October 11, 2021

American Banker Quotes Jonathan Pompan on Preparing for the CFPB’s New Debt Collection Rules

2 min

On October 11, 2021, Jonathan Pompan was quoted in American Banker on the Consumer Financial Protection Bureau’s (CFPB) overhaul of debt collection rules that will allow collectors to call consumers up to seven times per week. Other provisions, including requirements that consumers be given an itemized list of their debt and told how to opt out of electronic communications, require a high degree of coordination between creditors and collectors and are proving to be a challenge.

According to the article, debt collectors hope the rules will reduce the thousands of lawsuits filed each year for alleged violations of the Fair Debt Collection Practices Act, enacted in 1977, including many cases alleging violations related to notices sent to consumers validating a debt. But the rules have also raised concerns among creditors about what will be required in terms of ongoing oversight and monitoring of third-party vendors.

Incoming CFPB Director Rohit Chopra, who is expected to be sworn in next week, has vowed to aggressively pursue enforcement actions against companies that harm consumers. Some experts think the CFPB will seek to hold creditors that work with third-party collectors liable for engaging in "unfair, deceptive or abusive acts or practices," known as UDAAP claims.

“There's the potential for a perfect storm for original creditors given the current administration and in particular Director Chopra," said Pompan. "What policies, procedures, and activities does the creditor engage in that potentially fall under the rule in order to make the potential for UDAAP claims? It will vary depending on the creditors' practices, but it runs the gamut from call frequency restrictions to notices."