Alert July 23, 2013

CFPB Identifies Three Challenges to Debt Collection

Testifying before the Senate Subcommittee on Financial Institutions and Consumer Protection, the CFPB’s Assistant Director of the Office of Deposits, Cash Collections, and Reporting Markets, Corey Stone discussed "three important challenges to debt collection" that the CFPB intends to focus on, which include: (1) medical and student debt; (2) the development of clear standards for data integrity and record-keeping in the debt collection market and (3) the age of the Fair Debt Collection Practices Act. In particular, Mr. Stone noted that the FDCPA was written prior to the use of cell phones, text messaging, e-mail, voicemail and faxes and such communication methods are "being used [] by some debt collectors to reach consumers in ways that can compromise both dignity and privacy." As a result of the changing technology and tactics by debt collectors, Mr. Stone testified that the CFPB intends to work with the FTC and Federal Communications Commission to establish clearer guidelines on the use of such communication methods by debt collectors. Mr. Stone also raised concerns about the integrity of information used to collect debts due to lost or changed information when a debt is assigned or sold. He noted that there was recent consensus at a CFPB roundtable "about the need for robust national documentation standards and the need to maintain the accuracy of information used to collect debts," which the CFPB will take into consideration as it moves toward a debt collection rulemaking process.