In the News

Advocating for Regulatory Guidance on Capitol Hill

ACA International
9/26/19

ACA International advanced the accounts receivable management (ARM) industry’s advocacy message on the need for balanced regulations for consumers and businesses from the Consumer Financial Protection Bureau during a hearing with the House Financial Services Committee Thursday.

Modernizing the Fair Debt Collection Practices Act and the CFPB’s regulatory practices dominated discussions during Thursday’s hearing with testimony from ACA representatives John Bedard, owner of the Bedard Law Group in Atlanta, and Sarah Auchterlonie, an ACA consultant and shareholder with Brownstein Hyatt Farber Schreck in Denver.

Auchterlonie and Bedard, with ACA’s Vice President and Senior Counsel of Federal Advocacy Leah Dempsey, Vice President of Congressional and Political Affairs Rae Ann Bevington, and Vice President of Communications Kim Coghill in attendance, addressed lawmakers about the CFPB’s proposed debt collection rulemaking and the need to stop regulation by enforcement.

“The credit and collection industry has been seeking clear regulatory guidance on the FDCPA since its enactment in 1977,” Bedard said. “Industry supported regulation in 1977 and industry supports clear, fair regulation today. Regulation by enforcement is wrong. It is unlawful. It is happening today, and it needs to stop. To fulfill its statutory mission and obligations properly, the bureau must first articulate rules and then strictly adhere to fair, clear and transparent enforcement practices.”

U.S. Rep. Andy Barr, R-Ky., said the lack of clarity in CFPB rules is one of the greatest frustrations with the bureau and asked how the proposed debt collection rule addresses that issue.

“This proposal is a step in the right direction,” Bedard said. “It brings clarity to an area of the law which is today not clear.”

The hearing comes a week after comments on the CFPB’s proposed debt collection rule were due and included consideration of legislative proposals and discussion drafts on expanding FDCPA protections, limiting fees and credit reporting.

“We can all agree there is a problem. The current regime does not work for the American people. One cause could be the Fair Debt Collection Practices Act, the principal statute governing debt collection activities,” said ranking committee member U.S. Rep. Patrick McHenry, R-N.C. “It’s fair to say that much has changed in terms of technology and how society interacts. The CFPB recognizes the need to modernize the FDCPA and the rules surrounding debt collection.”

Regarding technology, when asked about the CFPB’s proposed rule by U.S. Rep. Blaine Luetkemeyer, R-Mo., Auchterlonie described the benefits of the rule’s reference to modern communication methods.

“What I really like about the bureau’s rule is it provides the opportunity for collection agencies to use communication means that are now more predominant in society,” Auchterlonie said. “The idea is to help the consumers feel more comfortable engaging in the debt collection process, so they have more control over their outstanding accounts.”

U.S. Rep. David Scott, D-Ga., recognizing Bedard’s firm as highly respected and distinguished in Georgia and the ARM industry, spoke with Bedard about electronic communications and protections for consumers in the CFPB’s proposed rule.

The CFPB’s proposed regulations make suggested changes to the frequency and methods of communications by debt collectors, including social media and private messaging services, Scott said.

Scott asked, "With consumers already facing challenges with safeguarding their information, do you feel the CFPB’s proposed rule adequately protects the privacy of our consumers?"

“The answer is yes. The proposal goes one step further,” Bedard responded. “The proposal gives control to the consumers over those communication channels. Consumers have an unconditional right to opt out of those communications. To the extent consumers even feel at risk of privacy exposure, they can control the process. Under the current draft of the proposal, every communication that is electronic between a debt collector and a consumer must contain a clear explanation of the consumer’s right to opt out of electronic communication.”

Meanwhile, the hearing discussion also focused on the importance of debt collection in the marketplace and economy, and ensuring consumers have access to credit.

“This modernization isn’t just important only to consumers,” Luetkemeyer said. “Small businesses in America and health care providers across this country depend on third-party collectors to manage receivables and ensure they are compensated for services provided.”

Lawmakers said during the hearing the CFPB’s proposed rule, by addressing modern communications and providing additional clarity on compliance using communication methods such as email and text messages, could help with affordable access to credit in the marketplace.

“I do think some of the modernizations under the CFPB proposal help achieve that very goal,” Rep. Barr said. “The cost of unpaid debt does not just disappear.”

The hearing, which lasted several hours, also focused on accurate data collected by the CFPB in its Consumer Complaint Database and its influence on the ARM industry.

“I think the important thing is not that the complaints aren’t helpful and valid, it’s just that you can’t look at raw numbers and take them out of context,” Auchterlonie said, adding that consumer complaints recorded in the database represent less than 1% of all debt collection contacts.

Among the legislative proposals, one bill (H.R. 4403 sponsored by U.S. Reps. Emmanuel Cleaver, D-Mo., and French Hill, R-Ark.,) focused on the FDCPA suggests extending the law to collectors of a debt owed to a federal agency, and limits fees.

The Small Business Lending Fairness Act (H.R. 3490) is a bipartisan bill sponsored by U.S. Reps. Nydia Velasquez, D-N.Y., and Roger Marshall, R-Kansas, that restricts the use of confessions of judgment for small business owners.

The Debt Collection Practices Harmonization Act (H.R. 3948) is a bill sponsored by U.S. Rep. Gregory Meeks, D-N.Y., that extends FDCPA to cover debt owed to a state or local government and adds protections to consumers affected by national disasters.

The remaining proposals under review at the hearing, in discussion draft form, include expanding the FDCPA’s protections to cover small business loans and banning entities from collecting medical debt or reporting it to a consumer reporting agency without notifying a consumer of their rights under the FDCPA and Fair Credit Reporting Act.