The Consumer Financial Protection Bureau (CFPB) on Tuesday proposed a rule meant to curb harassment by debt collectors with hard limits on how and when debtors can be contacted by collection agencies.
The proposal from the CFPB also bars debt collectors from taking certain actions that could harm debtors’ credit ratings or lead to costly litigation between debtors and collectors.
The CFPB proposal would impose stricter federal oversight and standards for debt collectors under the Fair Debt Collection Practices Act. The bureau was given responsibility for enforcing the law through the Dodd-Frank Act, the banking reform law that created the CFPB in 2010.{mosads}
CFPB Director Kathy Kraninger said in a Tuesday statement that the bureau “is taking the next step in the rulemaking process to ensure we have clear rules of the road where consumers know their rights and debt collectors know their limitations.”
“As the CFPB moves to modernize the legal regime for debt collection, we are keenly interested in hearing all views so that we can develop a final rule that takes into account the feedback received.”
The rule is scheduled to take effect one year after the proposal is published in the federal register later this month, and the CFPB is soliciting feedback for 90 days following its publication.
The CFPB proposal is meant to limit potential harassment by debt collectors while giving them clearer guidance on how to legally use newer technology to contact debtors.
The proposal would ban debt collectors from contacting debtors more than seven times per week and force collectors to wait seven days after a conversation with the debtor before reaching out again.
The rule would also bar debt collectors from contacting credit agencies about debts without notifying debtors and ban lawsuits or legal threats from collectors over debts that have extended past a statute of limitations.
The CFPB proposal also includes conditions on how collectors could contact debtors through email, text messages, calls to mobile phones and social media accounts.
Collectors would be legally allowed to contact debtors through emails, taxes and private messages on social media platforms as long as those communications comply with timing and frequency rules set for phone calls.
Debtors would be legally entitled to unsubscribe from electronic communications and ask collectors not to use certain phone numbers or accounts to reach them. Collectors would also be banned from contacting debtors through emails used for and provided by the debtors’ employer.