New Financial Reform Bill Would Shift FDCPA Enforcement to Federal Reserve

In its current form, Sen. Christopher Dodd's (D-CT) new financial reform bill would shift enforcement responsibilities for the Fair Debt Collection Practices Act (FDCPA) to a new bureau operating within the Federal Reserve.

The Federal Trade Commission (FTC) has enforced the FDCPA since its enactment in 1978. Should Dodd's bill pass unchanged, that enforcement authority would shift to a new consumer financial protection regulator that the bill itself would create.

In response to Dodd's legislation, representatives from the accounts receivables management (ARM) industry recently called on Congress to keep FDCPA authority within what they considered to be the FTC's capable hands. In a joint statement, DBA International, ACA International, the Commercial Law League of America (CLLA) and the National Association of Retail Collection Attorneys (NARCA) urged lawmakers to alter Dodd's bill to leave the FTC in charge of their industry and its business. "We are not running from regulation; we simply want an appropriate regulator," they said. "The bureau, as proposed by Sen. Dodd, is geared toward banks and others depository institutions. The FTC is the appropriate venue for our industry."

The coalition of ARM industry associations stopped short of rejecting the entire creation of a new consumer financial regulator, but cited the FTC's success as reason to keep the FDCPA under the commission's umbrella. "We understand Congress' intent to create a new bureau, and agree there is a need for fresh oversight in many areas," they said. "But the FTC has done a commendable job protecting the rights of consumers and bringing law enforcement action against outliers in our industry...Given the FTC's specific expertise at governing the debt industry, and given how pre-occupied a new regulator would be addressing issues other than those from FDCPA, we are calling upon Congress to leave the industry's regulatory powers with the FTC. The FTC is an effective protector of consumers' interests when it comes to the FDCPA. There is no need to break up something that is already working effectively for the American people."

Other business and industry leaders have been heavily critical of Dodd's move to create a new consumer regulator and the provision that would do so has been a lightning rod for criticism ever since its first mention last year. Among the regulator's loudest critics has been the U.S. Chamber of Commerce, which continued their opposition following the release of Dodd's bill, saying it "takes three steps backwards with the hope of making future progress."

Jacob Barron, NACM staff writer

 

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