Consumers will hopefully receive more protection from the new Consumer Financial Protection Bureau (CFPB), which was created as a part of the Dodd–Frank Wall Street Reform and Consumer Protection Act (http://www.govtrack.us/congress/bill.xpd?bill=h111-4173) has recently opened its doors. The new Consumer Financial Protection Bureau (CFPB) is assuming responsibility for rules and regulating the business of debt collection that the Federal Trade Commission (FTC) had been primarily handling.
On October 13, 2011, the CFPB released its examiners’ manual – CFPB Supervision and Examination Manual Version 1.0, which can viewed on the CFPB’s website here. The Manual is probably the most important document the CFPB will issue as its purpose is to ensure consistency by CFPB’s examiners in reviewing and assessing whether financial providers, including debt collectors, are complying with Federal consumer financial laws, including the Fair Debt Collection Practices Act (FDCPA).
The CFPB, according to its website and Manual, is guided by three principles:
A focus on risks to consumers in the policies and practices of consumer financial providers;
An analysis of available data on the activities of providers, on the markets in which they operate, and on the risks to consumers; and
Consistent standards in supervision of both depository institutions and non-depository consumer financial companies.
The Manual has specific sections, including a “Narrative” and “Examination Procedures,” for the FDCPA and Fair Credit Reporting Act (FCRA). These sections provide guidance as to what the current law is as well as new regulations and procedures to investigate possible violations. However, the Manual itself does state the following:
This examination manual provides internal guidance to supervisory staff of the CFPB. It does not bind the CFPB and does not create any rights, benefits, or defenses, substantive or procedural that are enforceable by any party in any manner. While every effort has been made to ensure accuracy, examination procedures should not be relied on as a legal reference.
There is much hope that the CFPB will promulgate rules that will prevent abusive debt collection tactics and increase the penalties for violations. The CFPB should consider adopting rules and regulations to protect consumers such as:
- Stricter documentation requirements for the filing of collection lawsuits;
- Stricter documentation requirements for the sale and purchase of consumer debt;
- New specific requirements for initial consumer communications, to include more robust information about the origin of the debt in question;
- Codified clarification on the use of e-mail, most likely defining an e-mail as a collection letter not eligible to be the initial communication, and only permissible with express consent; and
- Clarification on the use of user-fee communications, like mobile phones and text messaging.
With the recently proposed Mobile Informational Call Act of 2011 (H.R. 3035, 112nd Cong., 1st Sess. (2011)), which, if passed, would make sweeping changes to the Telephone Consumer Protection Act (TCPA), consumers should be very concerned that debt collectors will become more aggressive and start to use techniques that have been prohibited under the TCPA, such as the use of automatic dialers to call cellular telephones. If this Act does become law, the CFPB can hopefully minimize its effect by increasing regulation as well as the “penalties” for violations against abusive debt collectors.
The $58 billion dollar per year debt collection industry, of course is not without its own hopes for rule changes by the CFPB. In an attempt to weaken consumer protections already in place, a debt collector industry group recently recommended its own set of guidelines to the CFPD to include:
- The FDCPA should be amended to allow collectors to communicate with consumers by any method of communication available;
- The TCPA restrictions on the use of an auto-dialer or prerecorded message to call a consumer’s mobile phone should be amended to limit their application to telemarketing calls;
- The FDCPA should be amended to specify the precise language that a collector can leave in a voice-mail message without violating the law; and
- The Truth in Lending Act should be amended to require original creditors to maintain consumer account information for no less than seven years from the date of charge-off.
All of these proposals would help insulate debt collectors from many of the protections currently provided by the FDCPA, the TCPA as well as other laws, and permit even more aggressive debt collection activities.
At Lapin Law Offices we strongly urge all consumers to contact the CFPB and request that it strengthen, not weaken, their rights under the FDPCA, the TCPA and the Truth in Lending Act. Links for complaints and suggestions to the CFPB can be found here:
If you have questions or believe your rights have been violated by a debt collector or credit bureau, contact Lapin Law Offices for a free initial consultation.