CFPB issues 2017 FDCPA report

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The CFPB has issued its fifth annual Fair Debt Collection Practices Act report covering the CFPB’s activities in 2016.

According to the report’s section on complaints, the CFPB handled approximately 88,000 debt collection complaints in 2016, which was 2,900 more than in 2015.  The most common complaint was about attempts to collect a debt that the consumer claimed was not owed.  The second and third most common complaint issues were, respectively, disclosures or providing information sufficient to verify the debt and communication tactics used when collecting debts.

In the report’s section on the CFPB’s supervision of debt collection activities engaged in by banks and nonbanks subject to CFPB supervision under Dodd-Frank and nonbanks that qualify as “larger participants,” the CFPB described the following FDCPA violations found by its examiners:

  • Using unfair acts or practices to collect a debt by selling debts that, as a result of coding errors, did not properly reflect that the account was in bankruptcy, the debt seller had concluded that the account resulted from fraud, or the account had been settled in full
  • Charging of fees not expressly authorized by the agreement creating the debt or permitted by law, such as convenience fees and collection fees prohibited or capped by state law
  • Using false or deceptive means to collect a debt, such as falsely representing that the only option for repayment was using a checking account, misleading consumers by representing that an immediate payment was necessary to prevent a negative impact on the consumer’s credit, and impersonating consumers while using the creditor’s consumer-facing automated telephone system to obtain information about the consumer’s debt
  • Communicating with third parties other than the consumer for a purpose other than to acquire location information, such as by disclosing the debt owed by the consumer to a third party in a telephone conversation due to inadequate identity verification during the call

With regard to rulemaking, Director Cordray, in his introductory message, stated that the CFPB “is considering the feedback it received through the SBREFA panel [which it convened on August 25, 2016] and from other stakeholders subsequent to publication of the Outline [of proposals under consideration.]”  The proposals described in the outline, which the CFPB released in July 2016, only covered “debt collectors” that are subject to the FDCPA.

When it issued the outline, the CFPB stated that it expected to conduct a separate SBREFA proceeding for a rule covering first-party creditors collecting their own debts and others engaged in debt collection not covered by the proposals.  The CFPB’s Fall 2016 rulemaking agenda indicated that the CFPB expected to convene a second SBREFA proceeding in 2017 and gave a February 2017 estimated date for further prerule activities (which would likely include testing of model validation notices and other disclosures.)  Director Cordray did not mention the second SBREFA proceeding in his introductory message to the new report or give a timetable for issuance of a proposed rule covering “debt collectors” subject to the FDCPA.

The report also describes ten debt collection enforcement actions filed by the CFPB in 2016 and three pre-2016 collection actions that continued in 2016.  (Among those actions are the CFPB’s actions against Universal Debt & Payment Solutions, LLCNavy Federal Credit Union, TMX Finance, LLC, Moneytree, Inc., and CashCall, Inc.)  The report indicates that in 2016, public enforcement actions involving debt collection resulted in over $39 million in consumer relief and over $20 million “paid into the civil penalty fund.”

The report incorporates information provided to the CFPB by the FTC in its letter to the CFPB on the FTC’s 2016 debt collection activities.  (The FTC letter is an Appendix to the report.)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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