United States: CFPB Outlines Long-Awaited Debt Collection Reforms

Anthony E. "Tony" DiResta and Kwamina Thomas Williford are partners and Brian J. Goodrich is an associate in our Washington DC office.


  • The Consumer Financial Protection Bureau (CFPB) released new proposals designed to "overhaul" the practices of the debt collection industry.
  • Key proposals include a cap on the number of times a collector may attempt to contact a borrower, new debt substantiation requirements and expanded consumer disclosures.
  • The Bureau will seek input from the public, consumer groups, industry and other stakeholders during the rulemaking process.

The Consumer Financial Protection Bureau (CFPB) released on July 28 new proposals designed to "overhaul" the practices of the debt collection industry. The proposals include sweeping changes to existing regulations, including a cap on the number of times a collector may attempt to contact a borrower, new debt substantiation requirements and expanded consumer disclosures. As proposed, the CFPB's new requirements would apply to third-party debt collectors and debt buyers; the proposals do not apply to first-party debt collectors.

The CFPB released its proposal in preparation for convening a Small Business Review Panel to gather feedback from small industry players. In addition to consulting with small business representatives, the Bureau will seek input from the public, consumer groups, industry and other stakeholders during the rulemaking process.

Requirements of the CFPB's Proposed Rulemaking

The CFPB's proposals, promulgated under the Fair Debt Collection Practices Act (FDCPA), would require significant operational changes for debt collectors and other actors in the industry throughout the debt collection lifecycle. The CFPB's proposals include:

New Debt Substantiation Requirements

Collectors would be required to have key information about borrowers and debts at critical junctures in the debt collection lifecycle. Critical junctures include prior to engaging in collection, after a consumer disputes a debt and before engaging in any debt-related litigation. The required information is designed to enable the collector to have a "reasonable basis" for believing that a particular consumer owes a particular debt before acting on it.

Requirement for Collectors to Review and Transfer Borrower Information

The Bureau's proposals would require subsequent collectors to obtain and review certain information arising from past collection activity prior to initiating their own collection activity. Specifically, the proposals would require subsequent collectors to obtain and review certain information that could either affect the subsequent collectors' obligations to comply with the FDCPA or facilitate collector behavior that may be beneficial to consumers. This information includes, for example, whether the consumer previously disputed the debt and whether it was substantiated; any time, place or method of communication that the consumer previously stated was inconvenient; and whether a previous collector provided a time-barred debt disclosure. The proposals would obligate prior collectors to transfer this information if the consumer provided it to them in the course of collection activity, but generally would not require collectors to affirmatively attempt to obtain the information.

Revised and Expanded Validation Notice and Statement of Rights

Under the proposals, validation notices would contain enhanced and clarified information about debts and consumers' rights. The notices would also include an action-item "tear-off" portion to facilitate consumers' exercise of their right to dispute debts. For example, under the new proposal, collectors would have to disclose to consumers if a debt is too old for a collector to bring a lawsuit against a borrower. The consumer would then complete the tear-off portion, choosing among multiple options why the consumer is disputing the debt, and then send that portion back to the collector.

New Limitations on Communications with Borrowers

Under the proposals, collectors would be limited to six communication attempts per week through any medium before they have reached a consumer. The proposals also allow a consumer to stop collectors from contacting them in specific ways, such as on a particular phone line, while they are at work or during certain hours. The proposals also include a 30-day waiting period after a consumer has passed away during which collectors would be prohibited from communicating with parties related to the deceased.

Additional Required Disclosures

The proposals require that collectors provide additional disclosures designed to address issues in the debt collection process that many consumers may not understand. Specifically, the proposals require that collectors disclose if they possess an intent to sue the borrower to collect on the debt. If so, the proposals require that the collector provide the borrower with additional information related to the legal process. Additionally, the proposals require a set of disclosures explaining the legal nuances associated with debts that are beyond the applicable statute of limitations or other debts that may be barred from appearing on borrowers' credit reports.

New Limitations on Debt Transfers

The proposals prohibit debt buyers from placing debt with or selling debt to 1) agencies subject to a judgment or order in the state in which the borrower resides or 2) agencies not licensed to purchase or collect debt in the state in which the borrowers resides.

Record-Keeping Requirements

The proposals require a debt collector to retain all records documenting the actions it took with respect to a debt for three years after its last communication or attempted communication with a borrower.

What Do the Proposals Apply To?

The proposals under consideration would apply to third-party debt collection agencies, loan servicers, debt buyers, debt collection law firms and other entities subject to the FDCPA. This includes smaller industry actors, such as firms or agencies that employ fewer than 20 employees. Notably, the proposals do not apply to first-party debt collectors and creditors; the CFPB's announcement stated that it would pursue reform of first-party debt collection practices separately.


Debt collection has been a large source of consumer complaints to the CFPB since the Bureau opened its doors. The CFPB's new proposals seek to address concerns uncovered by the CFPB through those complaints, as well as through the many enforcement actions the CFPB has conducted within the industry. Members of the debt collection industry are permitted to submit comments to the CFPB during the public comment period.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.