Attorney General Becerra to CFPB: Proposed Debt Collection Practices Rule Falls Far Short

SACRAMENTO – California Attorney General Xavier Becerra today, as part of a coalition of 28 attorneys general, denounced the Consumer Financial Protection Bureau’s (CFPB) proposed Debt Collection Practices Rule, which falls far short of the regulation needed to protect consumers from abusive and unscrupulous debt collectors in the $11.5 billion industry. In the letter, the attorneys general recognize the importance of lawful debt collections and certain benefits of the proposed rule, but urge CFPB to fulfill its obligation to protect consumers in the financial marketplace rather than allow debt collectors to run rampant, putting customers at risk. Complaints about unlawful debt collection remain one of the top categories of consumer complaints received by the offices of state attorneys general. CFPB’s proposal fails to address meaningful risks to consumers and is at odds with its statutory mandate under the Dodd-Frank Act. The coalition asks the agency to reconsider its approach before issuing a final rule and to better offer consumers the meaningful protection that could be afforded by federal law.

“CFPB’s proposal falls far short of what is needed to manage the debt collection industry,” said Attorney General Becerra. “CFPB is tasked with protecting consumers, not debt collectors abusing the dated regulatory apparatus. We urge CFPB to try again, but this time with the agency’s mission in mind.”

In the letter the attorneys general praise CFPB’s efforts, but also ask CFPB to address a number of concerns, including that the proposed rule:

• Limits the number of times a debt collector may call a consumer, but the limitation is applied per debt rather than per consumer, which would lead to an unacceptably high volume of calls;

• Proposes no meaningful restrictions on the number of electronic communications that debt collectors can send, and authorizes debt collection through social media;

• Inadequately protects consumers from debt collections outside of the statute of limitations;

• Weakens the requirement that attorneys be reasonably involved with debt collection litigation, which would permit debt collection firms to file lawsuits without making sure the consumer actually owes the money;

• Does not protect consumers from debt-collection abuses by first-party creditors (the original lenders) but only applies to consumers who are pursued by third-party debt; and

• Disregards CFPB’s statutory mandate to protect consumers from an industry with a well-documented history of misconduct.

A copy of the letter can be found here.