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1 1 (June 6, 2019)

handle is hein.crs/goveagw0001 and id is 1 raw text is: Congressional . Research Service ~ ~~ ~informing the legis!ative debate since 1914___________________ CFPB Proposes New Debt Collection Regulation June 6, 2019 On May 21, 2019, the Bureau of Consumer Financial Protection (CFPB) issued a Notice of Proposed Rulemaking to implement the Fair Debt Collection Practices Act (FDCPA; 15 U.S.C. @ 1692). Congress passed the FDCPA in 1977 to eliminate abusive debt collection practices by debt collectors. The CFPB's proposal would clarify how certain debt collectors may communicate with consumers and what information they must disclose. The CFPB is accepting comments on the proposal until August 19, 2019. This Insight begins with an overview of the debt collection market and its regulation. It then analyzes major parts of the CFPB's proposed rule and reactions to the proposal by various stakeholders. Debt Collection Market and Regulation When a consumer defaults on a debt, the debt obligations are often collected not by the lender to whom the debt is originally owed, but rather by a third-party debt collector (hereinafter referred to as debt collector). Debt collectors either contract with the original lender to receive a share of any amount they collect on behalf of the original lender or buy the debt obligation in full. If a consumer does not settle a debt, the debt owner often has several options, such as taking the collateral for secured loans (e.g., car, mortgage) or garnishing a consumer's wages after obtaining a court order. According to a CFPB survey, approximately one-third of consumers with a credit bureau file reported being contacted by at least one creditor or debt collector in the previous year. The FDCPA is the primary federal statute regulating the debt collection market. Among other things, the FDCPA prohibits debt collectors from engaging in certain types of conduct (such as misrepresentation or harassment) when seeking to collect debts from consumers, requires that debt collectors disclose certain information to consumers, and grants consumers the right to dispute an alleged debt. The Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203, @ 1002 and @1011) granted the CFPB authority to write regulations to implement the FDCPA. The FDCPA requires that a debt collector must send a consumer a validation notice, which discloses certain information about the debt to the consumer, prior to taking action to collect a debt. In general, debt collectors expect that they will collect only a fraction of the face value of any particular debt, knowing that some consumers will never pay back their debt in full. Therefore, both parties can negotiate the Congressional Research Service https://crsreports.congress.gov IN11140 CRS INSIGHT Prepared for Members and Committees of Congress

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