CFPB Proposes Changes to Debt Collector Rules
On May 7, 2019, the Consumer Financial Protection Bureau (“CFPB”) detailed a plan to update the Fair Debt Collection Practices Act. The proposed rule would reduce the number of phone calls collectors can make to debtors, while providing clarity as to how collectors can use other communication methods, like email and text messages. The rule would limit the number of calls a collector can make to collect a specific debt to seven per week. Additionally, if a collector engages in a telephonic conversation with the debtor, the collector must wait a week before calling the debtor again. The rule, however, would not limit the number of emails or text messages that a debt collector can send to try and collect on an outstanding debt. The plan would clarify that emails and text messages are governed by the same rules as phone calls, including a bar on contacting consumers before 8AM or after 9PM and contacting consumers at their workplaces in the majority of situations. The proposed rule would also provide sample templates for how collectors could provide required disclosures when making electronic communications. Debtors could opt-out of any of the communication methods under the proposed rule. The proposed rule applies to third-party collectors who are typically either sold the debt from the original creditor or hired by the original creditor to collect on their behalf. The CFPB is inviting public comments on the proposed rule before finalizing any changes to the existing rule.
Sanders, Ocasio-Cortez Introduce Proposal to Cap Credit Card Interest Rates
Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez introduced proposed legislation in both chambers of Congress aimed at capping the interest rate on consumer credit cards and loans at 15%. The “Loan Shark Prevention Act” would also allow states to maintain caps below the proposed 15%. In addition,
the proposed legislation would create a postal banking system, offering basic financial services at U.S. post office branches. Sanders and Ocasio-Cortez stated that they introduced the legislation to protect the public from what they consider to be unfair rates that create a “debt trap for working people.” The proposal was criticized by many in the financial services industry as potentially restricting credit access to people who might need it the most.
FinTech Task Force Established in U.S. House
Members of the U.S. House of Representatives launched a new task force to examine a number of issues related to financial technology. The FinTech Task Force, created by the House Financial Services Committee, will review a number of issues, including blockchain, cryptocurrencies, lending and alternative underwriting, and data privacy. The Task Force will be chaired by Massachusetts Rep. Stephen Lynch and will contain a number of members of the Congressional Blockchain Caucus, a bi-partisan collection of members of Congress who regularly advocate for a hands-off approach to the regulation of blockchain and cryptocurrency companies.