The Consumer Financial Protection Bureau (CFPB) has reversed course about debt collection, and, as The American Banker noted, “in a big win for third-party debt collectors,” has said that banks, among other first-party creditors, must be responsible for accuracy of their consumer debt data.
In what the financial publication stated was an “about face” by the CFPB’s Director, Richard Cordray, the Bureau has now stated its realization of the difficulty in verification by parties that did not, in fact, originate those debts.
In a statement delivered by Cordray about debt collection at a consumer advisory board meeting this past week, “we have now decided to consolidate all the issues of ‘right consumer, right amount’ into the separate rule we will be developing for first-party creditors. Writing rules to make sure debt collectors have the right information about their debts is best handled by considering solutions from first-party creditors and third-party collectors at the same time.”
A formalized plan will be submitted by the end of this year or by early next year and is focused on third-party debt collection. A separate plan centered on first-party collection efforts will come separately and is “further off” in respect to timing, said the American Banker.
The third-party debt collection proposal had been issued last year by the CFPB.
Despite the accuracy of the data now being placed in the hands of the first parties, debt collectors still must make efforts to verify those debts.
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