The Consumer Financial Protection Bureau (CFPB) late last week released its fourth annual report to Congress detailing the regulator’s efforts to administer and enforce the Fair Debt Collection Practices Act (FDCPA). The report includes updates on supervision, enforcement, rulemaking, and complaints in the debt collection market, among other things.
Under the FDCPA, the executive branch agency charged with primary enforcement of the law must issue an annual report on its activities to Congress. That job is now jointly shared by the CFPB and FTC. Although the Dodd-Frank Consumer Protection Act, which created the CFPB, does not subject the Bureau to Congressional appropriations, it still must comply with the reporting requirement in the FDCPA.
The CFPB’s comments on rulemaking in the debt collection industry offered few substantial updates. The Bureau rehashed its ANPR process that began in November 2013. The reported noted that though comments and discussions with stakeholders, it identified four broad themes for potential new rules:
- Need to consider effect of technological change since implementation of the FDCPA in 1977, specifically identifying email as an example.
- Information accuracy and flow, specifically as it relates to account documentation.
- Communication issues.
- First- vs. third-party debt collection issues.
The report did note that prior to issuing debt collection rules for review and comment, the CFPB “may convene” a panel under the Small Business Regulatory Enforcement Fairness Act (SBREFA) “to get input from small businesses in the debt collection industry on the possible impact of debt collection rulemaking on their businesses.”
In the report’s intro, attributed to Director Richard Cordray, the CFPB noted that it is “making progress” on rulemaking.
The report details the work of the Office of Supervision, which began examinations of the Larger Market Participants in the collection industry in January 2013. Much of the information covered in the section was compiled from the CFPB’s two semi-annual supervisory reports that covered 2014. Some of the FDCPA violations examiners discovered at collection agencies include:
- Excessive or inconveniently timed telephone calls
- Misleading representations in collection litigation
- False threats of litigation
- Faulty training materials causing prohibited disclosures to third parties
- False and misleading representations in debt collection communications
The CFPB on Monday also separately released its annual report on the Consumer Response complaints database. Much of the detail in the FDCPA report was taken from the debt collection section of the main complaints report.
From January 1, 2014 through December 31, 2014, the CFPB handled approximately 88,300 debt collection complaints. These complaints include first-party and third-party collections. The Bureau noted that much of the data on collection complaints remained consistent from 2013 to 2014. The most common type of debt collection complaint is about continued attempts to collect a debt that the consumer reports is not owed (37%), followed by complaints about debt collectors’ communications tactics (20%).
While the CFPB said it has handled more than 88,000 debt collection complaints, it noted that it has sent only 39,500 – or 45% – of those complaints to companies for their review and response. The CFPB referred some of the remaining debt collection complaints to other regulatory agencies (44%), while other complaints were found to be incomplete (8%), or are pending with the consumer or the CFPB (3%).
The report also covered enforcement activities undertaken by the CFPB and by the FTC. The CFPB’s standalone actions included the Frederick J. Hanna & Associates matter, a pending case against a debt collection law firm; the suit filed against for-profit college operator Corinthian; and an enforcement action against a retailer over its debt collection practices targeting servicemembers.
By Patrick Lunsford