Key takeaways

• The Consumer Financial Protection Bureau’s (“CFPB”) proposals for regulating the debt collection industry, published in connection with its required consultation process under the Small Business Regulatory Enforcement Fairness Act (“SBREFA”), promise to bring significant changes in compliance to the consumer debt collection industry, particularly with regard to information integrity and substantiation of debt, litigation and time-barred debt practices, and collection communication practices.
• Although the current outline of proposals does not directly address first-party creditors, the requirements under consideration could have a substantial impact on such creditors, as they both will be indirectly required to maintain and provide certain types of information, and will be responsible for overseeing the compliance of their third-party collectors.
• The CFPB also plans to address additional requirements for first-party creditors in a subsequent SBREFA consultation process that might seek to “level the playing field” between third-party debt collectors and first-party collectors with respect to prohibited practices.  Given this possibility, creditors should consider the extent to which they might leverage pre-existing procedures in order to mitigate some burdens of additional CFPB-imposed requirements.