PHILADELPHIA — Subject matter experts representing debt collection agencies and consumer advocacy groups had split reactions on changes to the Fair Debt Collection Practices Act proposed by the Consumer Financial Protection Bureau on May 7.
“Back [in 1977], phone booths were on almost every corner, and the ubiquity of cell phones was not even imaginable,” CFPB Director Kathy Kraninger said at a May 8 town hall meeting to discuss the proposal. “The FDCPA was written largely to address communications between debt collectors and consumers, but it hasn’t always been easy to discern how it applies to technologies today.”
Specifically, the CFPB’s new rule would limit debt collectors to seven telephone calls per week per account, and bar collectors from calling the consumer again for one week once a conversation has taken place. The proposed rule would also outline guidelines for debt collectors when attempting to communicate with borrowers via text and email — which borrowers can opt out of, much like email subscriptions.
In addition, the proposed rule would allow debt collectors to leave “limited content messages” via voicemail or a third party, which would not constitute “communication” with the borrower. Finally, the proposal would bar debt collectors from suing — or threatening to sue — to collect a debt that the collector knows or should know is past the statute of limitation.
Consumer advocates held that the new guidelines do little to address top concerns when it comes to protecting consumers. The National Consumer Law Center estimates the proposed rule will affect 71 million Americans. “We see the rule as sanctioning excessive debt collection phone calls by allowing seven unanswered calls per week per debt,” said NCLC Staff Attorney April Kuehnhoff. “It would also undermine key privacy protections by permitting limited content messages to be left with third parties who might answer phones.”
Michael Froehlich, managing attorney of the Homeownership and Consumer Rights Unit at Community Legal Services Philadelphia, agreed. “We feel this is a huge missed opportunity to really address some of the predatory and unlawful actions that our clients face,” he said. “Further, rather than create clear rules for the road that we are looking for in debt collectors, [the rules] may create more ambiguity.”
Conversely, experts representing the debt collection industry feel the new proposed rules fall short in allowing opportunity for debt collectors to get in touch with borrowers.
“The ability for the collector to communicate with the consumer is paramount in resolving the issue,” said Jan Stieger, executive director at Receivable Management Association International. “Limiting that communication is difficult and often harmful to the consumer. When a debt buyer or collection agency gets an account, it may come with seven to 10 phone numbers. So, if calls are limited to seven a week, it may take over a week to determine what is a good phone number.”
Though the collection agency representatives disagreed on the specifics of the CFPB guidelines, they all acknowledged that the agency was on the right track.
“No one would prefer more than debt collectors to be able to send a letter and be responded to,” said Stephanie Eidelman, chief executive of iA Institute. “Unfortunately, it doesn’t happen that way. It’s a huge step to have opened up the opportunity to be able to communicate in a way that consumers prefer.”
Interested parties have 90 days to submit formal written comments to the CFPB on the proposed rule.
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