Here is a sampling of how some mainstream media outlets are covering the proposals released yesterday by the Consumer Financial Protection Bureau.
Raleigh News & Observer: New rules would reduce hounding by debt collectors
In general, the rules would put more responsibility on collectors for disclosing all the available information about a debt. All the nightmares wouldn’t end, but things would be better, and these changes are long overdue. The CFPB is also going to issue proposals for regulations on the ways financial service agencies like banks and credit card companies go about collecting debt themselves. Again, this is welcome, but more rules are needed.
The debt collection industry has grown in complexity over the past few decades, and some creditors now sell debts for pennies on the dollar to third-party collectors. Debt collectors sometimes try to collect in court, leading to abuses such as “robo-signed court documents” — when debt buyers create affidavits without checking the accuracy of their records.
Pittsburgh Post-Gazette: Consumer watchdog proposes new rules to curb abuses by debt collectors
The National Consumer Law Center in Washington, D.C., praised the proposed curbs, saying they would “significantly strengthen” consumer protections. Still, the group said the changes did not go far enough.
An attorney with the law center said collectors could still rely on information that may be inaccurate or mislead consumers.
U.S. News & World Report: Why Debt Collectors Might Soon Stop Calling
The bureau didn’t introduce any kind of final regulation this week and is expected to continue weighing its options in the months ahead. But Thursday’s breakdown of the types of proposals it is considering wasn’t entirely well received. Creditors and allies of third-party collection firms argue that the proposals would impose an unfair amount of regulatory red tape.
The debt collection business operates largely in the shadows of the mainstream financial industry, doing the messy, time-consuming and often contentious work of chasing up unpaid debts. The nature of the work means the industry is a frequent target of consumer complaints, and gets plenty of attention from regulators.
Tighter rules on debt collection are likely to draw plenty of opposition from business groups, including the debt collection lobby itself. “Small businesses that rely on debt collectors could lose access to these essential services if the cost of regulation is so high that it places third-party debt collection out of reach,” said Cindy Sebrell, the Vice President of Public Affairs at ACA International, a debt collection trade group.
These rules aren’t final, not by a long shot. There will be public hearings and various reviews before the CFPB can issue new rules—which the public and business interests alike can comment on for several months. The agency then will evaluate those submissions before releasing a revised, final rule. It’s highly unlikely all of this will be accomplished before next year, making this a timely reminder on the day Hillary Clinton is set to accept her party’s nomination for president of the United States of what a Democratic president can do for us and what a Republican president can possibly take away.
Christian Science Monitor: How a consumer watchdog wants to reform debt collection
While other proposals the consumer watchdog has issued in recent months, such as prohibitions on mandatory arbitration clauses and stricter rules on payday lending, have sparked a debate, some industry groups have praised the bureau’s efforts on debt collection as thoughtful.
Complain to the CFPB and your state attorney general about any debt collection abuses you encounter, said [April Kuehnhoff, a staff attorney with the National Consumer Law Center]. There have been several recent cases where the government has taken action against bad practices.
“It’s encouraging now to see there’s some attention being paid to these practices,” [Bruce McClary, a spokesman for the National Foundation for Credit Counseling] said.
Wall Street Journal: CFPB’s new rules rein in aggressive debt collection
The Consumer Financial Protection Bureau on Thursday unveiled an outline of new rules to rein in aggressive debt-collection practices.
The watchdog agency laid out how it intends to overhaul federal oversight of the debt-collection market for the first time in four decades.
The rules would require companies to have “more and better information” about the debt they collect and curb “excessive or disruptive” communications with customers. The industry encompasses nearly 9,000 businesses with $13.7 billion in annual revenue, according to an estimate by IBISWorld Inc.
Columbus Dispatch: Cordray’s agency considers overhaul of debt-collection practices
Many consumers don’t know what to do to resolve the issue. Sometimes they pay a debt that they don’t believe is accurate just to make the collector to stop contacting them, or they spend time and money to dispute the debt.
The proposed rules are far from being put into action: they will now go through a lengthy review process, and the industry will have a chance to weigh in.
But they are part of the CFPB’s efforts to bring sunshine to shadowy parts of the financial industry. They come about a month after the agency unveiled proposed regulations to take on payday lenders, which have gone with little federal oversight while charging incredibly steep fees and trapping borrowers in a cycle of debt.