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1 1 (February 3, 2021)

handle is hein.crs/govebng0001 and id is 1 raw text is: Congressional * Research Service CFPB Finalizes Two New Debt Collection Regulations February 3, 2021 The Consumer Financial Protection Bureau (CFPB) recently finalized two new regulations to implement the Fair Debt Collection Practices Act (FDCPA; 15 U. S. C. §§1692-1692f), which seeks to eliminate abusive debt collection practices by debt collectors. On November 30, 2020, the CFPB issued a final rule on how debt collectors may communicate with consumers. On January 19, 2020, the CFPB published a second rule clarifying what information debt collectors must disclose to consumers. This Insight provides an overview of the debt collection market and its regulation and analyzes major parts of the CFPB's two new rules. For more information about debt collection, see CRS Report R46477, The Debt Collection Market and Selected Policy Issues, by Cheryl R. Cooper. Debt Collection Market and Regulation When a consumer defaults on a debt, a third-party debt collector often collects the debt obligation rather than the original lender. Lenders contract with debt collectors to collect their debts. The U.S. debt collection market is large and impacts many consumers. According to a CFPB survey, approximately one- third of consumers with a credit bureau file reported being contacted by at least one lender or assigned debt collector trying to collect on a debt in the previous year. Debt collectors generally expect to collect only a fraction of the total value of any particular debt, knowing that some consumers will not pay back their debts in full. Therefore, both parties can negotiate the amount and payment schedule of the debt. 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, house) or garnishing a consumer's wages after obtaining a court order. Debt collectors have the option, but are not required, to furnish information about the debt to credit bureaus. Consumers do not choose the debt collectors with whom they engage. Therefore, consumer protection laws and regulations may be particularly consequential in this market. According to the CFPB, debt collection is the consumer finance market with the second-most complaints, accounting for 210% of the total complaints received in 2019. Congressional Research Service https://crsreports.congress.gov IN11590 CRS INSIGHT Prepared for Membersand Committeesof Congress

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