The CFPB outlined its plans Thursday to issue rules governing third-party debt collectors – regulations that credit union trade groups said will have little direct impact on credit unions.
However, the agency said it plans to address first-party debt collectors on a separate track soon.
"We estimate that about one in three consumers – more than 70 million people in all – were contacted by a creditor or collector seeking to collect a debt within the past year," CFPB Director Richard Cordray said in a written statement in advance of a field hearing on the issue in Sacramento, Calif. "It is not surprising, then, that for many years, the debt collection industry has drawn more complaints than any other, not only complaints to the consumer bureau but also to other agencies and officials in federal, state and local government."
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The agency said the rules it plans to issue would require collectors to verify detailed information about a person before contacting them about a debt. That includes full name, last known address, last known telephone number, account number, date of default, amount owed at default, and the date and amount of any payment or credit applied after default.
The agency is considering limiting collectors on each account to six attempts to reach a consumer they have been unable to reach.
And if a consumer disagrees about the validity of a debt, collectors would be required to go back and check documentation.
In addition, before collectors go to court, they would need reasonable support to demonstrate a consumer owes what the company said he or she owes.
Following Thursday's hearing, the CFPB will convene a Small Business Review Panel to determine the impact of the proposal. Then, the agency is likely to issue proposed rules.
CUNA officials said they were pleased that the agency recognized the difference between for-profit debt collectors and not-for-profit, first-party collectors such as credit unions.
And NAFCU cited a survey it conducted in June, which found 80% of the credit unions responding had waived late fees, interest payments or fines on delinquent accounts for members who expressed hardship during the past year.
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