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NAFCU Senior Regulatory Affairs Counsel Kaley Schafer yesterday sent the CFPB a letter in response to its supplemental notice of proposed rulemaking on debt collection practices pertaining to time-barred debt. Schafer urged the CFPB to exclude credit unions from any rulemaking and reiterated that credit unions are not debt collectors as defined in the Fair Debt Collection Protection Act (FDCPA), nor do they participate in abusive debt collection practices.

“NAFCU reiterates that the Bureau should only exercise their rulemaking authority under the FDCPA to alleviate any ambiguities regarding its application to creditors,” wrote Schafer. “In addition, the Bureau should not use a strict liability standard given that the statute of limitations is rooted in state law. Lastly, the Bureau should ensure that any time-barred disclosure does not increase costs or liability for creditors who utilize a third-party debt collector.”

Schafer noted that the proposed rule creates uncertainty prohibiting third-party debt collectors from bringing a lawsuit and urged the bureau to recognize the difficulty in determining whether a debt is time-barred.

In addition, Schafer offered support for the CFPB’s efforts to inform consumers of debts where the statute of limitations has expired; however, she noted that the proposed notice requirement “may impose additional costs and burdens on the responsible party, which could indirectly affect credit unions as creditors.”

“The Bureau should ensure that costs are not passed on to creditors,” wrote Schafer.

Debt collection was included on the CFPB's fall rulemaking agenda and NAFCU has continuously urged the bureau to exempt credit unions from any rulemakings on the issue. View the association’s various resources on debt collection available here.