Last week the Consumer Relations Consortium (CRC) urged the Bureau of Consumer Financial Protection (BCFP) to issue letters and opinions as guidance that could be relied on by companies trying to comply with gray areas in the law. 

“[Guidance protects] consumers’ rights, ensures lawful business operations, and addresses ambiguities leading to frivolous litigation, thereby reducing burdens on our courts.”

The group provided the following examples of guidance issued by other federal agencies:

  • Federal Trade Commission (FTC) letter advising that a debt collector does not violate §805(c) of the Fair Debt Collection Practices Act (“FDCPA”) by communicating with the consumer in compliance with the Fair and Accurate Credit Transactions Act (“FACTA”) after the consumer requested the debt collector to cease communication.
  • FTC letter concluding that notice from a debt collector that it will no longer seek to collect a debt because of the inability to verify is not a prohibited communication construed as an attempt to collect the debt under the FDCPA.
  • FTC letter concluding that the FDCPA applies to collection agency efforts to collect debt which is in default but not charged off, and that collection agency employees must collect in the agency’s name and not represent themselves as employees of the original creditor.
  • FTC letter addressing (1) specific questions about an account creditor’s or collection agency’s permissible purpose to access a consumer’s credit file under the Fair Credit Reporting Act (“FCRA”), as well as advising that (2) under the FCRA, an entity may not obtain consumer credit information from a credit reporting agency on behalf of another entity without disclosing the ultimate end-user of the credit information.
  • FTC letter addressing the applicability of the FCRA to the credit reporting of information by educational institutions in connection with defaulted student loans.
  • Internal Revenue Service (IRS) letter addressing questions from an association whose debt purchasing members sought answers to nine categories of questions relating to reporting requirements under §6050P of the Internal Revenue Code for debts that are settled for an amount less than the full amount owed.
  • FTC’s Statement of Policy Regarding Communications in Connection with the Collection of Decedents’ Debts advising that a debt collector does not violate §805 of the FDCPA when communicating with individuals who have the authority to pay the outstanding bills of the decedents’ estates using estate assets.

The CRC also noted that the Bureau’s Guidance Bulletins are helpful, but still don’t prevent an abundance of litigation filed to resolve gray areas. The group cites the Avila case in the Second Circuit, which adopted a “safe harbor” disclosure regarding the accrual of interest. While many assumed this would end related litigation, it in fact spawned the opposite – a drastic increase in litigation exploiting a new gray area – Does a collector now have to address the fact that interest is NOT accruing?


insideARM Perspective 

The CRC raised an additional point worth highlighting: During the (already) several years’ long process of debt collection rulemaking, the market has changed, even as the Bureau worked to approve its 2017 draft of a Notice of Proposed Rulemaking, and stakeholders anticipated its release.

Indeed, technology has evolved so greatly during the last few years that some of the positions addressed in the Advanced Notice of Proposed Rulemaking (ANPR) have become moot, or at least outdated to the point where they ought to be reconsidered from scratch. Contact caps is one of those topics. The concept of harassment has now converged with the rapidly advancing issue of privacy, and calls made to mobile phones – formerly the domain of the Federal Communications Commission. Because of the proliferation of illegal robocalls in recent years, many now question the viability of the phone channel altogether. A war is underway among consumers, illegal actors, legitimate businesses, regulators, carriers, and call analytics developers. Sides are shifting. Technology is evolving, both for the better (i.e. choice, convenience) and the worse (i.e. bad actors can spoof the identity of good actors). Consumers want to be contacted through the channel of their choice. They want privacy and control, and they want to be able to trust those on the other end of the device. 

One more thought:

Personally, I would also suggest taking this opportunity to revisit the idea of addressing third party collection rules before, or in the absence of, rules for their clients (creditors). As I like to say, “(Stuff) rolls downhill. Why start at the bottom of the hill?” This is not to suggest that a whole host of rules ought to be imposed on creditors; just that any rules imposed on collectors ought to be coordinated with corresponding requirements for their clients. Without a focus on the whole chain, it’s far less likely that the new rules can practically be implemented.

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