This fall, when the Consumer Financial Protection Bureau (“CFPB”) issued its latest report, it was quick to point out that violations are still occurring under the Fair Debt Collection Practices Act (“FDCPA”) and the Unfair Deceptive or Abusive Acts or Practices (“UDAAP”) relating to collection activities. Regarding debt collection, the CFPB discovered four areas of concern where compliance is still less than adequate.
1. Adding Unlawful Fees to a Debtor’s Balance.
When investigating collection activity, the CFPB discovered collection agencies were adding unlawful collection fees to a debtor’s balance when both the state law and the original contract did not allow for it. While such conduct is an obvious violation of the FDCPA, consumers were often unaware of such conduct and were paying the fees despite their being unlawful.
2. Threatening Litigation.
After reviewing FDCPA violations, the CFPB discovered that collection agencies are still threatening litigation against consumer debtors when there is no real intention to litigate and/or no legal right to litigate. Threating litigation under either of these circumstances in order to coerce a debtor into making payment is a direct violation of the FDCPA.
3. Unlawful Third-Party Disclosure.
The CFPB stated in its report that Third Party Disclosure is still an issue relating to disclosure of the name of the collection agency to a third party. Under the FDCPA, a debt collector is prohibited from disclosing the nature of the call and the name of the company it is calling from unless specifically asked. The CFPB stated that poor training of collectors by their employers is to blame for this violation of the statute.
4. Charging Excessive Interest.
The CFPB stated that when reviewing accounts sold to collection agencies, it discovered inflated interest rates that did not necessarily match the rates approved for by the initial contract. No amount beyond what was initially agreed upon in the contract is permitted to be collected by an agency and collection of any additional interest is a violation of the FDCPA.
If you believe you have the victim of a violation of the FDCPA and would like to speak with a licensed attorney, contact SmithMarco P.C. for a completely free case review.