On Wednesday, April 17th, Kathy Kraninger delivered her first major policy speech as the Director of the Consumer Financial Protection Bureau (CFPB), to announce major changes to debt collection rules in the coming weeks.
Creditors’ rights advocates like ALAW have been eagerly awaiting an update to the Federal Debt Collection Practices Act (FDCPA) for clarification on rules which have resulted in substantial fines and lawsuits. This will be the first update to the FDCPA in over 40 years, the biggest question on most minds is whether or not collectors will be able to use email and text messaging to make contact with consumers.
The FDCPA was last updated in 1977. “This was the same year that Steve Jobs introduced the world to the idea of a personal computer” Director Kraninger stated. “Phone booths were on almost every corner and cell phones were not even imaginable.”
Given the age of the FDCPA, it does not explicitly bar text messaging and email, but the industry at large does not typically utilize these methods of consumer outreach over compliance concerns and penalties. Regardless of the outcome, clarification of the rules will be a welcome change to all in the debt collection industry.
“While some consumer groups have voiced concerns about allowing digital outreach, we at ALAW believe that with the proper safeguards in place, the use of text messaging and email would improve the overall consumer experience with debt collectors.” Said Coury Jacocks, ALAW’s Texas Managing Attorney. “It has already been proven across other industries that millennials are exponentially more likely to text and email than answer or place a phone call. It is time we accept the fact traditional phone calls will continue to become less prevalent as younger generations come of age.”
Director Kraininger also presented a more business-friendly relationship with the CFPB which focused more on educating consumers to make better choices and reducing the regulatory burden on the creditors who provide financial services. The CFPB “cannot be everywhere, with everyone, at every transaction — nor should it try to be,” Kraninger said. “Empowering consumers to help themselves, protect their own interests … is vital to preventing consumer harm and building financial well-being.”
ALAW is hopeful that the new debt collection rules will provide a more favorable business environment for our clients and open respectful lines of communication with younger generations in a way that will benefit all parties.
As always, ALAW remains attuned to the latest regulatory changes in our everchanging business environment and will keep you informed of material changes.
VIEW FULL PRESENTATION BELOW FROM CSPAN: