CFPB Issues Annual Fair Debt Collection Practices Act Report
Inside Subprime: April 29, 2019
By Aubrey Sitler
The Consumer Financial Protection Bureau (CFPB) has released its eighth annual and statutorily mandated Fair Debt Collection Practices Act (FDCPA) Report. The report covers the supervision, enforcement, rulemaking, guidance, consumer education, and other activities conducted by the CFPB and the Federal Trade Commission (FTC) as they implement the 1977 FDCPA, which aims “to eliminate abusive debt collection practices by debt collectors.”
In 2018, the CFPB received approximately 81,500 total complaints about first-party and third-party debt collection—one of the most common consumer complaint topics about financial products and services reported to the CFPB. The vast majority of complaints were issued by consumers with medical, telecommunications, or banking and financial services debt. According to the report, financial services debt drives the highest proportion (almost 40%) of revenue for the entire debt collection industry. Consumers made complaints about a number of types of abuses, but most commonly their reports centered on debt collectors’ attempts to collect debt the consumer says they did not owe (40% of all complaints), debt collectors’ written notification about debt (20% of all complaints), debt collectors’ communication tactics (13% of all complaints), or debt collectors’ actual actions or threats to take negative or legal action (13% of all complaints).
The CFPB notes that it sent about 51,700 (63%) of the 81,500 debt collection complaints it received back to companies to review and deal with as they saw fit. At the time of this report’s publication, the CFPB notes that those companies had responded to 95% of those reports with follow-up results or actions. The vast majority (90%) were already closed out either with an explanation or non-monetary relief, while a small percentage (3%) were still under review. A mere 400 of those 51,700 cases (1%) had been closed with monetary relief to the consumer.
The report also cites six public enforcement actions they pursued stemming from alleged FDCPA violations. The CFPB won one of these actions, which resulted in an $800,000 civil penalty. The Bureau lost one case, and the other four cases remain pending in 2019. The report also discusses law enforcement actions taken by the FTC against phantom debt collectors, including those trying to collect on counterfeit payday loans.
On the topic of policy and rulemaking, the report describes a number of “research and market outreach” activities it has undertaken to monitor, understand, and engage debt collection industry stakeholders. Director Kathy Kraninger’s opening letter notes that we should expect to see new rules issued sometime this year: “The Bureau will issue a Notice of Proposed Rulemaking relating to debt collection in spring 2019. The Notice of Proposed Rulemaking will address such issues as communication practices and consumer disclosures.” It remains to be seen whether new rulemaking will cover both first- and third-party debt collectors.
The National Law Review points out that CFPB Director Kathy Kraninger has continued in her predecessor’s footsteps of including information from the FTC’s annual letter to the CFPB while excluding the actual text of that letter as an appendix.