In early 2022, the Consumer Financial Protection Bureau announced that anyone would be able to submit a petition for rulemaking. Since then, there have been a number of petitions filed by consumer advocacy organizations, trade groups, and ordinary people. In most cases, these petitions remain “open” and can be commented on by anyone who chooses to do so. The CFPB recently published two petitions that it had closed, and both have something to do with the accounts receivable management industry.
Close ‘Credit Jail’: One petition, filed by Judy Young-Bird in February 2022, was for the CFPB to release consumers from having to pay a debt once it has been on a credit report for seven years. In some cases, debts are removed from credit reports after seven years, and Young-Bird wants collection activity to stop as well.
- Selling debt to third parties (for pennies on the dollar, she notes) and allowing the buyer to continue to “ravage” an individual’s credit score is not only usury, she says, but goes above and beyond what the original creditor should be collecting.
- Last week, the CFPB wrote to Young-Bird to let her know that it allowed comments on her petition for 60 days and two comments were filed. “The CFPB appreciates the concerns you have raised regarding debt collection practices. You have raised an important issue and we will continue to consider this as we evaluate existing regulations for potential updates,” the regulator wrote back to her.
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Require Proof of Debt: The other petition, filed by Pablo Alvarez also in February 2022, suggested that credit reporting agencies should require furnishers to submit proof that the debt exists, rather then just verify or confirm the debt is legitimate when a consumer files a dispute.
- The CFPB left this petition open for 60 days as well, it notes in its letter back to Alvarez, but nobody submitted any comments.
- “The CFPB appreciates the petition’s emphasis on the importance of proof of consumer debt in credit reporting. The CFPB recently announced it is considering a rulemaking on the topic of consumer credit reporting under the FCRA and will consider this proposal relating to disputes in the context of that ongoing process,” it wrote back to Alvarez.
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