CFPB Issues “Larger Participant Rule,” Releases Examination Procedures for Debt Collection Supervision

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October 26, 2012 · by mlivolsi · Spark Notes

Prepared by: Wes Huffman (

Today, the Consumer Financial Protection Bureau released regulations defining a “larger participant” in the debt collection marketplace. Larger participants are defined as a debt collection firm with more than $10 million in annual receipts. The rule will cover three general areas of debt collection: firms that may buy defaulted debt and collect the proceeds for themselves; firms that collect defaulted debt owned by another company in exchange for a fee; and debt collection attorneys that collect through litigation. The regulations are expected to be published in the Federal Register tomorrow.

The Bureau also released its examination procedures for debt collection. According to the document, the CFPB intends to focus on ensuring debt collection firms provide required disclosures and accurate information and that they communicate “civilly and honestly with consumers.” The Bureau will also be examining companies’ consumer complaint and dispute resolution processes.

Roughly 175 debt collection firms will now be subject to CFPB supervisory authority, effective January 2, 2013. COHEAO suggested receipts related to the Title IV student loan programs should be excluded in the overall revenue calculation because, among other reasons, the Department of Education audits Title IV debt collectors. However, the CFPB rejected this proposal because Education says it does not audit collection companies for compliance with the Fair Debt Collection Practices Act. The discussion of COHEAO’s comment on this topic is included on pages 27-28 of the text of the final rule. COHEAO’s comments are included with this Spark as a separate attachment.

The CFPB did accept another comment and clarified that third party billing servicing is not being counted for the purposes of this rule, nor is debt collection by the original creditor. The rule and examination guide were released in advance of a CFPB field hearing on debt collection in Seattle today. The field hearing is scheduled for 10 AM PDT (1 PM EDT). It may be available via webcast at or if not, will be available on You Tube afterwards via that link.

COHEAO has created a CFPB Task Force to assist our members on all things related to the CFPB. If you are interested in joining this task force, which is open to all COHEAO members, please contact Wes Huffman ( or the Task Force Chair David Stocker (

• A factsheet on the CFPB announcement can be found at:

• A copy of the final rule can be found at:

• The CFPB Examination Procedures for Debt Collection can be found at:

CBA Education Funding Report

COHEAO Comments to Bureau”s Proposed Rules