The Consumer Financial Protection Bureau released a report Thursday on collection enforcement actions it took in 2013 and discussing the 30,000 consumer complaints it has received about collections since it began accepting them last July.
The CFPB pursued two collection enforcement actions last year. It sued online loan servicer, CashCall Inc., its owner, its subsidiary and its affiliate, for collecting money on loans that were legally invalid. It also ordered payday lender, Cash America International Inc., to refund up to $14 million to consumers for robosigning court documents in collection lawsuits.
The CFPB reported taking important steps last year that it believes will help create a "level playing field for law-abiding" collection agencies, including its large participant rule. That rule became effective in January 2013 and gives the CFPB supervisory authority over firms with more than $10 million in annual receipts from consumer collection activities, which extends to an estimated 175 collection companies.
In November, the CFPB took the first step toward consumer protection rules for the collection market with an Advance Notice of Proposed Rulemaking (ANPR). Through the ANPR, the CFPB is reviewing information on issues such as the accuracy of information used by collectors, how to ensure consumers know their rights and the communication tactics collectors employ to recover debts, and plans to use the information it gathers to plot future rules. The CFPB ended the comment period of its ANPR on Feb. 28.
The CFPB reports that collection companies have responded to an estimated 82 percent of the complaints the CFPB has sent to them for a response in the July-December 2013 timeframe.
To view the full report, click here.
The top three complaints about collections:
Collectors hounding consumers about a debt they do not owe: More than one-third of the complaints the CFPB handled were about a collector continually attempting to collect a debt that the consumer does not believe is owed. Of these complaints, almost two-thirds of consumers report that the debt is not theirs, while others report that the debt was paid, was the result of identity theft, or was discharged in bankruptcy.
Aggressive communication tactics used by debt collectors: Nearly a quarter of the complaints received were about collectors using inappropriate communication tactics. More than half of those complaints cite frequent or repeated calls from a collector and often the collector is calling the wrong phone number. Consumers also complain about collectors calling their places of employment or collectors using obscene, profane or abusive language.
Taking or threatening an illegal action: About 14 percent of consumers report that a company is taking or threatening an illegal action. Most of these complaints are about threats to arrest or jail consumers if they do not pay. Other complaints relate to collectors threatening to sue or attempting to seize property.
The CFPB report states that approximately 30 million Americans had, on average, $1,400 of debt subject to collections in 2013. It has estimated that there are more than 4,500 collection firms nationwide.
Earlier this month, the Federal Trade Commission published its annual summary of collection enforcement activities, stating in the past year it has continued "aggressive enforcement" of the Fair Debt Collection Practices Act by bringing or resolving nine collection cases.