Comprehensive response to CFPB’s proposed debt collection rule outlines improvements and provides legal analysis of proposals.
After working with ACA International members and association leadership to garner feedback on the Consumer Financial Protection Bureau’s first-ever proposed rule for the Fair Debt Collection Practices Act, ACA submitted comprehensive comments on behalf of its members, outlining views on the rule and suggested improvements.
The comment period began in May after the CFPB’s debt collection town hall in Philadelphia, where ACA CEO Mark Neeb represented the membership and the accounts receivable management (ARM) industry.
The bureau’s proposed rule (Regulation F) will be the first of its kind since the FDCPA was enacted more than 40 years ago in 1977. Accordingly, the CFPB’s proposal will shape the future of the ARM industry and the larger economy.
The proposed rule addresses several key issues ACA has long sought clarity on, including safe harbor procedures for the use of voicemail messages and the ability to use modern forms of communication, such as text messaging and email. The proposed rule also provides more clarity on the requirements for a validation notice and includes a model form.
“Overall, ACA believes that the bureau’s efforts will resolve ambiguities in the FDCPA and help create uniform national standards,” Neeb said. “Nevertheless, in its comprehensive comments, ACA identifies a significant number of changes that should be made to the proposal.”
Notably, ACA’s comments outline why arbitrary limitations on communications ultimately harm consumers. Communication barriers addressed in the comments include “call caps” at §1006.14, complicated E-SIGN consents at §1006.42, vague inconvenient place and time restrictions at §1006.6(b)(1) and § (6)(b)(1)-1, and unworkable requirements to differentiate between work and personal email addresses at §1006.22(f)(3).
ACA will host a Hot Topic Webinar on the comments, complimentary for members, at 2 p.m. CDT Sept. 20. Panelists will outline the details of ACA’s comprehensive comments on the proposal, which posed more than 200 questions. Vice President and Senior Counsel of Federal Advocacy Leah Dempsey will also discuss ACA’s efforts following the comment period deadline and outline next steps. Kari Barber, ACA’s corporate counsel, will moderate the webinar and Neeb will also speak with members. This webinar will provide ACA’s members with insight into the final days before ACA’s comments were filed and where the industry goes from here.
Top-level points in ACA’s comments include:
- The U.S. economy depends on collected debt. The ARM industry returned $67.6 billion to U.S. businesses in 2016—that’s an average savings of $579 for every American household. The CFPB’s final rules should not incentivize consumers to shirk legal and valid debts at the expense of honest businesses and other consumers seeking affordable credit.
- ARM industry professionals represent a diverse segment of the population who are simply working to earn a day’s living, pay for their children to go to school and put food on their tables. They want to work to help consumers find a solution to their financial problems. Over 70% of debt collection professionals are women; racial and ethnic minority groups account for 40% of the total collection industry workforce. Industry employees spend more than 520,000 hours per year in volunteer activities. Rhetoric disparaging these hardworking individuals has no place in the policy debate over the rules.
- Clear and plain language communication is best for consumers and the industry. Unfortunately, fear of plaintiff’s litigation and the “overshadowing” doctrine force collection agencies to use stiff and confusing statutory language that consumers deem intimidating.
- Defining the limited content message and attempts to communicate under the FDCPA can provide clarity for leaving voicemails. The current statutory catch-22 has harmed ARM professionals’ ability to leave voicemail messages, which has increased call volumes and warranted regulatory guidance for several decades.
- The proposed call caps, complicated E-SIGN consent forms for email, and vague inconvenient place and time restrictions create communication barriers that ultimately harm consumers. The work of the ARM industry allows consumers and creditors to settle debts outside of litigation. Therefore, any regulation that interferes with meaningful communication between collectors and consumers will increase litigation from creditors.
- The proposed call cap is not supported by evidence that it provides any consumer benefit. Instead, it will decrease direct contact between consumers and the accounts receivable management industry and cause an increase in alternative contacts, such as letters, text messages and emails. Ultimately, this will increase costs and the length of time it takes to resolve a debt. This could impact a consumer’s ability to access credit or services. Plus, the FDCPA already restricts collectors from placing calls to consumers repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number. Collectors are legally bound by this reasonableness standard and an arbitrary call cap is unnecessary.
- Consumers increasingly prefer modern electronic communications—such as email and text messages—over antiquated snail mail. The CFPB needs to set realistic regulations of these communications for businesses to follow. The bureau’s proposed electronic flowchart for electronic disclosures is overly complex and could be particularly burdensome to small businesses. It could also make it infeasible for many collectors to use electronic methods of communication. This does not benefit consumers.
- The bureau’s current proposal to create a uniform validation notice is important for both consumers and industry. In its comments, ACA outlines several ambiguities created or not addressed by the model form, including itemization, the tear-off form check box and failure to address litigation over interest accrued, among others. The comments outline in detail why new itemization requirements are unworkable for small businesses and for several types of debt, particularly medical, merchant and service debt.
- Imposing onerous requirements that do not detail what it means to communicate with a consumer prior to furnishing information to credit reporting agencies regarding the consumer’s debt is an impermissible regulatory act. The FDCPA is not meant to govern credit reporting in this manner and the Fair Credit Reporting Act, which sets forth many requirements, does not require this.
- ACA agrees that the bureau should define a “duplicative dispute” as a dispute that is substantially like a prior dispute raised by the consumer and, if possible, adopt specific criteria for determining whether a dispute is duplicative. Legitimate disputes are comprised of an extremely small percentage of all accounts, but it is essential that agencies have the resources to address these disputes for the benefit of consumers. Duplicative disputes only serve to deplete resources that would otherwise be available for an agency to work legitimate disputes.
- The bureau’s proposed safe harbor for meaningful attorney involvement is unworkable in its current form.
ACA addresses many other issues in its comments and provides a table of contents to help readers navigate the response. We encourage members to read the complete comments to the CFPB, which are available through ACA’s Advocacy Resource Center.
Before the Sept. 18 deadline, more than 9,000 comments were posted on the Federal Register, including many from ACA members and ARM industry professionals helping to shape the suggested improvements to the CFPB’s proposal and ensure the final version reflects the input from those working with consumers and creditors every day. ACA thanks its members for their robust participation in the process and for sharing their feedback.
What ACA Members Are Saying:
“First of all, I'd like to say I think it's positive to allow collectors to leave a limited content message. I’ve had to do my job for many years now without being able to leave consumers messages and I believe it would benefit consumers greatly who want to receive messages and who are often upset when we cannot leave them a message and it results in litigation that's often commenced as a result of not being able to contact our customers. Also, clarification of proposed definitions would be helpful to avoid problems down the road. Secondly, I think call frequency is very important in my industry. We need to be allowed to contact our customers as needed. Not regulated to a certain time frame or frequency which can result in increased letters, notices and emails to the consumer.”
“While we applaud the efforts of the CFPB in their attempts to add clarity to the outdated federal FDCPA, the overall premise of adding an additional layer of regulation/rules does not necessarily establish a clear path forward for determining adherence to federally mandated regulatory practice. A cleaner approach would be updating and expanding, where necessary, the existing FDCPA. In particular, the new CFPB rules do not contain language that defines which regulation takes precedence in situations where one regulation differs from the other, or which regulation takes precedence in areas that are only covered in one of the regulations (similar to paragraph 816 of the FDCPA). Implementing the new rule without language clarifying this issue will result in even more ambiguity once the rule is tested in the courts, rather than establishing the clarity that is the intended consequence sought by the CFPB.”
“It is important, as a debt collector, that we are able to meet the requests of our consumers. Currently consumers are asking us for things that are not discussed in the FDCPA because the FDCPA was enacted before these forms of electronic communication existed. This is making it difficult to effectively assist consumers. I often hear conversations in my office where consumers are asking for information and/or documents to be sent via email or text, and I often receive emails from consumers with such requests for information. I would like to meet the consumers request by being able to oblige when a consumer asks our office to email or text them information or to call at another time but cannot risk doing so without guidance from the CFPB.”
ACA will continue to provide coverage of the comments and next steps in the proposed rulemaking in the coming days and weeks. The U.S. Small Business Administration's Office of Advocacy also submitted comments to the CFPB with suggested clarifications to minimize impact of the rule on small businesses.