Defining Larger Participants of the Consumer Debt Collection Market

CONSUMER FINANCIAL PROTECTION BUREAU <CFR>12 CFR Part 1090</CFR> <DEPDOC>[Docket No. CFPB-2025-0030]</DEPDOC> <RIN>RIN 3170-AB51</RIN> <SUBJECT>Defining Larger Participants of the Consumer Debt Collection Market</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Consumer Financial Protection Bureau. <HD SOURCE="HED">ACTION:</HD> Advance notice of proposed rulemaking. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Consumer Financial Protection Bureau (CFPB or Bureau) is seeking information to assist it in considering whether to propose a rule to amend the test to define larger participants in the consumer debt collection market established by the Bureau's Defining Larger Participants of the Consumer Debt Collection Market Final Rule published on October 31, 2012 (Consumer Debt Collection Larger Participant Rule). </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received on or before September 22, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> You may submit responsive information and other comments, identified by Docket No. CFPB-2025-0030, by any of the following methods: • <E T="03">Federal eRulemaking Portal: https://www.regulations.gov.</E> Follow the instructions for submitting comments. • <E T="03">Email: 2025-ANPR-ConsumerDebtCollection@cfpb.gov.</E> Include Docket No. CFPB-2025-0030 in the subject line of the message. • <E T="03">Mail/Hand Delivery/Courier:</E> Comment Intake—Defining Larger Participants of the Consumer Debt Collection Market 2025, c/o Legal Division Docket Manager, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552. <E T="03">Instructions:</E> The CFPB encourages the early submission of comments. All submissions should include the agency name and docket number. Additionally, where the Bureau has asked for specific comment on a topic, commenters should seek to highlight the topic to which their comment is applicable. Because paper mail is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to <E T="03">https://www.regulations.gov.</E> All submissions, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals, should not be included. Submissions will not be edited to remove any identifying or contact information. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Dave Gettler, Paralegal, Office of Regulations, 202-435-7389. If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> The Bureau is seeking information in order to consider whether to propose a rule to amend the test to define larger participants in the consumer debt collection market. Currently, a nonbank covered person is a larger participant of the consumer debt collection market if the person has more than $10 million in annual receipts resulting from consumer debt collection activities as those terms are defined in the Consumer Debt Collection Larger Participant Rule. The Bureau is concerned that the benefits of the current threshold may not justify the compliance burdens for many of the entities that are currently considered larger participants in this market, and that the current threshold may be diverting limited Bureau resources to determine whom among the universe of providers may be subject to the Bureau's supervisory authority and whether these providers should be examined in a particular year. <HD SOURCE="HD1">I. Background</HD> Section 1024 of the CFPA, <SU>1</SU> <FTREF/> codified at 12 U.S.C. 5514, gives the Bureau supervisory authority over all nonbank covered persons  <SU>2</SU> <FTREF/> offering or providing three enumerated types of consumer financial products or services: (1) origination, brokerage, or servicing of consumer loans secured by real estate and related mortgage loan modification or foreclosure relief services; (2) private education loans; and (3) payday loans. <SU>3</SU> <FTREF/> The Bureau also has supervisory authority over “larger participant[s] of a market for other consumer financial products or services, as defined by rule[s]” the CFPB issues. <SU>4</SU> <FTREF/> To date, the Bureau has issued six rules defining larger participants of markets for consumer financial products and services for purposes of CFPA section 1024(a)(1)(B). <SU>5</SU> <FTREF/> <FTNT> <SU>1</SU>  Consumer Financial Protection Act of 2010, title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376, 1955 (2010) (hereinafter CFPA). </FTNT> <FTNT> <SU>2</SU>  The provisions of 12 U.S.C. 5514 apply to certain categories of covered persons, described in section (a)(1), and expressly excludes from coverage persons described in 12 U.S.C. 5515(a) (very large insured depository institutions and credit unions and their affiliates) or 5516(a) (other insured depository institutions and credit unions). The term “covered person” means “(A) any person that engages in offering or providing a consumer financial product or service; and (B) any affiliate of a person described [in (A)] if such affiliate acts as a service provider to such person.” 12 U.S.C. 5481(6). </FTNT> <FTNT> <SU>3</SU>  12 U.S.C. 5514(a)(1)(A), (D), (E). </FTNT> <FTNT> <SU>4</SU>  12 U.S.C. 5514(a)(1)(B), (a)(2); <E T="03">see also</E> 12 U.S.C. 5481(5) (defining “consumer financial product or service”). </FTNT> <FTNT> <SU>5</SU>  These six rules defined larger participants of markets for consumer reporting, 77 FR 42874 (July 20, 2012) (Consumer Reporting Rule); consumer debt collection, 77 FR 65775 (Oct. 31, 2012) (Consumer Debt Collection Rule); student loan servicing, 78 FR 73383 (Dec. 6, 2013) (Student Loan Servicing Rule); international money transfers, 79 FR 56631 (Sept. 23, 2014) (International Money Transfer Rule); automobile financing, 80 FR 37496 (June 30, 2015) (Automobile Financing Rule); and general-use digital consumer payment applications, 89 FR 99582 (Dec. 10, 2024) (General-Use Digital Payment Applications Rule). The Bureau is issuing advance notices of proposed rulemakings to reconsider the test for defining larger participants in the consumer reporting, consumer debt collection, international money transfer, and automobile financing markets. The Bureau will continue to assess whether it is appropriate to reconsider the test for the student loan servicing market. The General-Use Digital Payment Applications Rule was made ineffective by a joint resolution of disapproval by Congress under the Congressional Review Act. S.J.Res.28—119th Congress (2025-2026), Public Law 119-11; <E T="03">see also</E> 5 U.S.C. 801 <E T="03">et seq.</E> </FTNT> The Bureau published the Consumer Debt Collection Larger Participant Rule on October 31, 2012. <SU>6</SU> <FTREF/> The final rule defined a market for consumer debt collection that covers debt collection resulting from certain activities that meet the definition of consumer debt collection and established that nonbank covered persons with more than $10 million in annual receipts resulting from consumer debt collection activities would be considered larger participants in this market. <FTNT> <SU>6</SU>  Defining Larger Participants of the Consumer Debt Collection Market, 77 FR 65775. </FTNT> Participants of the consumer debt collection market generally include different types of consumer debt collection entities such as third-party debt collectors, debt buyers, and collection attorneys. <SU>7</SU> <FTREF/> Third-party debt collectors primarily collect debt on behalf of originating creditors or their assignees and typically are compensated through contingency fees calculated as a percentage of the debt they recover. Debt buying is another important component of the consumer debt collection market. Debt buyers purchase debt, either from the original creditors or from other debt buyers, usually for a fraction of the balance owed, and profit when their recoveries exceed the direct and indirect costs of collection. Debt buyers sometimes use third-party debt collectors or collection attorneys to collect their debts, but many also undertake their own collection efforts. Debt buyers also may decide to sell purchased debt to other debt buyers. Additionally, collection attorneys play a role in the consumer debt collection market. Collection attorneys undertake traditional collection efforts, such as contacting consumers by telephone or written communication. Attorneys also file lawsuits against consumers to collect debts or may buy debt and collect in their own names. <FTNT> <SU>7</SU>  The NAICS code for collections agencies does not distinguish between different types of debt collectors ( <E T="03">e.g.,</E> law firms, other third-party agencies, and debt buyers who are engaged in debt collection activities). The Bureau lacks data with which to assess the relative prominence of these firm types in the overall group of larger participants at different values of the threshold. </FTNT> Debt collection is a $15.1 billion industry with about 2,500 collection agencies in the United States. <SU>8</SU> <FTREF/> Debt collection directly affects a large number of consumers. Nearly one in five people with a credit report, approximately 20 percent, have had at least one debt in collections identified on their credit report as of the first quarter of 2023. <SU>9</SU> <FTREF/> Consumer debt collection plays a role in the functioning of the consumer credit market—debt collection can reduce creditors' losses from non-repayment an ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 23k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━