CFPB Debt Collection Field Hearing: Mixed Emotions

Dave Rudd

As I write this, the CFPB Field Hearing on Consumer Debt Collection in Seattle just finished. I have mixed emotions about it:

First, it seems easier to tear down and complain than to build-up and praise.

Second, the consumer protection groups and their attorneys are passionate about their position.

Third, the debt collection industry is passionate about their work and the good they provide to businesses, the U.S. economy and debtors.

Fourth, the CFPB seems interested in listening to both sides of the debt collecting issue and then implementing policies that will help both debtors and the ARM industry. (I am not yet convinced that they will listen equally to consumer advocates and our industry, however.)

In his opening remarks, Richard Cordray, Director of the CFPB, shared his own collecting experience. He stated that years ago he was a County tax collector. He learned from the experience that it really is unfair that some people shirk their obligation and don’t pay their taxes. On the flip side, he said he also learned that some people, through no fault of their own (sickness, divorce, elderly, job loss, etc.), simply have financial challenges. Director Cordray said he strongly believes that debt collection can be done in the right way. He mentioned the fact that 1 in 10 Americans (approximately 30 million) are currently in the debt collection process with an average outstanding debt of $1,500.

Following Director Cordray’s comments, a panel discussion of consumer advocacy attorneys and debt collection industry experts was conducted. Representatives from the CFPB asked the panel questions.

Disclaimer: As a provider of products and services to the collection industry, I am certainly biased. This industry helps me pay my own bills and provide for my family. I also strongly believe the debt collection industry provides a valuable role in our economy. That said, I was bothered by how strongly the consumer protection representatives attacked our industry. One of their many ridiculous accusations was that the ONLY objective a collection agency has in calling someone at their home is to annoy and harass them into paying their debt. (Fact: Contacting a debtor via the phone is an effective method to discuss payment options, explain the debt, educate about financial practices, etc.)

The debt collection industry panelists represented our industry well. Carrie Finney, Bill Allen and Chad Benson responded fairly to hostile comments by the consumer groups and adequately answered questions by the CFPB. Throughout their responses, our industry panelists made the following very clear:

• Our industry is very interested in complying with clearly stated laws and regulations, but some regulations (specifically FDCPA and TCPA) need to be modernized.

• Our industry wants a spot at the table to give input and help find solutions to problems that do arise in the industry.

• Our industry is interested in finding the bad acting companies and having them expelled from the industry.

After the panel discussion, the meeting was opened to comments from the audience. Unfortunately, the majority of comments negatively blasted debt collectors.

I agree with industry experts that we need to find the “bad apples” and expel them from our industry.

I agree with industry experts that we need to partner with the CFPB—and even the consumer advocacy groups—and clarify the conflicting laws and regulations governing our industry.

I agree with Director Cordray that debt collection can be done “the right way.”

The CFPB has a big job to accomplish. Define “the right way to collect.” Help clarify and modernize conflicting laws and regulations. Find and expel “bad apples” from the industry. AND satisfy the demands of both the consumer advocacy and collection industry groups.

The debt collection industry is here to help. Just ask.