Over the past several weeks, litigation and government relations efforts have resulted in the accounts receivables management (“ARM”) industry achieving regulatory clarity, which will allow the industry to better serve clients including hospitals, small financial institutions and small business.
The Consumer Financial Protection Bureau (CFPB) recently announced several policy shifts, including a rollback of efforts targeting medical care payments that sparked several legal challenges over its predicted impact on health care providers. Meanwhile, the Federal Communications Commission (FCC) delayed implementation of convoluted new rules that would have led to consumers opting out of needed calls. Finally, the New York City Department of Consumer and Worker Protection (DCWP) is set to re-propose rules after a legal challenge highlighting constitutional and regulatory process concerns with NYC’s original rule.
Keep reading for a rundown on these regulatory changes and what they mean for creditors and their collection partners.
CFPB Announces Plan to Rescind Advisory Opinion in Response to Litigation
The ARM industry achieved a win on April 11 in a lawsuit filed by ARM industry trade association, ACA International and Collection Bureau Services, Inc. The CFPB stated in a court filing that it plans to revoke its advisory opinion on medical debt collection from Oct. 1, 2024. The filing was a motion to the U.S. District Court for the District of Columbia and seeks to pause proceedings while the CFPB takes steps to revoke the opinion.
On behalf of ACA and CBS, Brownstein filed a lawsuit asking the court to set aside an Oct. 1, 2024, advisory opinion that set different and unreasonable account review standards for firms collecting past due medical accounts. The lawsuit originally established March 26, 2025, as the deadline for motions for summary judgment. The CFPB in February asked for a 60-day extension of time for the incoming administration to consider its position on the lawsuit. On April 11, it made its position clear and alerted the court that it would be withdrawing the advisory opinion in its entirety. The CFPB proposed to update the court on its progress toward revoking the opinion by July 14 and every 30 days thereafter.
In a memo to CFPB employees, Chief Legal Officer Mark Paoletta indicated the CFPB will be shifting its enforcement and supervision resources on pressing threats to consumers, particularly servicemembers, their families, as well as veterans. He also noted they will be deprioritizing the recent focus on medical debt but continue to target any “actual fraud against consumers” under their Fair Credit Reporting Act (FCRA) and Fair Debt Collection Practices Act (FDCPA)/Regulation F regulatory authority.
One-Year Delay for FCC’s “Revoke-all” Rule
The FCC had planned to enforce new or modified rules requiring businesses to stop robocalls and robotexts immediately after a consumer revokes their consent. Originally, companies would have needed to comply by April 11, 2025. However, after advocacy efforts from industry groups—including ACA International and banking associations—the FCC decided to delay part of the rule by one year, until April 11, 2026.
The main reason for the delay is to give businesses more time to update their systems so they can properly handle consent revocation requests in a cost-effective way. Smaller companies especially needed extra time to implement the changes. However, most of the other new rules will still take effect as planned in April 2025, unless the FCC takes any further action over the next year.
One key rule that will still be enforced is that consumers can revoke consent for robocalls or texts using simple words like “stop” or “unsubscribe,” and companies must honor that request within 10 business days. Consumers may also use any other reasonable means to revoke consent.
The specific rule being delayed will require businesses to treat a consumer’s request to revoke consent for robocalls or robotexts as applying to all future communications to that sender where that communication requires prior consent, not just messages related to the original request. The FCC granted a one-year delay, pushing the compliance deadline to April 11, 2026, to give companies time to adjust their systems.
New York City Clarifies and Re-proposes Rule in Response to Litigation
The ARM industry had a success on April 10 when the New York DCWP reissued its comprehensive rulemaking concerning first- and third-party debt collection in NYC. The reissued rule supersedes the previous rule and allows stakeholders to continue engaging with the DCWP on crafting NYC regulations that meet both department consumer protection goals and that are consistent with federal law.
The department finalized and adopted a comprehensive rule for the collection industry on Aug. 12, 2024, which was originally set to take effect on Dec. 1, 2024. On behalf of the ARM industry, Brownstein took action in October and filed a lawsuit seeking to set aside the rule, ACA International et. al. v. Adams, et. al. filed in the U.S. District Court for the Eastern District of New York. Soon after filing the lawsuit, Brownstein counsel and DCWP and NYC counsel engaged in substantive discussions about the rule to settle the parties’ disagreements on a long list of issues. In response to industry requests for more time to comply, DCWP gave two extensions of the rule’s effective date, first from Dec. 1, 2024, to April 1, 2025; then from April 1, 2025, to Oct. 1, 2025.
The new proposed rule, published in the New York City Record, amends Title 6 of the Rules of the City of New York (the “Rule”) as it relates to debt collectors, City Record, Consumer and Worker Protection Notice of Adoption (Apr. 10, 2025) at https://a856 cityrecord.nyc.gov/RequestDetail/20250402028. The revised proposal reflects the cooperation of counsel and the significant efforts of the ARM industry to provide data, concerns about implementation and real-world experiences to inform and advise the rule drafters.
The proposed rule introduces several substantive revisions and clarifications. It would expand the definition of “itemization reference date” to include the most recent transaction date for accounts without a charge-off date. The definitions of “debt collection procedures” and “debt collector” would also be revised to clarify that original creditors are not considered debt collectors until they initiate formal collection efforts. The definition of “debt collector” would continue to include private individuals and entities collecting government debt, while excluding government employees acting within the scope of their official duties.
Important to note, original creditors are now included in this rule once they initiate formal debt collection processes—a major change from both the initial rule and the second proposal. Notably, the original creditor is now defined as the entity that entered into the agreement. So, for example, if a car dealership created the agreement and then immediately assigned it to a bank, the dealership would be covered by the rule.
The proposed rule also clarifies the scope and timing of conduct covered by the rules. For example, provisions addressing unconscionable or deceptive trade practices would apply only once debt collection procedures have begun. The rules governing the frequency of communication would be clarified, including exceptions. Original creditors would be permitted to continue electronic communications with consumers who have previously provided consent, so long as consumers are notified of their right to withdraw that consent.
Additional procedural clarifications are included as well. The proposed rule would define acceptable communication practices during work hours and specify that a debt collector’s notice about furnishing information to a credit reporting agency does not need to take the form of a validation notice. Debt collectors covered by the Fair Credit Billing Act that provide a comparable dispute resolution process would be exempt from certain validation requirements. The proposed rule also outlines when notices regarding time-barred debt must be issued, depending on whether the debt became time-barred before or after a validation notice was provided. Lastly, the amendments would refine verification standards by specifying the requirements for notices of unverified debt and expanding the scope of debt itemization.
With a changing regulatory and political landscape, there are a number of opportunities and challenges for participants unfolding in the consumer financial space.
