Good News, Bad News in Latest Debt Collection Rule

Advocates at consumer group Consumer Action break down the elements of the Consumer Financial Protection Bureau’s (CFPB) new rule on debt collection.

The good news: “debt parking” may be prohibited because the new rule requires debt collectors to reach out to consumers and notify them before posting debts to credit reports. That’s helpful, because consumers will now have an opportunity to dispute a debt BEFORE it impacts their credit score.

The bad news: Debt collectors may get virtually unlimited electronic access to consumers, including the ability to call, email, and use social media channels to reach consumers.

Linda Sherry, director of national priorities for Consumer Action said of the rule regarding consumer contact:

“The last thing consumers who are having trouble paying their bills need is to be besieged by debt collectors with a green light to hound them by text, email and social media. We hope that a reinvigorated CFPB — with consumer-focused leadership — will revisit some of the excesses extended to industry.”

Consumer Action had urged the Bureau to require collectors to get individuals’ consent before sending them texts and emails about debts they presumably owe. In a decision that places more of a burden on consumers than collectors, CFPB Director Kathy Kraninger created a rule that lets collectors send electronic messages to consumers without their permission. Instead, consumers were given the option to opt…