CFPB Proposes New Regulations for Debt Collectors
The Consumer Financial Protection Bureau is looking to “overhaul the debt collection market” by proposing new regulations which would limit the amount of communication that collectors have with potential debtors. In short, the CFPB wants to protect consumers from getting pesky, disruptive, and often unwarranted calls from debt collectors without thorough confirmation of the debts in question.
The fundamental laws that regulate third-party debt collection agencies haven’t been changed since 1977 with the creation of the Fair Debt Collection Practices Act. This law ensures that debt collectors do not abuse or harass their customers. The new proposal takes that idea one step further.
Some major changes cited in the proposal include:
- Making sure debt collectors substantiate their information before contacting consumers. Agencies will have to verify that they have the right person and the correct amount of debt by providing information such as the last known address/phone number, the account number, and the day the account defaulted.
- Limiting the number of times debt collectors can contact a consumer to six times per week.
- Making it easier for consumers to control when and how debt collectors reach them, like not receiving phone calls during work hours.
- Stop all debt collection attempts if the consumer disputes the debt in any way. The agencies would have to provide proper documentation to verify the debt before continuing with their pursuit.
- Prevent debt buyers from collecting on debts from previous agencies if a dispute has been filed. Under the current system, a debt can be transferred to a new collection agency even if there is a dispute on file; then the new collector can start the process over again.