The Consumer Financial Protection Bureau (CFPB) recently released its fifth annual Fair Debt Collection Practices Act (FDCPA) Annual Report, detailing the CFPB and FTC’s activities throughout 2015 related to debt collection practices. The report covers:
In addition to summarizing the CFPB’s activities in the debt collection space from the past year, the report hints at the CFPB’s potential future activities.
In its overview of the debt collection market, the report notes that the CFPB expects consumer debt to grow, with increases in the student loan segment of the market driving the growth. While auto loan and bank-issued credit card lending is also increasing, medical debt collection is on the decline according to the report. The CFPB also expects debt collection litigation to continue its growth trend, and the Report notes that FDCPA litigation has increased by 271 percent since 2007 and FCRA litigation has increased by 247 percent since 2007.
Complaints related to debt collection continue to be the most common type of complaint that the CFPB receives, though the overall number of complaints declined by 5 percent in 2015 from 2014 levels. The majority of the complaints are resolved with an explanation from the lender.
The report also reveals several areas of concern uncovered by the CFPB’s supervision process, including failure to identify as a debt collector, failure to implement consumer requests regarding communications, and making false and misleading statements regarding credit reporting. Many of these issues could potentially constitute FDCPA and FCRA violations.
The report describes the CFPB’s 15 new law enforcement actions filed in 2015 related to unlawful collection conduct, resulting in over $360 million in consumer relief and over $79 million paid into the civil penalty fund. These include an action against a mortgage loan servicer for failing to implement loan modifications, an action against a bank for selling erroneous and unenforceable charged-off credit card accounts to debt buyers, and an action against a student loan lender for unfair, deceptive, and abusive practices. The report also highlights the FTC’s aggressive law enforcement activities, which include an all-time high number of actions for a single year.
One of the takeaways from the report is the CFPB’s growing focus on student loan debt—which the CFPB notes is 60 percent higher than pre-recession levels and is driving the growth in non-revolving debt. In fact, the report states that “[e]mpowering consumers to manage their student loan debts” is a “significant focus” of the CFPB. Given the increasing growth in both student loan debt and student loan debt collections, student loan lenders can expect increasing scrutiny from the CFPB.
The report also hints at the CFPB’s current focus in its supervision and enforcement functions. For example, the CFPB highlights several improper practices uncovered through the supervision process. These practices include potential FDCPA violations—such as collection calls to a consumer’s workplace after being told not to contact the consumer at work—and potential FCRA violations—such as deleting credit reporting trade lines rather than truly investigating the credit dispute.
In the enforcement space, the report highlighted two areas of increased enforcement activity: phantom debt collection (“Phantom debt collectors engage in unfair, deceptive, or abusive conduct by attempting to collect on debts that either do not exist or are not owed to the phantom debt collector”) and debt collection via unlawful text messages and email. The report reaffirms the CFPB’s increasing scrutiny of email and text message debt collection.