The Consumer Financial Protection Bureau (CFPB) is rolling out a set of rules designed to clampdown on aggressive and reckless debt collection agencies.
Third party debt collectors would be barred from attempting to contact alleged delinquents more than six times per week, the bureau said. The initiative would also require collection agencies to verify that the person they’re contacting actually owes money to the entity that contracted their services in the first place.
Rules would also place a 30-day waiting period after a person’s death, on debt collectors seeking to pursue claims against the next-of-kin. They would additionally seek to boost transparency and the disputation process for those who say they were wrongly targeted by collection agencies.
An outline of the plans were revealed early Thursday morning by the CFPB. According to The Wall Street Journal, the regulations will be formally proposed sometime next year. A public comment period will then follow before the agency can finalize the rules.
“This is about bringing better accuracy and accountability to a market that desperately needs it,” CFPB head Richard Cordray said on Thursday.
The CFPB said last year that debt collectors were flagged most often in consumer complaints, which the bureau accepts on a rolling basis.
“The most common complaints are about collectors seeking to collect debt from the wrong consumer, for the wrong amount, or debt that could not legally be enforced,” the CFPB remarked this week.
While industry figures are reportedly concerned about the cost of complying with regulations, they unexpectedly welcomed the proposal roll-out, according to both The Wall Street Journal and The New York Times.
“The problem that the debt-collection industry has had is there were no regulations,” Joann Needleman, a lawyer and former industry group president, told WSJ. “Of course the industry wants clarity. The question becomes what do the rules say?”
According to CFPB data, there are 70 million consumers “who have debt in collection.”
