Currently, differing interpretations of federal law regarding debt collection results in debt collection activities that may or may not be unlawful and an excess of litigation. Creditors claim the Federal Fair Debt Collection Practices Act (“FDCPA”) even lacks a definition for the term “debt collection” and is one of the most heavily litigated in the country. Consumer advocates request clear definitions of prohibited debt collection practices. The terms of the law appear to apply to debt collectors only, not creditors collecting their own debts, but even that distinction is questioned.
On October 17, 2018, the Bureau of Consumer Financial Protection (BCFP), formerly known as the CFPB, announced that it plans to issue a Notice of Proposed Rulemaking (NPRM) for the Fair Debt Collection Practices Act (FDCPA) by March 2019. The proposed rule, or NPRM, is the official document that announces and explains the BCFP’s plan to address a problem or accomplish a goal, in this case, regulations covering debt collection. The NPRM on debt collection regulations is expected to follow on a 2016 attempt by the then-CFPB to issue debt collection regulations. It is likely to contain a background section and specific proposals for rules. Most importantly, there is a period for public comment, and BCFP attorney Thomas Pahl, who is responsible for the rulemaking effort, has strongly urged public comment on the rulemaking.
Clarity in debt collection under the FDCPA is sorely needed. All agree that the terms of the FDCPA are less than clear, leaving debt collectors unsure of how to comply and consumers unsure of their rights. Further, the law was passed in the 1970’s, when debt collectors communicated with consumers in person, telephone or by U.S. mail. Now, consumers use and prefer email and texting, and debt collectors use automated contacts and seek to leave messages. Reconciling the law’s vague terms to 21st methods of communication has been a fertile source of litigation, with predictably inconsistent outcomes. Hopefully BCFP proposed regulation will remedy these problems in a way that benefits both debt collectors and consumers.