The CFPB 2014 Fall Report

This October, the Consumer Financial Protection Bureau (“CFPB”) released is Fall Highlights Report.  In its report, the CFPB describes areas in which its new rules have been successful and areas in which it needs improvement, as violations of the Fair Debt Collection Practices Act (“FDCPA”) are still a regular occurrence. 

The first area of concern for the CFPB was the number of collection agencies adding what has been referred to as “convenience fees”.  Convenience fees are an amount of money that a collection agency charges a debtor during the collection process for making a payment by credit card or debit card.  Most states have laws against this type of fee but the CFPB discovered collection agencies charging one regardless of the law.  In its report, the CFPB places the responsibility on the collector to determine whether or not the state in which the debtor resides entitles the collector to recover a convenience fee without violating the law. 

Second, the CFPB noted a growing number of collectors threatening to file suit against consumers, when there is no real intention to file.  This is a direct violation of the FDCPA. 15 U.S.C. 1692e(5).  After witnessing more than a few collection agencies making empty threats of litigation against a consumer in order to coerce payment, the CFPB is emphasizing the importance of collectors avoiding making any statement that may infer litigation.

Third, the CFPB discovered numerous financial institutions violating the law when selling charged-off debt.  First, these institutions were inflating debtors’ annual percentage rates “APRs” to make it appear that a debtor was responsible for a higher payment that he or she actually owed.  Second, these institutions were failing to report any payments received from a debtor after the debt was sold, essentially forcing the debtor to make payment on the debt more than once.  In an effort to fix these problems and avoid litigation, institutions must maintain a procedure to communicate all necessary information when selling debt and timely report any payments received from a debtor after the sale to a debt buyer has been made.    

Lastly, the CFPB noticed additional violations in the area of third party communication.  More collection agencies are violating the FDCPA when communicating with a debtor’s employer.  During the collection process, a collector cannot voluntarily disclose their name or the name of their agency unless requested to provide such information.             

While not every violation may pertain to every collection agency, the CFPB feels that this summary provides a good indication of areas in which agencies need to focus on when improving their FDCPA compliance policies.  If you believe you have been the victim of a violation of the FDCPA and would like to discuss your situation with a licensed attorney, contact SmithMarco P.C. for a completely free case review.