Date: November 18, 2015Author: Denbeaux & Denbeaux
CFPB Annual Report 2015
On March 26, 2015 the Consumer Finance Protection Bureau (“CFPB”) published its fourth annual report to Congress summarizing Fair Debt Collection Practices Act (“FDCPA”) consumer complaints and enforcement actions.
As usual, the report begins with an analysis of market statistics which are staggering. According to the report, “Consumer credit, excluding mortgages is $615 billion higher than pre-2008 levels,” and 77 million or 35% of adults with credit files have at least one debt in default collections. This has lead the debt collection industry to experience substantial growth and as the report highlights, substantial consolidation of larger third party collection entities.
In 2014 37% of the 88,300 consumer complaints filed with the FDCPA related to allegations that a debt collector was seeking to collect on a debt that was not owed or was miscalculated. An additional 20% of complaints related to phone calls from debt collectors often made at inconvenient times or worse, to a person’s place of business. Another common complaint from debtors is the allegation that collectors failed to issue validation of debt letters within 5 days of their initial communication with the debtor as required by 15 U.S.C. 1692g.
The report highlights a potential problem with the CFPB data. When a consumer files a complaint with the CFPB they are required to authorize that the complaint will be forwarded to the offending company for a response. Consumers may be fearful of retribution or of undermining a separate civil litigation matter if they file a complaint with the regulatory agency. This may be a cause of underreported offenses. To correct this potential problem, the CFPB should allow consumers to submit complaints with proofs and elect not to have their information disclosed to the offending company. If the CFPB notices a pattern of problems from a particular collection company they could contact the complainant and seek their permission to pursue the action and disclose the debtor’s information.
This past year, the CFPB expanded its research initiative and conducted a study determining that an astonishing 70% of all debt collection court actions were dismissed once the consumer filed a contesting answer. In these lawsuits, the collector was unable to furnish necessary documentation to prove its case. The CFPB suggests in its report that such activity is a misleading representation that violates the FDCPA because the collector made representations and threats to collect the debt based on false information and/or an intention not to actually pursue if challenged.
Finally, the report addresses successes of the CFPB’s affirmative enforcement activities. In 2014 the CFPB successfully obtained $570 million in relief for consumers in five key actions against large scale offenders. These results are to be hailed as a major success. That said, it remains a drop in the bucket and highlights that individual civil actions remain a significant policing mechanism for the industry that continues to grow annually. The CFPB has demonstrated its support for such civil actions by contributing friend of the court Amicus briefs in several circuit court cases. Most notably, in 2014 the CFPB has advocated finding that efforts to collect a statutorily time barred debt is actionable under the FDCPA.
Entering its fifth year, the CFPB continues to grow in effectiveness. The agency has done a particularly good job of increasing public awareness of its efforts which will continue to result in a blossoming partnership between the public and governmental agency in policing the often unscrupulous debt collection industry.