The report outlines the debt collection market, the CFPB’s pending FDCPA rule, legislation and policy issues for Congress to consider.
10/21/2020 12:30
The Congressional Research Service (CRS) released a new report this month, “The Debt Collection Market and Selected Policy Issues,” providing an overview of legislative and regulatory activity in the last year as well as the Consumer Financial Protection Bureau’s pending debt collection rule on the Fair Debt Collection Practices Act.
The report, by Cheryl R. Cooper, analyst in financial economics for CRS, was prepared for members and committees in Congress and notes the importance of the debt collection industry to lenders and the economy.
“The debt collection market helps lenders recoup their losses when a consumer defaults, generally making consumer credit and other related markets more efficient. When lenders can effectively recoup their losses, they may be more willing to lend to consumers at lower initial loan costs, leading to more access to credit for consumers,” the report states.
The report summarizes legislation in the 116th Congress as well as regulation of the debt collection market and additional legislation impacting the accounts receivable management (ARM) industry in response to the COVID-19 pandemic. This includes the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act from the U.S. House of Representatives, which would have a significant impact on the ARM industry related to credit reporting as well as some restrictions on debt collection during a national emergency, when collectors can actually help consumers more through hardship programs.
In addition to an overview of the debt collection market, the report covers an in-depth look at the CFPB’s active rulemaking process for the industry with the purpose to clarify and update provisions in the FDCPA.
ACA Outlook:
The report’s focus on the CFPB’s debt collection rule, including analysis of debt disclosures, communication frequency and medical debt, among other topics, for Congress signals it is on the mind of legislators as well.
The report concludes: “The debt collection market continues to be an important part of ensuring that consumers have access to a robust consumer credit market; however, the potential for consumer harm may make consumer protection laws and regulations particularly important. The regulation of the debt collection market may continue to be an active policy issue because it impacts many consumers going through the debt collection process and the efficiency of consumer credit markets in the United States. As the CFPB finalizes and implements its debt collection rulemaking, stakeholders may be able to see how new regulations could impact the market. For these reasons, the debt collection market may continue to be the subject of congressional interest and legislative proposals.”
The report also includes an overview of debt collection market legislation ACA members may access in our latest Advocacy Booklet. Members are also encouraged to check out the election outlook memorandum on our advocacy strategy after Nov. 3.
ACA will host a series of ACA Huddle webinars, complimentary for members, set to begin after the CFPB releases its final rule. Registration is open now.