In this podcast, Alan Kaplinsky, who leads our Consumer Financial Services Group, interviews Professor Adam Levitin of Georgetown University Law School about why businesses and consumer advocates are both opposed to the proposed Restatement, which would change the law in ways that will harm businesses and consumers.

Click here to listen to the podcast.

CFPB Director Kraninger has announced that Brian Johnson will serve as the Bureau’s Deputy Director.  Mr. Johnson first joined the Bureau in December 2017 as Senior Advisor to the Director and was named Principal Policy Director in April 2018 by former Acting Director Mulvaney.  Mr. Johnson has served as Acting Deputy Director since he was appointed to that position by Mr. Mulvaney in July 2018.  Before joining the CFPB, Mr. Johnson served as a House Financial Services Committee staff member.

The Bureau also announced additions to its senior leadership and executive teams.  The leadership positions are:

  • Kate Fulton will serve as the Chief Operating Officer.  Ms. Fulton first joined the Bureau in 2013 serving as Senior Counsel in the Legal Division and later in the Office of Supervision, Enforcement and Fair Lending. In 2016, she was named Deputy Chief of Staff and Senior Counsel.  For the last year, she also served as the Acting Chief Operating Officer.  Prior to joining the Bureau, Ms. Fulton served as Attorney Advisor at the U.S. Customs and Border Protection.
  • Yasaman Sutton will serve as Senior Advisor and Counselor to the Director.  Ms. Sutton previously served in the Executive Branch where she provided advice and representation on legal matters affecting the Office of Management and Budget, the White House, the Department of Defense, and the Department of Justice.

The executive positions are:

  • Melissa Brand will serve as the Director of the Office of Civil Rights.  Ms. Brand previously spent almost 10 years at the U.S. Equal Employment Opportunity Commission.  She has been the Bureau’s Equal Employment Opportunity (EEO) Complaints Program Manager since 2016.
  • Jim Rice will serve as the Assistant Director of the Office of Servicemember Affairs.  Mr. Rice has more than three decades of military service, including as the Chief of the Health Services Division for the Chairman of the Joint Chiefs of Staff.



In this blog post, we attempt to dissect and explore the Bureau’s proposed call frequency and time/place limitations in the recently-released debt collection NPRM.

Proposed Call Frequency Limitations

First, let’s tackle the proposed call frequency limitations.  Section 1006.14(b)(2) prohibits attempting to call (note the use of the word “call,” as opposed to “communicate with”) a consumer about a debt more than seven times within seven consecutive days.  Note that this portion of the proposed rule addresses only call attempts – successful communications will be discussed next.

The proposed call attempt limitation would apply on a per debt basis.  This means that if a consumer has three separate debts, the proposed rule would permit up to a total of twenty-one call attempts – seven per each debt –within a consecutive seven day period, according to the commentary to Section 1006.14(b).  However, in the context of a consumer from whom a collector is attempting to collect multiple debts, accounting for call attempts per debt can become a bit muddled.  The commentary suggests that if a collector intends to discuss (or would intend to discuss) multiple debts in the event that the consumer responds to a call attempt on any one account, the collector would need to count those attempts across all of the accounts that would or could be discussed by the collector.  So, if a collector wishes to be able to place up to seven call attempts on each account, it will need to develop ways to demonstrate that its agents would not discuss any other debts in the event the consumer answered the call.  From a practical perspective, perhaps that could be accomplished without too much fuss if a collectors assigns different debts to entirely different collection teams but, in reality, I suspect that if a consumer wants to discuss paying other debts during a call that was not placed on those accounts initially, a collector is likely to engage in that discussion and attempt to resolve as many debts as possible.  As a result, the de facto impact of the proposed call attempt limits may end up functioning on a per consumer basis in some instances.

However, it is important to note that the proposed call attempt limitation changes significantly when student loans are involved.  Rather than applying the call attempt limit on a per debt basis when attempting to collect a student debt, the Bureau proposes that the call attempt limit apply to all debts that were serviced under a single account number at the time they were placed with the collector.  This means that if the student had three loans, but they all were serviced using the same account number, then the collector is limited to seven call attempts total on the combined group of accounts.  This is an important distinction, and it is important that student lending participants take it into account to avoid potential violations.

It also bears noting that while the proposed call attempt limitation does include limited content messages (i.e., messages that the NPRM states would presumptively not constitute collection communications under the FDCPA – which we will cover in more detail in future blog posts), the proposed rule excludes from its counts any communication made by text or email, call attempts that do not actually connect to the dialed number (i.e., a busy signal or reached a disconnected line), and call attempts to a number that a collector subsequently learns does not actually belong to the consumer it was trying to reach.

Thereafter, once a collector successfully contacts the consumer, there is an additional, mandatory seven-day waiting period before the collector can resume any further call attempts.  The date of the successful communication serves as the first day of the seven-day waiting period.  The proposed rule states that a “successful contact” includes both actually speaking to the consumer and leaving a message (other than a limited content message) for the consumer.  The Bureau further cautions that collectors should remain mindful that a location call or call attempt that does not immediately reach the consumer can become a successful contact if the end result is that contact is made with the consumer.

Finally, the Bureau remarks that calls placed in response to consumer requests for information or a return call are not subject to the call frequency limitations described above, as a consumer can consent to additional calls.

Our read of this NPRM provision suggests that the Bureau is working to transition collection efforts away from relying on outbound calls to consumers, and is instead encouraging consumer contact through other, less intrusive channels.  The Bureau makes a number of statements expressing concern that consumer phones may ring repeatedly, day after day, and indicating that it wants to avoid that type of disturbance.  However, a number of industry participants already have expressed concern that the Bureau’s one size fits all approach to limiting call attempts will not work well across all debt types and consumer profiles.  Some industry groups already have announced plans to provide the Bureau with additional data to support industry claims that this approach will cause disproportionate impacts on certain areas of debt collection.

It also is curious that under the NPRM, ringless voicemails that result in a collections message being left for the consumer also are deemed to be successful communications that trigger the seven-day waiting period.  This seems somewhat out of place, given the goals of this portion of the NPRM (which appear aimed at reducing intrusive telephone calls that ring a consumer’s phone).  In that regard, a ringless voicemail seems more akin to the types of communications that the Bureau proposes to exclude from the contact frequency limitations (i.e., email and text) because a consumer can retrieve and review a ringless voicemail at a time of the consumer’s choosing, using their phone, without hearing an intrusive ring when the message is transmitted.

In sum, we anticipate that the Bureau’s proposed contact frequency limitations will generate a great deal of additional commentary and, hopefully, discussion with the Bureau to determine if there is a more appropriate way to achieve the dual goals of protecting consumers from abuse and effectively assisting consumers in resolving their debts.

Proposed Time and Place Restrictions

Second, let’s look at the NPRM’s proposed time and place restrictions that are broadly applicable to all forms of communication – calls, messages, texts, and emails.  For example, Section 1006.6(b) of the proposed rule prohibits collectors from contacting consumers at unusual or inconvenient times or places.  The proposed rule then provides that attempting to contact a consumer at the consumer’s work phone number or work email is presumptively inconvenient.  (Future blog posts will explore the narrow circumstances when such numbers can be contacted.)

Similarly, attempting to contact the consumer before 8 a.m. or after 9 p.m. in the consumer’s time zone also is presumptively inconvenient.  If the consumer’s time zone is unknown to the collector (perhaps because the consumer’s cell phone and zip code are different), the NPRM would require the collector to only contact the consumer in a window that is simultaneously compliant in all potentially applicable time zones.  Since consumers commonly retain their cell phone numbers as they move around the country, this could present challenges if it significantly decreases the windows within which collectors can contact consumers to assist those consumers to resolve their debts.  A communication is deemed “sent” purposes of compliance with these time window requirements based on when the collector sends the communication to the consumer and not when it is actually received by the consumer.

In addition to these prohibitions, the proposed rule would further prohibit collectors from contacting consumers at other times or places that the collector “knows or should know” are inconvenient.  The Bureau provides a number of examples in the NPRM’s official commentary in an attempt to illustrate this standard and what language is “sufficient” to trigger the collector’s knowledge that the contact is inconvenient.

For example, if a consumer states that he or she cannot talk “at this time of day,” “during these hours,” “during school hours,” or “this is not a good time,” at that point, the collector is deemed to know that further contacts at the location or during that window of time are inconvenient for the consumer, and therefore, prohibited.  However, this standard could prove challenging because it turns on the collector’s understanding of the consumer’s statements during a communication and whether they “sufficiently” convey that the time or place is inconvenient.  What does “during school hours” mean?  How does the collector understand if that means the consumer is in school during the day, at night, only three times a week?  What does “at this time of day” mean?  Does it mean at the time the collector called until the top of the next hour?  A three-hour window?

As we have seen in litigation involving the FDCPA, TCPA, and other similar statutes, attempting to interpret subjective consumer statements and directions in order to avoid potential liability under amorphous standards like “should know” is, at best, often challenging and inconsistent.  For one, how do you calibrate everyone’s interpretation of what the consumer said?  What if the consumer hangs up and clarification is needed to understand what the consumer actually wanted?  It is extremely difficult to implement concrete, clear training standards around these types of subjective, vague legal standards, and we anticipate comments on whether the “should know” standard is appropriate or if more definitive standards and guidelines are necessary.  Indeed, offering more specific guidance could help consumers and collectors alike by allowing consumers to understand how to clearly convey their wishes while reducing potential (and costly) litigation risks for collectors.

Similarly, the proposed rule states that a collector should know that any previously identified inconvenient times or places made known to the creditor or a prior collector by the consumer are inconvenient and prohibited absent the collector receiving consent directly from the consumer to resume contacts at those previously identified inconvenient times or places.  This imposes a substantial information transfer requirement as a debt is assigned or otherwise transferred throughout the collections process.  As a result, increased demands for contractual representations and warranties to reduce potential risk seem likely to protect against potential errors in recording and/or transferring such data to the current collector.

Under the NPRM, consumers retain the ability to allow calls at times or places that are inconvenient with proper consent.  However, the NPRM is clear that consent to receive calls at inconvenient times or places cannot be obtained by the collector in the same communication that led to the collector learning of the inconvenience.

The NPRM also suggests that collectors are barred from contacting a consumer at a work email or work telephone if the collector knows that the employer bars its employees from receiving such communications at work.  As currently stated, this requirement seems to demand that collectors maintain an internal database of employers who prohibit such communications and then scrub all emails and phones numbers against that list (as well as review their entire collections file to ensure they know where the consumer works when such information was included in the file received by the collector, something the Bureau suggests would be appropriate to do).  This seems to pose a daunting compliance task and may be superfluous in that the Bureau already states that contacts at work numbers and work emails are presumptively inconvenient.  Or, perhaps the Bureau means exactly what it says here – that even if a consumer consents to being contacted at work, if the collector knows the consumer’s employer does not allow its employees to receive such communications from other collection experiences or otherwise, the Bureau expects the collector to protect the consumer from violating the employer’s prohibition.  Clarification is needed on this point – do consumers have the right to consent to communications at work if that is their preference in order to resolve their debt or not?

Finally, it is not clear that Section 1006.6(c)’s statement that a consumer’s cease and desist request or refusal to pay request must be submitted “in writing” is something that should be accepted at face value.  On the one hand, through this statement, the Bureau likely is attempting to ensure that collectors are aware that written cease and desist requests can be delivered through available electronic channels (text and email), as well as by mail.  But collectors will be hard pressed to justify disregarding a verbal request by phone for a cease and desist because not honoring such a request not only risks a violation of the FDCPA’s various prohibitions against harassment and unfair treatment, but also risks TCPA and potential state law violations.  Alternatively, perhaps this section supports the argument that a verbal statement that merely states “stop calling me” is not be sufficient to support an argument that the consumer requested a cease and desist, as opposed to simply a stop calling request specific to that number.  This remains yet another of the many areas that are unclear and likely will fall to courts to resolve in future litigation.

We look forward to working with our clients and the collections industry to address these and many other areas in the coming months.


The Washington, D.C. Department of Insurance, Securities, and Banking (DISB) has published a Bulletin reminding those who service student education loans in the District of Columbia of their obligation to file an annual report.

Section 3014 of the DISB’s regulations, finalized August 10, 2018, requires that a licensee submit an annual report, on or before January 30 and in a form prescribed by the Commissioner, describing the number of student loans sold, assigned, or transferred during the preceding calendar year and any other information required by the Commissioner. The Bulletin does not state that the annual report form has been finalized, although it is anticipated that the DISB will release the report in the next month. The Bulletin also does not state whether the DISB will require an annual report for calendar year 2018 and, if so, when licensees must file such a report. Failure to file a timely report is subject to a late penalty of up to fifty dollars per day.

Because the federal district court for the District of Columbia found provisions of the District’s student loan servicing law to be preempted by the Higher Education Act in Student Loan Servicing Alliance v. District of Columbia, et al., the Bulletin clarifies that “a licensee is only required to provide information on the licensee’s non-federally owned loans.”

The CFPB has issued a plan for the periodic review of its rules that have a significant economic impact upon a substantial number of small business entities.  It also announced that it was launching the first such review, which will look at the overdraft rule adopted in 2009.

Rules Review Plan.  Section 610 of the Regulatory Flexibility Act requires every agency to publish in the Federal Register a plan for the periodic review of the agency’s rules that have a significant impact on a substantial number of small business entities (610 Review).  The plan must provide for a review of the relevant rules within 10 years of a rule’s publication as a final rule.  The purpose of a 610 Review is to determine whether a rule should be continued without change, or amended or rescinded, consistent with the objectives of the relevant statute, to minimize any significant economic impact of the rule on a substantial number of small business entities.

The Bureau plans to initiate 610 Reviews every year, with the review of a particular rule to begin about 9 years after its publication and completed within 10 years of the publication date.  A rule subject to a 610 Review can be one issued by the Bureau or by another agency whose authority was transferred to the Bureau, such as the Federal Reserve Board.  The Bureau plans to publish a list of rules that it plans to review in the upcoming plan year and, for each rule to be reviewed, a notice that invites public comment on the rule.

It intends to conduct a 610 Review “based on information on hand, relevant literature, and information submitted by the public in response to the Bureau’s request for comment.”  Also, the Bureau “may exercise its discretion to request additional data from relevant parties on a voluntary basis or otherwise obtain data from other sources, for example, by purchasing data from a third-party vendor.”  Factors to be considered by the Bureau in determining whether a rule should be continued without change, or amended or rescinded, consistent with relevant statute’s objectives, to minimize any significant economic impact of the rule on a substantial number of small business entities include: the continued need for the rule, the extent to hich the rule overlaps, duplicates, or conflicts with federal, state, or other rules, and the time since the rule was evaluated or the degree to which technology, economic conditions, or other factors have changed the relevant market.

Comments on the Bureau’s review plan must be filed within 60 days of its publication in the Federal Register.  The 610 Reviews are separate from, and in addition to, the assessments the Bureau conducts pursuant to Dodd-Frank Section 1022(d) of each significant rule or order and about which the Bureau publishes a report not later than 5 years after the effective date of the rule or order.  The Bureau has so far published three such assessment reports concerning the remittance transfers rule, the mortgage servicing rule, and the ability to repay/qualified mortgage rule.

Review of Overdraft Rule. The first rule to be subjected to a 610 Review is the rule adopted by the Federal Reserve Board in 2009 that amended Regulation E (which implements the EFTA) to add a rule limiting the ability of financial institutions to charge overdraft fees for paying ATM and one-time debit card transactions that overdraw a consumer’s account.  The rule prohibits overdraft fees from being charged on such overdrafts unless the consumer has affirmatively consented or opted-in to the institution’s payment of such overdrafts.  The Dodd-Frank Act transferred authority to implement the EFTA from the Board to the Bureau.

In the Supplementary Information, the Bureau states that it has found that the share of consumers who have opted in varies widely by institutions but generally is considerably less than half.  The Bureau notes that it estimated in a June 2013 white paper that the rule led to a material decrease in the amount of overdraft fees paid by consumers.  It also notes that there has been substantial growth in debit-card based transactions and that it has observed several changes in overdraft practices at financial institutions, including changes in the order in which transactions are posted, daily limits on overdraft fees, and “cushions” that preclude overdraft fees from being assessed on de minimis amounts.  The Bureau states that it “does not have reason to believe that these changes are attributable to the rule.”

The Bureau also references the four alternative versions of a revised opt-in model that were released in 2017 and that it has heard concerns regarding the requirement that the opt-in notice be substantially similar to the model form, including a desire among financial institutions to add additional information to the notice that they believe may be relevant to the consumer’s decision.

The Bureau ask for comment on the following topics:

  • The nature and extent of the economic impacts of the rule as a whole and of its major components on small business entities
  • Whether and how the Bureau by rule could reduce the costs of the overdraft rule on small business entities

Comments on the overdraft rule must be received within 45 days of the date the Bureau’s notice of the 610 Review and RFI is published in the Federal Register.

In November 2017, the CFPB published a notice in the Federal Register announcing that it planned to seek OMB approval to conduct online testing of ATM/overdraft disclosures with 8,000 individuals.  In addition to the June 2013 white paper, the CFPB has issued a July 2014 report and an August 2017 report on checking account overdraft services.


Last week, the House Financial Services Committee established two task forces, one on financial technology and the other on artificial intelligence.  Both task forces were established pursuant to resolutions adopted by unanimous consent.

The “Task Force on Financial Technology” will examine the current legal framework for fintech, how fintech is used in lending, and how consumers engage with fintech.  Its Chair will be Rep. Stephen Lynch (D-MA).

The “Task Force on Artificial Intelligence” will examine the impact of automation and machine learning and how companies and consumers can use AI to improve their lives.  Its Chair will be Rep. Bill Foster (D-IL).




On Wednesday, May 8, the Federal Trade Commission hosted a special forum exploring small business lending practices, regulations, and policies. The forum consisted of three panels: (1) Overview of the Small Business Financing Marketplace, (2) Case Study on Merchant Cash Advances, and (3) Consumer Protection Risks and the Path Ahead, along with the opening remarks of FTC Commissioner, Rohit Chopra, and closing remarks from FTC Bureau of Consumer Protection Director, Andrew Smith.

While the forum covered a wide array of topics, several important themes were apparent throughout. The first two panels, which focused on the general small business financing landscape as well as a deeper dive into the small business financing option of merchant cash advances, highlighted the difficulty of using APR as a metric for evaluating the fairness of small business financing. Several panelists, in order to promote “cost of capital” as the relevant data point, emphasized the often acute short term needs of small businesses, the lack of access to more traditional financing, and the high risk involved in small business lending. Panelists also emphasized how several small business financing tools utilize repayment options that are structured exclusively on seasonal (or otherwise sporadic) cash flow models, further complicating the use of an annualized metric like APR in determining the fairness of small business financing.

The panelists universally acknowledged the opportunity existing in the small business finance sector where there is significant need for services, potential for dramatic economic growth, and several practical and regulatory barriers to more traditional financing formats. While some panelists embraced the opportunity inherent in small business financing to revisit the traditional underwriting model and wholly divorce the process from an individual’s personal credit worthiness (which is often negatively impacted by entry into the entrepreneurial realm), others noted that the profitability margins available in shorter term loans make small business financing particularly ripe for abuse by unscrupulous players and in need of regulatory clarity.

One of the more contentious issues discussed by the second and third panels was the continued inclusion of confessions of judgment in small business financing instruments, particularly in merchant cash advances. While some panelists encouraged the abolishment of confessions of judgment entirely, others sought to continue their use in limited circumstances, such as where the loan amount (and accompanying risk) is particular high or where there is evidence of fraud on the part of the borrower. All noted that a complicating factor was the state-by-state variations in the procedure and enforcement of confessions of judgment.

Addressing potential policy concerns moving forward, the panelists strongly encouraged greater transparency in the small business financing process. In particular, the final panel suggested that the FTC explore the value of national minimum disclosure requirements for small business lenders that include elements such as APR, cost of capital, return on investment, and average monthly payment. Lenders represented on the various panels also expressed frustration with the uncertainty of whether they must comply with state consumer finance protections which increasingly have been extended to small business financing but generally do not apply at the federal level.

In his opening remarks, Commissioner Chopra noted “[t]he FTC is the sole federal regulator and enforcer in the non-bank small business financing marketplace.” As such, it seems any forthcoming rules and enforcement actions will largely emanate from the FTC, though lenders would be wise to continue to monitor the regulatory landscape broadly when looking to enter into or operating in the small business financing space.

The Bureau’s proposed debt collection rules, released last week, only apply to debt collectors, as defined under the Fair Debt Collection Practices Act.  So, why should creditors and servicers be interested in them?  Lots of reasons.

First, a number of provisions call for creditors (or by extension, servicers) to take action before a debt is assigned to a collection agency in order to facilitate the collection agency’s use of electronic communications with the consumer.  The various provisions that allow a consumer’s consent to receive electronic communications to be transferred from a creditor to a debt collector either require the creditor to keep records of the consumer’s prior E-SIGN consent, or require the creditor to make a disclosure to the consumer about placement of the debt with a collection agency, and then track any consumer opt-outs from receiving electronic communications from the debt collector.  In several instances, we believe these options for transferring consent (which are likely to facilitate the debt collection process and help avoid the potentially large impact of the call frequency restrictions) will require new system development and new data communication streams to be supported by creditors and servicers.  The long lead times associated with such system builds suggests that planning for them should begin in the near future.

Second, creditors will be required to exercise effective third-party oversight over debt collectors with whom they place accounts, and understanding the proposed rules – with all of their complexity – will be essential to doing this.  Creditors will also likely see increased documentation demands and requests for additional representations and warranties from their third-party agency and debt buying partners to maximize their ability to use existing consumer contact information to begin collection efforts.

Finally, there is the potential for the rules, when finalized, to be applied directly to creditors and servicers.  Although the proposed rules make occasional distinctions between creditor collections and those of third-party debt collectors, the main thrust of the proposed rules is to define unfair and deceptive practices with respect to debt collection by reference to principles like harassment and third-party disclosure.  Although there are good reasons to treat creditor and servicer collections differently than third-party collections, the potential exists for some portions of the proposed rules to be applied to creditors by analogy under the CFPB’s UDAAP authority, and indeed the Bureau released a Bulletin in 2013 stating that it would consider doing so with respect to certain provisions of the FDCPA.

For example, there are a number of proposed approaches (e.g., contact limitations, limited content messages, using text and email, etc.) that could have direct impacts on how collections are performed in the first-party environment.  It is not much of a stretch to anticipate that the CFPB will seek to impart those expectations into first-party collections through examinations and enforcement using its UDAAP authority.  Moreover, many states have debt collection statutes modeled after the FDCPA, but which also apply to creditors and servicers collecting debt.  The state agencies responsible for enforcing these statutes (or even private litigants) could argue that the unfair or deceptive practices defined in the final CFPB rules are also prohibited by these state laws.

We believe that creditors and servicers should carefully analyze the proposed rules and make a determination about which ones may apply, and how to incorporate them into their own collections efforts.  Sitting on the sidelines and dismissing the rules as applicable only to debt collectors does not seem like a viable option, in our view.

Be sure to tune in for our May 14 webinar, where we will discuss this and many other topics of interest related to the CFPB’s proposed debt collection rules.  The webinar registration form is available here.

One day after announcing its notice of proposed rulemaking regarding the Fair Debt Collection Practices Act (FDCPA), the CFPB held a town hall at the University of Pennsylvania to discuss the major aspects of the proposal, gauge stakeholders’ reactions, and field comments from the public.  The town hall consisted of opening remarks by Director Kraninger, a panel discussion with Bureau staff, industry representatives, and consumer advocates, and an open question and answer segment with members of the community.

On May 14, 2019, from 12 p.m. to 1:30 p.m. ET, Ballard Spahr attorneys will hold a webinar, “The CFPB’s New Proposed Debt Collection Rule.”  The webinar registration form is available here.

In her opening remarks, Director Kraninger emphasized that the Bureau endeavored to create “clear rules of the road” in which consumers know their rights and debt collectors know their limitations.  She also noted that the rulemaking provides long-needed guidelines for the application of the FDCPA to new technologies that allow twenty-four hour personal communication—the statute is more than forty years old and was written when the “ubiquity of cell phones was not even imaginable.”  According to Bureau statistics cited by Director Kraninger to underscore the need for clarity and modernization, the Bureau receives “tens of thousands” of debt collection complaints, there are more than eight thousand debt collection firms in the U.S., and one out of three persons with a credit bureau report has had debts in collection in a twelve-month period.

In explaining the Bureau’s rulemaking priorities, and its focus on debt verification, Director Kraninger noted that consumers frequently struggle to understand debt collection communications because of the addition of unexplained charges, the age of the underlying debts, and the addition of the a previously unknown third party collector.  She also acknowledged that the rule seeks to address the thousands of private court actions faced by debt collectors as a result of the FDCPA’s ambiguities and that those ambiguities have been resolved differently by different federal courts.  In her opinion, the resulting proposal is a “balanced set of provisions” “grounded in common sense” and resulting from “rigorous economic market analysis” created “deliberately and transparently” through the Bureau’s rulemaking process over the past five years.

Bureau Research, Markets and Regulations Associate Director David Silberman moderated the discussion that followed and External Affairs Policy Associate Director Andrew Duke provided introductory remarks. Participating in the discussions for the Bureau were Acting Deputy Director Brian Johnson, Research, Markets, and Regulations Policy Associate Director Tom Pahl, and Director Kraninger.  Industry representatives included Mark Neib of ACA International, Stephanie Eidelman of the iA Institute, and Jan Steiger of the Receivables Management Association International.  Consumer advocates included April Kuehnhoff of the National Consumer Law Center, Patricia Hasson of Clarify, a regional credit counseling service, and Michael Froehlich of Consumer Legal Services of Philadelphia.

Generally, industry representatives praised the Bureau for its engagement with industry through the rulemaking process, although they questioned whether the resulting proposal was based on a thorough cost-benefit analysis and sufficiently supported by data.  In particular, industry representatives emphasized that a “one size fits all” approach to communications limitations was misguided because of the different rates of consumer responses and engagement between different types and ages of debt.  Industry representative emphasized that any final rule must address consumers who are looking to pay, but also reflect the reality that legitimate collectors experience a wide array of consumer approaches to resolving their debts.

They also argued that any inefficiencies created by the proposed rule will result in higher credit prices and restricted access to credit.  When prompted for specific improvements to the proposed rule, including communications limitations, industry representatives deferred, indicating that they intend to address those issues in the written comments they will submit after they have had the opportunity to consult with their membership.  Generally, however, industry representatives agreed that limiting communications does not serve the interests of the consumer because debt buyers may receive a handful of potential numbers for a consumer and speaking with consumers is the most effective means of resolving unpaid debts.

In contrast, consumer advocates largely viewed the rulemaking as a missed opportunity to protect consumers, objecting to a proposed rule they saw as allowing excessive communications, sanctioning the implicit disclosure of debts to third parties through “limited purpose” communications, and permitting the use of hyperlink electronic communications without appropriate consent or assurance that consumers can access information through that medium.  Consumer advocates also noted that the proposed rule may weaken protections regarding the collection of time-barred debt.  (The proposed rule prohibits threatening litigation when the collector knew or should have known the debt was outside of the statute of limitations when some federal courts have interpreted the FDCPA to provide strict liability for such conduct.)  Consumer advocates also generally criticized the Bureau for dropping certain 2016 proposals, including a statement of rights and specific information about what will happen with a debt after the initial 30-day dispute period has passed.

The Bureau was asked whether its rulemaking had altered the scope of the FDCPA.  The Bureau responded by noting that it attempted to adhere to the statutory language wherever possible and did not attempt to alter the U.S. Supreme Court’s ruling in Henson v. Santander that a debt buyer does not become a debt collector merely by purchasing defaulted debts because it does not collect debts due another.  The panelists seemed to want to reserve judgment on the scope issue.  They did agree that it was unclear whether the proposed rule would increase consumer complaints.  Community members suggested that debt collectors be licensed and addressed the concept of “zombie debt” through several personal anecdotes.

The proposed rule will be subject to public for ninety days from publication in the Federal Register.


In this podcast, we discuss significant consumer arbitration developments since Congress’ Oct. 2017 override of the CFPB’s arbitration rule, including the prospects of proposed federal legislation, litigation developments, and how arbitration agreements can be revised to address risks created by those developments. We also review best practices for drafting consumer arbitration agreements and hear from Alan Kaplinsky about his experience as a witness at the Senate’s April 2019 arbitration hearing, the current political dynamics surrounding arbitration, and hearing takeaways.

Click here to listen to the podcast.