Letter to the CFPB on Defining Larger Participants of the Consumer Debt Collection Market

Dear Acting Director Vought,

The American Bankers Association welcomes the opportunity to respond to the Consumer Financial Protection Bureau's (Bureau) advance notice of proposed rulemaking (ANPR) that seeks information to determine whether to amend the Bureau’s test to define larger participants in the consumer debt collection market. That test was initially established in 2012 by the Bureau's Defining Larger Participants of the Consumer Debt Collection Market Final Rule.

A cornerstone of Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) was the authority given to the Bureau to establish a supervisory program for nondepository institutions to ensure that federal consumer financial law is "enforced consistently, without regard to the status of a person as a depository institution, in order to promote fair competition." Congress enacted this provision because the mere existence of consumer protection laws and regulations does not ensure compliance with those laws. Instead, the laws must be enforced fairly, comparably, and transparently to ensure that legal and regulatory obligations are observed. This is best achieved through robust federal supervision. Supervision encourages entities to expend the resources to develop the practices, procedures, training, and other components of an effective compliance management system that promotes the entity’s compliance with consumer protection laws. As nonbank financial companies increasingly offer services that closely resemble traditional banking services, these companies should be held to comparable regulatory standards. Without supervision, nonbanks may operate without the consumer protections that banks are required to uphold.

Under section 1024 of the Dodd-Frank Act, the Bureau has supervisory authority over all nondepository institutions that offer or provide to consumers mortgage or foreclosure relief services, private education loans, or payday loans. In addition, Congress gave the Bureau supervisory authority over "larger participant[s] of a market for other consumer financial products or services" when the Bureau issues a rule to define the larger participants in that market. ABA agreed with the Bureau’s 2012 rule defining larger participants in the consumer debt collection market as entities with more than $10 million in annual receipts resulting from consumer debt collection activities. The promulgation of this rule – and the Bureau’s subsequent supervision of larger entities in this market – has helped to establish comparable accountability across all providers in this market.

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