On Monday, April 7, CFPB General Counsel Meredith Fuchs warned that debt collection, payday lending, prepaid cards and privacy notices are priorities for the Bureau in the coming months. Appearing before the Practicing Law Institute’s 19th Annual Consumer Financial Services Institute in New York City, Ms. Fuchs noted that the CFPB has already received in excess of 22,000 comments in response to its debt collection advanced notice of proposed rulemaking (ANPR). Calling “certain debt collection practices a source of concern,” Ms. Fuchs did not promise that the CFPB would issue its proposed debt collection rule in 2014. She justified the protracted process by noting that no federal agency has issued debt collection rules governing how the FDCPA should be applied to modern technology. Fuchs did suggest that the debt collection rule could cover (1) the collection or attempt to collect time-barred debt; (2) first-party collection tactics and (3) the transfer of consumer’s information between the original creditor and the debt buyer. We are not surprised that the potential debt collection rule would go beyond the scope of the FDPCA. Indeed, we have written previously that the CFPB would invoke its UDAAP authority to cover first-party collectors in its proposed rule.
Turning to payday lending, Fuchs cited the recent CFPB report in explaining that the CFPB remains concerned with consumers’ sustained use of short-term, small dollar loan products, the amortization of these products and the use of these products by the elderly and others that depend on fixed government benefits. While Fuchs vacillated on the specific timing for payday lending rule-making, she did indicate that the CFPB would continue to aggressively police the ACH, lead generators and other “choke points” that payday lenders rely upon to reach consumers. Given that the CFPB does not intend to commission any further studies analyzing the benefits of payday loans, we anticipate that the proposed rule will impose rigid, arbitrary limits on numerous payday loan features.
Fuchs also indicated that prepaid cards are a high priority for the CFPB in 2014. Noting that Regulation E is not applicable to prepaid cards, Fuchs insinuated that a proposed rule could be issued in 2014 and feature model disclosures and mandatory error resolution procedures.
Lastly, Fuchs reiterated the CFPB’s intention to streamline privacy notice rules. The General Counsel indicated that the CFPB is inclined to eliminate the annual privacy notice in certain circumstances (e.g. if an institution’s internal policy has not changed in that year). We would applaud such a move as neither the institution nor the consumer benefits from excessive paperwork.