The Consumer Financial Protection Bureau proposed an overhaul of the debt collection industry, which restricted the number of calls that can be placed to consumers, allows consumers more tools to dispute charges, and will require collectors to get more documentation on what consumers owe. This would be one of the most extensive overhauls of the debt collection industry since the creation of the Fair Debt Collections Practices Act 40 years ago.

Regulators say the new rules will bring better accountability to the market, but also realize that the proposals are likely to be met with strong opposition. The current proposals will only affect third-party debt collectors. The new rules state that once a debt is considered valid, the debt collector cannot call debtors more than six times per week. If the consumer disputes the legitimacy of the debt, the proposal requires collectors to provide consumers with easier and more understandable ways to challenge contested debts. Currently, most disputes are handled in writing. The new rules propose notices receive a “tear off” portion where consumers can state why the amount of the debt is wrong or invalid. If this happens, the debt collectors would be required to freeze collection activities until enough evidence is collected to substantiate or refute the debt. The CFPB will also propose a 30-day waiting period on any collection attempts from the surviving spouse or child of a debtor who has died.

Advocacy groups praised the new proposals, but don’t think they go far enough. Margot Saunders of the National Consumer Law Center believes that the new rules don’t address some of the most troublesome elements in debt collection, like the continuation of debt collectors solely relying on inaccurate databases.

New regulations will force debt collection agencies to become more organized and to perhaps utilize professional payment collectors who have the ability to abide by any new policies, while maintaining debt collection merchant account profits. EMB is the preferred processor for Collections Max, and Industry Leading Collections Software. We have assisted thousands of collections agencies and will acquire the debt collection services you need to keep your business profitable and in compliance with federal regulations.