In what might be a positive development for auto finance companies, both the American Financial Services Association and the Consumer Bankers Association picked up on the same segment of the debt collection regulatory proposal the Consumer Financial Protection Bureau unveiled on Thursday. It’s a point CFPB director Richard Cordray made during the first half of his prepared remarks at a field hearing the bureau hosted to discuss the proposal in more detail.

“As part of our overhaul, we also plan to address first-party debt collectors soon, but on a separate track,” Cordray told the gathering in Sacramento, Calif., that included more than a half dozen CFPB officials as well as industry representatives and consumer advocates.

“The basic principles of the proposals we are considering are grounded in common sense,” he continued. “Companies should not collect debt that is not owed. They should have more reliable information about the debt before they try to collect. They would have to limit the number of attempts to make contact and should give consumers better information and more control over the process.

“Collectors also would have to make it easier for consumers to pursue disputes, and they would be barred from collecting on disputed debt that lack proper documentation. These same requirements would follow along with any debts that are sold or transferred to another collector,” Cordray went on to say.

Making the differential between first-party and third-party activities drew positive reactions from both AFSA and CBA.

“All AFSA member companies are first-party collectors and thus are not affected by this rule,” AFSA said in a statement sent to SubPrime Auto Finance News. “We’re pleased that the CFPB has made the important distinction between first and third-party collectors.

“It seems that the bureau may be proposing a rule down the line for first-party collectors,” the organization continued. “AFSA will continue to work to protect the activities of AFSA members if such a rule should be proposed in the future.”

Meanwhile, Richard Hunt, president and chief executive officer of the Consumer Bankers Association, appears poised to do the same thing as AFSA.

“We appreciate the bureau’s efforts to tailor these rules and set clear expectations for consumers and industry,” Hunt said in a statement distributed by CBA. “The bureau recognizes the importance of distinguishing between first-party creditors and third-party collectors in their rulemaking process.  This is important because the facts are clear: Consumers have very different experiences when dealing with banks as opposed to debt collectors. 

“Over the next few weeks, our team will do a deep dive into the study and the outline to better gauge the impact on our customers.  We look forward to further dialogue with the bureau to make sure all of us get this right,” Hunt went on to say.

And at the event, DBA International’s executive director Jan Stieger wasn’t a part of the panel discussion, but she took the opportunity to speak during the public comment segment of the hearing. DBA International is the nonprofit trade association that operates in Sacramento and represents more than 550 companies that purchase or support the purchase of performing and non-performing receivables on the secondary market.

“It’s DBA’s philosophy and we are truly committed to working with regulators and other policymakers at the state and federal level to ensure that new laws and regulations provide necessary consumer protections while not putting unnecessary barriers to the collection of legitimate debt,” Stieger said. An example, we have worked with the New York Department of Financial Services and their courts with the new rules they adopted in early 2015 as well as the California attorney general’s office and the legislature in crafting the passage of the California Fair Debt Buyers Act of 2013. I’m proud to say DBA was in support of that legislation.

“We have worked across the aisle and with many of the consumer groups represented on the panel to work our solutions to the issues,” she continued. “It was in the spirit of wanting to ensure consumer protection that DBA launched our certification program in 2013, a robust program with over 20 best practices, gold standards, that in most cases exceed current law at both the state and federal level.

“While we didn’t have a lot of time to look at the proposal that came out, I will say that a quick look reveals that most of the DBA standards that are in our certification program match very nicely with the proposal from the CFPB,” Stieger went on to say.

“DBA has worked closely with the CFPB these last three years in the rule-making process and we look forward to continuing to work with the CFPB in the next steps and express our desire for the CFPB to continue to look at the DBA’s certification program for best practices in an effort to provide the best consumer protection while ensure the payment of legitimate debt.”