ABA Offers Feedback on CFPB’s Third-Party Debt Collection Rule

In a comment letter to the Consumer Financial Protection Bureau today, The American Bankers Association offered feedback on a long-awaited proposed rule that would modernize and clarify rules related to third-party debt collection. Issued under the Fair Debt Collection Practices Act, the rule would not generally apply to creditors collecting their own debts and thus would not generally apply to banks. Because some banks place debt with third-party debt collectors, however, many must monitor their compliance with the FDCPA.

ABA applauded the bureau for its efforts put forth a modern interpretive rule for the nearly 50-year-old statute. However, ABA strongly opposed the CFPB’s “unnecessary reliance” on the Dodd-Frank Act’s UDAAP authority in issuing the rule, noting that its use of UDAAP could introduce substantial uncertainty and legal risk for first-party creditors, including the risk that state attorneys general will enforce the rule against national banks.

ABA also encouraged the CFPB to allow collectors to contact consumers using contact information they provided, until and unless the consumer requests that the collector not do so, in recognition of consumer preferences that have changed since the FDCPA’s passage in 1977.