CFPB Won’t Delay Debt Collection Rules After All

The Consumer Financial Protection Bureau will not delay implementation of controversial debt collection rules, the agency announced Friday.

The rules will go into effect as scheduled on Nov. 30, 2021.

The agency issued a proposed rule in April that would have extended the effective date to Jan. 29, 2022, as financial institutions struggle with the impact of the pandemic. CFPB officials said that based on the comments on that proposal, they have determined that the extension is not needed.

The debt collection rules have been controversial, with consumer groups contending that they do not go far enough in preventing harassment by debt collectors. However, CFPB officials said they were worried that entirely rewriting the rules as part of this process could raise concerns under the Administrative Procedure Act. They added that nothing precludes them from revising the rules later.

The rules cover third-party debt collectors, so credit unions would not be directly affected. However, credit unions that hire third-party collectors will find that their collectors have to adjust to the rules.

The debt collection rules represent an update of decades-old regulations that did not account for new technology, such as cell phones.

The first rule prohibits debt collectors from making a collection phone call for a particular debt more than seven times within a seven-day period. The rule also allows consumers to restrict the type of media that may be used by a debt collector, but allows emails and texts to be used.

The second rule tries to clarify the disclosures that debt collectors make at the beginning of communications and places restrictions on threats to sue or filing suit against consumers on time-barred debt.

CFPB officials also said Friday that they will consider issuing additional guidance for debt collectors, including those that service mortgage loans, as needed.

“The CFPB recognizes that mortgage servicers are expected to receive a potentially historically high number of loss mitigation inquiries in the fall as large numbers of borrowers exit forbearance and that, as a result, mortgage servicers in particular may face capacity constraints,” the agency said. “The CFPB will continue to work with all market participants to ensure a smooth and successful implementation.”

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