U.S. Small Business Administration’s Office of Advocacy’s comments on the bureau’s proposed rule outline recommended clarifications to prevent potential harm to the debt collection industry.
9/23/2019 9:00
The U.S. Small Business Administration (SBA) Office of Advocacy submitted comments on the Consumer Financial Protection Bureau’s proposed rule for the Fair Debt Collection Practices Act (Regulation F) in line with ACA International’s suggestions on consumer communications and disclosure notices and noting the significant impact it could have on small businesses.
“Advocacy is concerned about the impact that the proposal may have on small entities and encourages the bureau to take steps to mitigate that impact,” the SBA’s letter states.
Following are top level comments from the SBA Office of Advocacy’s Fact Sheet:
- The bureau is prescribing the rules pursuant to its authority under the FDCPA, as well as the Dodd-Frank Act’s prohibitions on unfair, deceptive or abusive acts or practices (UDAAP). The UDAAP provisions create uncertainty for first party creditors who are not supposed to be regulated by the proposal. Advocacy encouraged the bureau to limit the rule to the FDCPA.
- The rule imposes a limit on the frequency of debt collection calls and provides a safe harbor for debt collectors who comply with the call caps. Because small entities do not usually make calls that exceed the limits in the proposal, Advocacy encouraged the bureau to exempt small debt collectors from the call limit caps.
- Several provisions of the rule will be particularly difficult for small debt collectors and require consideration of alternatives approaches. These include the requirement of compliance with the E-Sign Act for electronic disclosures, the requirement of an itemized validation notice, liability for an attempt to collect a debt that is time-barred and requirements for retention of records.
- The initial regulatory flexibility analysis states that larger collectors may already have some of the proposed provisions in place. The small debt collectors may not. Some of the provisions may require expensive changes to technology and additional training. Advocacy encouraged the bureau to give small entities additional time to comply, if they cannot be exempted from the requirements of the proposed rule.
In its comment letter, the Office of Advocacy also notes concerns with the CFPB’s Small Business Regulatory Enforcement Act panel convened as it developed the proposed rule, in particular that it lacks required information on the costs and economic implications for industry.
“For example, in terms of the limits for telephone calls and telephone conversations, the bureau states that many debt collectors would incur costs to revise their systems to incorporate the proposed call frequency limits. There is no information in the IRFA (initial regulatory flexibility analysis) about what it may cost to revise the system. Instead the bureau states that many small debt collectors only attempt to reach each consumer one or two times per week and are already within the frequency limits,” the letter states.
ACA appreciates the SBA Office of Advocacy’s comments and the opportunity to continue to work it and other industry organizations, members and the CFPB during the rulemaking process.