The National Consumer Law Center (on behalf of its low-income clients) and Consumer Federation of America appreciate the opportunity to submit these comments on the Consumer Financial Protection Bureau’s (CFPB) advance notice of proposed rulemaking (ANPR) on whether to propose a rule to amend the test to define larger nonbank participants in the consumer debt collection market. Entities defined as larger participants are potentially subject to supervision by the CFPB.
We oppose changing the definition of larger participants in a way that would reduce the number of entities that qualify for supervision, which would do nothing to achieve the CFPB’s stated goals of reducing compliance burdens or avoiding the diversion of limited CFPB resources. The CFPB is not required to and does not conduct examinations of all larger participants, and many are never examined at all. The CFPB conducts only a limited number of examinations each year, and the CFPB can limit the resources devoted to supervision and the number of companies examined without changing the larger participants definition.
But amending the definition would cause harm, including depriving the CFPB of the flexibility to examine a company if problems arise or to spot check compliance by entities of different sizes. The CFPB would have less information about market practices and compliance challenges by mid-sized companies, making it harder to tailor regulation to them. Companies would have less incentive to respond to consumer complaints or to ensure that they are complying with the law. Law-abiding companies would be harmed by unfair competition. Companies that escape supervision, a confidential, non-adversarial compliance tool, might instead face enforcement actions.
Supervision of a broad range of debt collectors is critical to implementing Congress’s vision of a national minimum level of protection for all consumers under the Fair Debt Collection Practices Act (FDCPA) and preventing compliant debt collectors from being competitively disadvantaged in the marketplace. Supervising a broad range of debt collectors is also important because state laws and the ability to enforce these laws vary, and recent Supreme Court decisions about standing in federal court caused a significant decrease in private FDCPA enforcement actions. Additionally, making supervision broadly applicable to debt collectors is especially appropriate given the need to monitor implementation of federal debt collection regulations that took effect in 2021 and the adoption of new debt collection technology.
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