The Consumer Financial Protection Bureau has released its annual report to Congress, detailing enforcement actions in 2014 and the status of coming up with rules for the collection industry. The report also includes an overview of complaints submitted to the bureau last year.
The CFPB, which began accepting consumers collection complaints last year, noted that collections is the leading source of complaints but also said that of the 45% of complaints forwarded to collectors, 89% were responded to in a timely manner. According to the report, the types of consumer complaints about debt collection received in 2014 were consistent with those received in 2013.
Top complaints include:
- Continued attempts to collect debt not owed represent 37% of the complaints the CFPB handled last year. Most consumers said it is because the debt is not their debt (64%) or that the debt was paid (26%).
- Communication tactics resulted in 20% of the complaints. Most complaints about communication tactics were about frequent or repeated calls (53%). The CFPB reports consumers also complained about repeated contact attempts after they have asked a collector not to call and calls to places of employment or third parties.
- Disclosure about and verification of debt resulted in 13% of the complaints.
- Reports that a company is taking or threatening to take an illegal action constituted 12%.
The bureau found many Fair Debt Collection Practices Act violations last year based on its authority to review activity at firms with more than $10 million in annual receipts from consumer collection activities. The authority extends to about 175 debt collectors, which accounts for more than 60% of the credit and collection industrys annual receipts, according to the report.
Violations documented in the report include: excessive or inconveniently timed telephone calls; misleading representations in collection litigation; false threats of litigation; faulty training materials causing prohibited disclosures to third parties; and false and misleading representations in debt collection communications.
Seven public law enforcement actions involving alleged unfair, deceptive and abusive collecting occurred last year, according to the report.
Some of these actions are still pending, including an action against the Frederick J. Hanna law firm filed last July in which the CFPB alleges that the law firm operates as a debt collection lawsuit mill that uses illegal tactics to intimidate consumers into paying debts they may not owe. Hanna officials quickly denied those claims.
The CFPB enforcement actions for 2014 so far have resulted in more than $570 million in consumer relief and more than $13 million contributed to the CFPBs civil money penalty fund.
The CFPB notes that it received more than 23,000 comments in response to its Advance Notice of Proposed Rulemaking for the collection market issued in 2013, the report states the CFPB is making progress on developing collection rules through its review of filed comments and meetings with commenters.
Some of the themes found in the comments include: the need to consider the significant technological changes since the enactment of the FDCPA; issues related to information accuracy and flow; issues related to the proper time, place, and manner of debt collection communications; and debate over whether debt collection rules should apply to first party creditors.
"Since the FDCPA has not been substantially updated since 1977, there can be some uncertainty as to what the law requires in some circumstances, according to the report. The bureau expects that its rulemaking activities will address many of the primary uncertainties in the market, promote compliant debt collection practices, lessen unfair competition from bad actors, and most importantly, assist in protecting consumers from illegitimate collection practices.Although the report does not provide an indication of timing for release of proposed collection rules, the CFPB may convene a panel under the Small Business Regulatory Flexibility Act (SBREFA) to get input from small businesses in the industry on the potential impact of rules under consideration.