This morning, the CFPB released a proposed rule to define “larger participants” subject to its supervision and enforcement authority.  We will write more about this proposed rule after we get the chance to review it, but from an initial review of the press release, there are several interesting aspects to the proposed rule:

  • Initially, the CFPB is seeking to cover only “large” consumer reporting agencies and debt collectors, with revenue thresholds of $7 million and $10 million, respectively, to define the covered entities.
  • The Bureau states that today’s proposal is only the “first in a series of rulemakings to define larger participants.”  So, industries not included in this initial rule – especially those listed in the Advance Notice released in June 2011, like prepaid card issuers, finance companies and debt relief firms – will have to continue to watch for another proposed rule.
  • The scope of covered debt collectors explicitly includes debt collectors, debt buyers, and collection law firms.
  • The coverage of debt collectors and debt buyers seems particularly significant in light of recent judicial and regulatory developments relating to documentation in consumer collection activity.  See our e-Alerts covering some of these developments here, here and here.  I strongly suspect that the CFPB will make a review of collection documentation and affidavit execution processes a priority once it has the opportunity to conduct examinations of debt collectors and debt buyers.
  • The scope of coverage of consumer reporting agencies is much wider than the “big 3,” and is said by the CFPB to include the largest 30 consumer reporting agencies.  This signals a desire by the Bureau to regulate beyond traditional credit reporting agencies.

In some ways, today’s proposed rule is no surprise – debt collectors and consumer reporting agencies were the first two groups identified in the June 2011 Advance Notice released by the CFPB.  Nevertheless, at the margins, with respect to issues like the inclusion of debt collection law firms and smaller consumer reporting agencies, it will be interesting to watch the comments to this proposed rule and the CFPB’s ultimate decision on its authority.