Last week, the Consumer Financial Protection Bureau (“CFPB”) unambiguously stated that the debt collection industry is a major target of its enforcement activities. On July 10, 2013, the CFPB issued two bulletins on debt collection; five action letters that consumers may consider using when corresponding with debt collectors; and a call for complaints related to the debt collection industry. Significantly, these activities are not merely directed at debt buyers or collectors, but rather, they are directed at creditors and servicers.
The two bulletins relate to unfair and abusive practices, as well as the nature of statements to consumers about a debt’s impact on their credit report. The first bulletin makes clear that any entity regulated by the CFPB (third-party collector or creditor collecting its own debts) can be held accountable for unfair, deceptive, or abusive practices when collecting a consumer’s debt. Specific conduct is highlighted in the bulletin, including threatening action the collector does not have the authority to pursue, falsely representing aspects of the debt, misrepresentations, and failing to properly post payments or credits. The second bulletin warns companies about statements they make about how paying a debt will impact a consumer’s credit score, report, or creditworthiness.
Next, the CFPB issued “action letters” that amount to form correspondence that consumers can use in communicating with debt collectors. These situations include when a consumer wants to dispute a debt, when a consumer wants to restrict how and when a collector can contact them, and when the consumer has hired counsel or wants the collector to cease all contact. These action letters appear to be based on templates from a plaintiffs’ law firm.
Finally, the CFPB opened the door for consumers to submit complaints about debt collection, including those related to “any consumer debt,” including credit cards, mortgages, auto loans, medical bills, and student loans. The CFPB has been taking complaints on a number of topics since its inception, but this request for complaints seeks those specifically related to debt collection. The CFPB takes the complaints via Internet, telephone, facsimile, or U.S. mail.
If your institution is involved in the collection of debts, you should conduct an analysis of your procedures and policies through Spilman or other knowledgeable counsel.