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Agency CEO Files Comment About Proposed Debt Collection Rule

It has not happened much, so it feels like news every time a representative of the credit and collection industry files a comment about the proposed debt collection rule from the Consumer Financial Protection Bureau.

David John, the chief executive of LTD Financial Services, submitted his thoughts and suggestions about the proposed rule yesterday. There have been maybe a handful of comments filed from the industry, out of a total of nearly 1,200 comments that have been received and posted so far. Most of the comments that have been filed to date are from consumers who are against many of the provisions in the proposed rule.

John notes in his comment that many individuals prefer to conduct business, especially something as sensitive as financial-related business, without having to talk to someone. Yet, when it comes to working with debt collectors, the only non-verbal means available to most individuals is to send a letter through the postal service. But, John argues, that is not reflective of the “environment of immediacy” we live in today.

“Consumers have the ability to conduct much of their personal business via their smart phone: Order a ride-share, send money to a friend, have groceries and meals delivered, etc.,” John writes in his comment. “Unfortunately the consumer can’t expect the same convenience when working out repayment of a past-due account. Due to a certain class of attorney’s who extort settlements from legitimate businesses because of the inconsistencies between federal circuit courts and lack of guidance from the federal government, debt collectors are frozen into inaction and can’t communicate with customers in the method the customer may prefer.”

Along with sharing his opinion about the need to update the communication channels open to those in the collection industry, John also has some suggestions that the CFPB should consider in its rule making process:

  • Provide safe harbor statements for debt collectors that permit reasonable, fair communication between the collector and the consumer.
  • Allow the use of electronic mail for all notices provided the collector has the ability to determine that an email has been delivered.
  • Allow text messaging between the consumer and the debt collector provided the collector does not disclose specific information regarding the nature or amount of the debt in the text (i.e. a text message that states “ABC Company has an important notice for you. Please visit our website via the following link: abccompany.com”.)
  • Provide debt collectors the ability to seek redress from frivolous lawsuits. Federal law does not currently allow a debt collector to seek attorney fees and costs in any case. This provides an incentive to unscrupulous attorneys to file lawsuits and accuse debt collectors falsely with no repercussion or risk.

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