The CFPB on Wednesday issued a bulletin warning the collection industry and lenders - as well as the entire financial services industry - about potentially illegal conduct during in-person collections.
The bulletin highlights that in-person collection visits may be harassment and result in third parties, such as consumers’ co-workers, supervisors, roommates, landlords or neighbors, learning that the consumer has debts in collection. Revealing such information to third parties could harm the consumer’s reputation and result in negative employment consequences, according to the CFPB.
The bulletin also highlights that it is illegal for those subject to the law to engage in practices such as contacting consumers to collect on debt at times or places known to be inconvenient to the consumer, except in very limited circumstances.
Lenders and debt collectors risk engaging in unfair or deceptive acts and practices that violate the Dodd-Frank Act and the Fair Debt Collection Practices Act when going to consumers’ homes and workplaces to collect debt.
The bulletin was released along with disciplinary action announced against Austin, Texas-based EZCORP Inc., a small-dollar lender, for allegedly illegal collection strategies and practices.