CFPB Announces Outline for Debt Collection Rules

The Consumer Financial Protection Bureau (CFPB) announced at a field hearing in Sacramento, California July 28, 2016 they plan to make it much easier for consumers to dispute their debts with collectors.  This was one of their major themes as they finally announced what they have been working on for about 4 years.

In addition to creating a new form all debt collectors may have to use, the CFPB also wants to make certain all collectors have the ability to verify debts with primary documentation before trying to collect.  It seems a good deal of consumer complaints about debt collectors focuses on collectors who do not or cannot verify debts with primary documentation when asked for it.  Although it is already against the law (Fair Debt Collection Practices Act, or FDCPA) and has been since 1978 to fail to respond to a verification of debt request, there are too many consumers complaining and not enough collectors providing these documents (referred to as an “itemized statement”).  Now the CFPB may require a “scrub” prior to trying to collect a debt.

There were several other recommendations at the field hearing, and you can get a broader sense of their proposals from their website at, but for this post I would like to focus on these two concepts.  First, making it much easier to dispute a debt is not helpful for the consumer who wants to pay their bills and wants the collector to stop bothering them about paying their bills.  The proposed new form will have a “tear-off” section that has six options for disputing a debt and only one for paying it.

The second item here is something that won’t affect Southern much, as this has been our practice always; to have or have access to the primary documents to prove a debt, or not take the account for collection.  In this way, I think the CFPB is doing something that is unfortunately necessary to bring in line other debt collectors who have not had a high enough standard for working past due debts, primarily those who purchase debts without much backup.

In any event, there are some things that will benefit consumers, a few that will make it more difficult, and most items will make the business of collecting legitimate bills more difficult and expensive.  We will do our best to continue to provide outstanding service for our clients and consumers while meeting the increased requirements of federal regulation.

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