Debtors may take some comfort in recent news regarding trends in debt collection enforcement. A recent ruling from the Eleventh Circuit Court of Appeals held that the transmission of personal consumer data from a creditor to any third party may be a violation of the Fair Debt Collections Protections Act (FDCPA). This is huge news given that it has been common practice for a long time for creditors to engage in this kind of activity. It seems that the court ruling will put a halt to that activity for the time being. However, this is not the only new regulation that creditors need to be on the lookout for now. It seems that the entire landscape of debt collection is beginning to change. Read on for more debt collection trends for 2021.
It is perhaps not surprising to learn that the COVID-19 pandemic has had an impact on the debt collection industry. The debt collection industry was under full assault as the pandemic began to sweep across the United States in March and April of 2020. A piece from The Intercept at that time shed some light on just how difficult times were for the industry and how it sought to fight back:
DEBT COLLECTORS, facing growing demands to freeze the collection of debt across the country amid the economic hardship caused by the coronavirus pandemic, are mobilizing their lobbyists to push back.
In New York, residents are receiving a 30-day reprieve from the collection of state-owned medical and student debt. Chicago Mayor Lori Lightfoot this week similarly announced an end to the collection of city debt, including late parking fines, through at least April 30.
It was an easy way for politicians to put political points up on the board. They knew that they could use the debt collection industry as their punching bag as they sought to show their constituents that they were doing something to alleviate some of the economic pain that millions of Americans faced all at the same time. It might have been a clever political move, but it was not something that the industry took lying down. They fought back against these reprieves and other measures to try to maintain some of their revenue streams going forward. After all, the debt collection industry employs workers as well.
The industry has not been able to catch a break even after lockdowns eased and some aspects of life began to return to normal. The state of California and its tens of millions of residents will have new regulatory protections set to go into effect on January 1, 2022. These protections are established under a law called The California Debt Collection Licensing Act (CDCLA). This law is designed to require that all debt collectors seeking to collect debts in the state first register for a license with the state to do so. This applies regardless of the physical location of the offices of the debt collector, and it applies to both first and third parties in the industry.
Obviously, this layers yet another set of regulations on one of the most highly regulated industries in existence and makes it that much more difficult for the companies in this industry to do their work. Most in the industry believe that is the objective of the law, and see it as an overreach by the state government.
The Consumer Financial Protection Bureau (CFPB) is pushing enforcement harder than ever to protect consumers from illegal or sketchy practices conducted in debt collection. This is their role as a government institution, and there is nothing wrong with them doing everything within their power to fulfill their objective. However, their zeal to prove to the public that they are helping protect them may cause them to go beyond their mandate at times. It is yet another factor that the debt collection industry must keep an eye on at this time.
There are a lot of changes weighing down the debt collection industry at this time, and they are constantly changing. If you want the latest on these changes and what you can do to adapt to them, please contact us for all of the latest news and information and how to improve your collections efforts.