Consumer Debt Collectors Join the Federally Supervised Community

by BakerHostetler

For the consumer debt collection industry, the federal regulators have arrived. In February 2013, the Consumer Financial Protection Bureau (CFPB) began supervising roughly 175 large consumer debt collectors, defined as those averaging more than $10 million in annual debt collection receipts. CFPB's regulations and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) not only require supervision of roughly 60 percent of the collection market, but also allow CFPB to investigate service providers, as well as any covered collector the CFPB determines is risky. In anticipation of CFPB action, debt collectors should review their electronically stored information (ESI) policies, recognize that some Dodd-Frank standards are new and untested and ensure that their information on consumers is as accurate and adequate as possible. Debt collectors can begin with the following steps.

First, debt collectors and other businesses supervised by the CFPB should consider adopting policies for ESI designed to foster effective preservation of privileged information and quick responses to potential CFPB requests. The CFPB appears to have relied upon and adapted the Federal Trade Commission's (FTC's) rules governing the production of ESI and the withholding of privileged information in response to a civil investigative demand (CID). Debt collectors should develop policies to prepare for quick responses to CIDs because, unlike FTC regulations, CFPB regulations disfavor extending the time to modify or set aside CIDs beyond 20 days. In light of the need to petition quickly, consumer debt collectors should review their policies to increase their organizational speed and ability to assemble and catalogue ESI, which may form the basis for setting aside or modifying a CID.

Second, debt collectors should anticipate growing pains in teasing out some of Dodd-Frank's standards. For example, the CFPB will seek to ferret out "abusive" conduct, which is evaluated under a fairly subjective reasonableness test. Another stated focus of the agency is identifying activities that generally pose risks to consumers. To that end, the CFPB has instructed its examiners to assess compensation structures based on whether they believe employee incentives are risky.

Third, debt collectors should prepare for the CFPB's emphasis on the adequacy and accuracy of consumer debt information. Prior to CFPB regulation, the FTC reached a $2.5 million settlement with a consumer debt collector related to inaccurate and incomplete information used to collect consumer debts. Picking up where the FTC left off, CFPB Director Richard Cordray in 2012 emphasized the Bureau's plans to scrutinize the accuracy of debt information used by consumer debt collectors.

Regardless of size, all consumer debt collection businesses need to be aware of their new exposure to federal investigation by the CFPB. While some new requirements remain untested, the CFPB will likely exercise its new supervisory authority over consumer debt collectors with vigor.

If you have any questions about this alert or how it may impact your business, please contact Dennis O. Cohen at or 212.589.4288 or any member of BakerHostetler's White Collar Defense and Corporate Investigations Team.

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.

© BakerHostetler | Attorney Advertising

Written by:


BakerHostetler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.