Requirements for Third-Party Debt Collectors.”