CFPB Issues 2013 Annual Report: Debt Collection Industry Remains a Top Priority
As if the debt collection industry needed another reminder, the March 20, 2013 Fair Debt Collection Practices Act (FDCPA) second annual report from the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) makes absolutely clear that regulation of debt collection remains a top priority for the federal government.
While the most significant development the CFPB made in 2012 was the finalizing of a supervision rule for larger participants in the debt collection industry, the FTC continues to maintain supervisory and enforcement authority overall debt collectors, regardless of annual revenue. Total coverage and coordination is reflected in the Memorandum of Understanding entered into by the CFPB and the FTC in January 2012, where the two agencies agree to organize efforts to protect consumers. Further, in a letter sent by the FTC to Director Cordray on February 1, 2013, the FTC stated that it “continue[s] to engage in aggressive law enforcement activities to address troubling debt collection activity and obtained strong remedies to promote compliance with the law.”
Although the CFPB has yet to engage in a significant number of supervisory and enforcement actions against debt collectors, the CFPB does tout the October 2012 American Express $99 million settlement as a major coup against debt collectors who fail to maintain adequate documentation evidencing a debt.
While the CFPB is not yet accepting complaints about debt collection, a main focus of the report surrounds complaints. As stated, the Bureau “continues to work towards expanding its complaint handling to include other products and services under its authority, including debt collection.” No timeframe is provided for when the complaint portal will begin accepting complaints about debt collectors. The complaints that are addressed in the report, therefore, are those that the FTC received in 2012.
Complaints
The FTC states that it receives more complaints about the debt collection industry than any other specific industry. In total, complaints about third-party debt collectors and in-house collectors in 2012 totaled 125,136 and accounted for 24.1% of all complaints the FTC received.
The top five complaints received were:
-
Falsely represents character, amount, status of debt;
-
Calls any person repeatedly or continuously;
-
Falsely threatens suit/illegal or unintended act;
-
Fails to send written notice of debt to debtor; and
-
Falsely threatens arrest, seizure of property.
What Now?
The CFPB continues to underscore the “widespread abuse” that exists in the debt collection industry. Similarly, the CFPB, along with the FTC, states that it is a top priority to use “aggressive enforcement” to curb these abuses. Those in the debt collection world need to remember that not only will there be oversight by the CFPB, there will be oversight by the FTC. And with law enforcement “at the heart of the FTC’s recent debt collection work,” responding and handling consumer complaints, along with implementing a company-wide preparedness policy for these inevitable supervisory efforts, is key.
Troutman Sanders’ Financial Services Litigation Practice
Troutman Sanders’ Financial Services Litigation practice is an accomplished and experienced leader in providing litigation and regulatory advice to a broad spectrum of financial services institutions. The practice is comprised of a dedicated group of trial and regulatory lawyers who focus on resolving the array of issues that confront financial institutions. Its lawyers have years of hands-on successful experience in all areas of the trial process, coupled with in-depth banking industry and regulatory knowledge.
© TROUTMAN SANDERS LLP. ADVERTISING MATERIAL. These materials are to inform you of developments that may affect your business and are not to be considered legal advice, nor do they create a lawyer-client relationship. Information on previous case results does not guarantee a similar future result. Follow Troutman Sanders on Twitter.