CFPB to Prioritize Debt Collection Rulemaking
CFPB Acting Director Mick Mulvaney describes a more restrained CFPB; wants regulations to be guided by data.
1/24/2018 10:42 PM
In an article published by The Wall Street Journal on Wednesday, Consumer Financial Protection Bureau Acting Director Mick Mulvaney laid out a welcomed new approach to how the CFPB will approach its role under his leadership: one that is balanced between consumers and regulated entities and appropriately restrained by its statutory authority.
“It’s fair to say that the bureau’s previous governing philosophy was to ‘push the envelope’ aggressively, under the assumption that we were the good guys and the financial-service industry was the bad guys. That is going to be different. That entire governing philosophy of pushing the envelope frightens me a little,” stated Mulvaney in the article.
In order to return the CFPB to its intended authority, Mulvaney announced last week that the CFPB will review all of its core functions by issuing a series of RFIs in “a call for evidence to ensure the Bureau is fulfilling its proper and appropriate functions to best protect consumers.”
When it comes to CFPB regulations, Mulvaney was clear: “it seems that the people we regulate should have the right to know what the rules are before being charged with breaking them. This means more formal rule making and less regulation by enforcement.” This is in stark contrast to how the CFPB operated under former CFPB Director Richard Cordray where “regulation by enforcement” was rampant and publicly acknowledged.
Of particular importance for the debt collection industry, Mulvaney noted that, in 2016, almost a third of CFPB complaints related to debt collection. He stated that this type of data will guide how the Bureau prioritizes regulations.
It is important to parse this out. As ACA International has consistently asserted, relying on the raw number of complaints as an indicator of performance by the debt collection industry is highly misleading given that debt collectors make nearly one billion consumer contacts a year. In addition, the CFPB’s overly broad characterization of what actually constitutes a complaint artificially inflates the number of reported complaints against the debt collection industry.
ACA plans to release a new White Paper next week that provides an overview of CFPB debt collection complaints from 2017 that supports these important points. In addition, as ACA’s upcoming White Paper shows, rather than providing evidence of the debt collection industry’s failure to follow the law, the most common complaint data from consumers more appropriately provides evidence that there is a lack of clarity guiding the substantiation of debt and the overall debt collection process, issues that can be addressed through a rulemaking.
As a result, ACA is pleased to hear that the CFPB will be prioritizing debt collection rules. Under new leadership, the CFPB is well-positioned to adopt reasonable, balanced, and data-driven debt collection rules that are needed to bring certainty to the debt collection market. Whether communicating with consumers using modern technology or sending out a notice, debt collectors will benefit from clear rules that address the increasing number of gray areas that have emerged since the Fair Debt Collection Practices Act was enacted in 1977.
ACA looks forward to working with new CFPB leadership to develop an appropriate and balanced regulatory framework for debt collection that can persist for years to come, as well as to explain the flaws inherent in the CFPB’s current complaint handling process so that it can be modified to be more accurate, reliable, and meaningful.
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