Last week, on the day of the deadline to submit comments, the Consumer Financial Protection Bureau (CFPB) quietly withdrew its proposal to conduct a consumer survey about debt collection disclosures. 

The CFPB's plan - originally proposed earlier in 2017 - was to conduct a web-based survey of 8,000 individuals as part of its research on debt collection disclosures, and to use the information gathered from the survey “to help assess whether it can improve the clarity of forms used during debt collection to facilitate consumer decision making,” as well as to help inform the development of future consumer disclosures. 

A first round of comments on the proposal closed in June. insideARM wrote this article about the survey and those comments, highlighting one by AFSA (the American Financial Services Association). The gist of their submission was that – just so long as the survey relates only to third party collectors -- they are pretty much fine with it. The association said the biggest problem they see with the CFPB’s approach to debt collection is that it treats collectors and creditors the same way. They suggested this is not appropriate because of the difference in motivation to treat customers with respect.

Another comment, from the American Bankers Association, was critical of the proposal because it did not contain enough information to provide meaningful comment. Indeed, the CFPB went back to the drawing board (or at least the tweaking board), revised the proposal, and re-opened a comment period, which ended on December 14, 2017 -- the same day the proposal was withdrawn. ACA International also submitted comments in August on the original proposal, and on December 14 on the revised proposal. The association told its members last week,

"In ACA’s view, given the CFPB’s cursory dismissal of comments submitted by ACA regarding significant flaws in the Bureau’s collection request, it appears the CFPB failed to meaningfully consider the input it received in response to its original notice and instead approached the important PRA process as a mere check-the-box exercise."

insideARM Perspective

It was always a little odd that the Bureau intended to release a proposed debt collection rule prior to conducting this survey. Until Cordray's departure just before Thanksgiving, it was widely believed the release of a NPR (Notice of Proposed Rulemaking) was imminent. In July, a CFPB announcement specifically noted,

"Building on feedback received through the SBREFA panel, we have decided to issue a proposed rule later in 2017 concerning debt collectors’ communications practices and consumer disclosures. We intend to follow up separately at a later time about concerns regarding information flows between creditors and FDCPA collectors and about potential rules to govern creditors that collect their own debts.” (emphasis added)

Why make a rule regarding disclosures before planning to do research on the effectiveness of disclosures?

Anyway, now it may be moot. Or maybe not.

Acting Director Mick Mulvaney has put a 30-day hold on all rulemaking (that's about 1/2 way through now) as he gets his arms around everything currently on the bureau's plate. It's not surprising that he would pull the plug on a survey expense. Meanwhile, former CFPB Director's pick to temporarily lead the bureau (until President Trump can get an appointee approved in the Senate), Leandra English, will have another hearing this Friday related to her lawsuit claiming to be the rightful acting director. On November 28 a District Court judge denied her request for a temporary restraining order to block Mulvaney from taking the job. She has since filed for an injunction in Federal Court. Unlike a restraining order, an injunction can be appealed if denied. English's attorney, Deepak Gupta, said about the denied TRO,

“I think everyone understands this court is not the final stop, this judge does not have the final word on what happens in this controversy.” 

Should the judge rule in her favor on December 22, we may see another very confusing day (or longer) at the CFPB, with many wondering who is in charge -- and whether everything Mulvaney has done might soon be reversed.

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