The House next week will consider legislation that would prohibit the Consumer Financial Protection Bureau from implementing large parts of its third-party debt collection rule—a regulation that the Trump Administration wrote and the Biden Administration already has delayed.
The bill, H.R. 2547, combines several debt collection measures into a larger bill; it has been approved by the House Financial Services Committee.
Committee Democrats said the bill is urgently needed. “It is critical that Congress immediately enhance and expand protections to ensure borrowers are not subjected to the wide range of abuse and harassment by predatory debt collectors,” committee Democrats said, in the panel’s report on the bill.
The Credit Union National Association and committee Republicans have said they oppose the bill. CUNA President/CEO Jim Nussle said that the rule and legislation would have an impact on credit unions because some credit unions hire third-party debt collectors.
In May 2019, the CFPB, then run by the Trump Administration, released a proposal intended to update debt collection rules that were adopted before such technological advances as cell phone.
Consumer advocates have criticized the rule. They argue that it would allow debt collectors to make a call every day to a debtor, while simultaneously using emails, text messages and social media to harass the debtor multiple times a day without consent.
H.R. 2547 would prohibit a debt collector from contacting a consumer by email or text message without the consumer’s consent. It also would require the CFPB to annually report on the impact of electronic communications used by debt collectors.
In the Financial Services Committee report, panel Republicans said the CFPB’s original rule was the result of more than seven years of research by the agency. “It sets forth clear rules of the road for both consumers and debt collection agencies and outlines acceptable communications,” the Republicans said, adding that the new bill is a “progressive retread” of bills from the last Congress.
In a letter to the committee when it marked up the bill, Nussle wrote that the legislation would “undermine consumers’ financial well-being and jeopardize lenders’ ability to make safe and sound underwriting decisions.”