Last week, the Consumer Financial Protection Bureau issued a news release and Advance Notice of Proposed Rulemaking that signals the Bureau's intention to broadly exercise its claimed power under the Fair Debt Collection Practices Act to regulate creditors and debt collectors. Most notably, the Bureau is claiming the power to regulate creditors. Although creditors generally are exempted from liability under the Act, the 113-page Notice touches on nearly every aspect of debt collection under the Act, seeking comments on a wide variety of topics from traditional written notices to how contemporary communication technology – like social media, text messaging, and cell phones – affect debt collection practices.
Even while acknowledging that Congress specifically excluded creditors from the Act's reach, the Bureau stated that it "believes it is important to examine whether rules covering the conduct of creditors . . . are warranted," citing the Dodd-Frank Act as its authority for doing so. The Bureau's potential reach here is staggering and could impact creditors, like retailers, medical providers, and small business, which would not likely have considered themselves subject to the Bureau's jurisdiction or the Act itself. The Bureau signaled earlier this fall that it wished to expand its reach when it claimed supervisory authority over any furnisher of information to credit agencies under the Fair Credit Reporting Act. We discussed that bulletin in an earlier blog post. This Notice seems to be the next step in the Bureau's broad claim to jurisdiction over consumer creditors.
While far ranging, the Notice focuses specific attention on the adequacy of information that creditors provide to collectors and buyers of debts, and how creditors transmit that information. The questions posed by the Bureau suggest that it is contemplating rules governing how creditors provide information to debt collectors and buyers when assigning or selling a debt and the oversight creditors have over the collection of the sold or assigned debt. Additionally, the Bureau dedicated a section of the Notice to technology that both creditors and debt collectors and buyers can use to share information, and privacy concerns relating to that technology.
This Notice is the second signal since September that the Bureau is looking to expand its purview in the area of debt collection to creditors, who generally are considered to be outside of the reach of federal debt collection laws.
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