Angela Meyster, regulatory affairs counsel for the National Association of Federal Credit Unions, urged the CFPB last week to consider how its proposed rulemaking on debt collection practices may impact credit unions.
The rulemaking proposed by the CFPB requests comment and information about how the debt collection system works for both financial institutions and consumers. The CFPB is the first federal agency granted authority to issue rules implementing the Fair Debt Collection Practices Act, which prohibits third-party debt collectors from using questionable tactics and implements regulations on communication with the consumer.
Additionally, the CFPB is authorized under the 2010 Dodd-Frank Act to regulate deceptive and abusive debt collection practices—or UDAAPs—and to require disclosures that help consumers understand financial products.
Meyster said that while credit unions are generally not considered debt collectors under the FDCPA because they do not collect debts on behalf of other parties, they would still be subject to Dodd-Frank’s rules on UDAAPs.
“NAFCU urges the CFPB to distinguish between credit unions collecting on their own behalf and third-party debt collectors in its regulatory efforts,” Meyster said. “The CFPB should not promulgate regulations under its FDCPA authority that would apply to credit unions or other financial institutions that are not currently subject to the FDCPA requirements.”
Meyster pointed to the FDCPA requirements and said that credit unions, unlike third-party debt collectors, are member-owned and answer directly to their members.
“Credit unions’ priorities are to bring the loans current and return to normal member service relationships,” Meyster said. “This continuing relationship is very different from the relationship between a third-party collection agency and a debtor associated with an account referred to collection agency. Accordingly any regulatory regime built under the FDCPA’s authority should not apply to credit unions collecting on their behalf.”