Notice of Proposed Rulemaking – Consumer Debt Collection

The Consumer Financial Protection Bureau issued a notice of proposed rulemaking to update the legal foundation surrounding consumer debt collection practices. The proposal comes at a time when 13 state attorneys general are investigating companies that buy defaulted debt, as well as banks and other financial entities that sell debt. The bureau is looking for comments from both consumers and representatives of the debt collection industry, and expects to finalize the rules in 2014.

The Fair Debt Collection Practices Act, passed in 1977, governs consumer debt collection but updates to the law have not kept pace with new collection practices. Potential areas for rule changes include the industry’s use of the internet, social media, and auto-dialing to collect debts, as well as rules that impact the developing industry of debt buyers. The bureau’s authority to regulate debt collection practices extends to companies that buy defaulted debt, companies that collect debts on behalf of creditors, and lawyers who collect debts through litigation.