Comments reflect the need to limit regulatory burden on small businesses in line with ACA International’s view.
8/3/2020 15:30
The U.S. Small Business Administration Office of Advocacy (Advocacy) submitted comments on the Consumer Financial Protection Bureau’s Supplemental Notice of Proposed Rulemaking (SNPRM) on out-of-statute debt disclosures, noting similar concerns to those of ACA International about the potential impact of the proposal on small businesses.
ACA and Advocacy have met several times to discuss the debt collection rule proposal from the CFPB, including during two roundtables organized by ACA for small-business members. In May 2020, Advocacy hosted a conference call with ACA to discuss the impact that the out-of-statute debt proposal could have on its small-business members.
The CFPB provided an additional 60 days for the public and industry stakeholders to comment on the SNPRM after it separated the out-of-statute debt proposal from its overall proposed rule for the debt collection industry, which is expected to be released in October 2020.
ACA will be filing comments on the SNPRM, which are due Aug. 4, 2020.
“Advocacy is concerned about the impact that the proposal may have on small entities and encourages the bureau to take steps to mitigate the impact,” Major L. Clark III, acting chief counsel for the Office of Advocacy, said in the comments. “Advocacy discussed the debt collection proposal at its roundtable on June 26, 2019. Advocacy also participated in two roundtables that ACA International organized for its small [business] members in July 2018 and July 2019. In May 2020, Advocacy held a conference call with ACA to discuss the impact that the proposal could have on its small [business] members.”
Out-of-statute debt was the subject of many comments to the CFPB after the release of its May 2019 proposed rule for the debt collection industry, including from ACA.
The CFPB conducted research and testing on consumer disclosures related to out-of-statute debt that were not included in the May 2019 proposed rule for the industry.
“The Supplemental NPRM proposes model language and forms that debt collectors could use to comply with the proposed disclosure requirements. As with the May 2019 NPRM, the Supplemental NPRM also proposes to require disclosures only if a debt collector knows or should know that the debt is time barred to address debt collector liability if there was too much uncertainty as to whether a debt was time-barred,” according to a news release from the CFPB.
Highlights from Advocacy’s comments include:
- Some states have already implemented similar disclosures for out-of-statute debt. “Is it possible for the bureau to obtain information about the approximate implementation costs from those states? Moreover, is it possible for the bureau to estimate the approximate number of attorney hours, training costs and the cost of changing systems to reflect the disclosure requirements? If so, this information should be provided. The information not only informs the public about the rulemaking. It also provides a baseline for the bureau and the public to consider less costly alternatives.”
- “As Advocacy stated in its letter on 2019 Debt Collection rule, whether a claim is barred by the statute of limitations is a legal defense in a judicial proceeding. Laws vary by state and it can be difficult to determine because different factors may need to be considered. Such an issue should not be determined by a debt collector who may or may not have legal training.”
Feedback on the CFPB’s proposed rulemaking for the industry remains a top advocacy priority for ACA. Watch for coverage of ACA’s comments on the out-of-statute debt SNRPM in ACA Daily.
“If the CFPB decides to require debt collectors to provide disclosures, Advocacy encourages the CFPB to take the necessary steps to make the provisions as less burdensome as possible,” Clark concludes in Advocacy’s comment letter. “For example, the CFPB could create a safe harbor for small entities that make a good- faith effort to comply with the provisions. Advocacy further encourages the CFPB to perform additional outreach with small entities to develop less burdensome alternatives and to clarify any disclosures that the CFPB may decide to adopt.”
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