The Consumer Financial Protection Bureau (“CFPB” or “Bureau”) recently took a major step forward in establishing its supervisory authority over the nation’s largest debt collectors. On February 17, 2012, the Bureau proposed a rule (the “Proposed Rule”) that would bring the largest 175 or so of the nation’s debt collectors under the Bureau’s nonbank supervision program.

Debt collectors are already subject to oversight by various federal and state agencies. However, supervision by the CFPB likely will be more intrusive and in-depth. Debt collection companies should strongly consider taking advantage of the opportunity to submit comments to the CFPB before the proposed rule becomes final.

Note that the Proposed Rule is really two distinct (but related) proposed rules. One would identify debt collection as a market the larger participants of which will be subject to the Bureau’s supervisory authority, and define who the largest participants in that market are. The other proposed rule would do the same for consumer reporting. This Alert focuses on the part of the Proposed Rule that relates to debt collection.