CFPB Cracks Down on Debt Collectors
Today, the Consumer Financial Protection Bureau is intensifying its efforts to stop unlawful and abusive debt collection practices.
The CFPB will begin notifying banks, payday lenders, finance companies and other lenders that they will be held accountable for unlawful conduct in collecting consumer debt. The Bureau is also adding debt collection to its complaint database and providing action letters that consumers can use in their correspondence with debt collectors.
This oversight will affect the collection on all types of consumer debt, including auto loans, credit cards, medical bills, student loans and mortgages.
“These bulletins make clear that it doesn’t matter who is collecting the debt–unfair, deceptive, or abusive practices are illegal,” said CFPB Director Richard Cordray in a statement. “Consumers need options to help them secure fair and respectful treatment from those debt collectors that fail to abide by the law. They can protect themselves by using our action letters to communicate with debt collectors and by submitting a complaint to us if they believe they are harmed by illegal conduct.”
The CFPB says there are over 4,500 debt collection firms in the United States. According to the Federal Reserve Bank of New York, nearly 15 percent of all credit reports had collection items from debt collection during the first quarter of 2013. These estimated 30 million consumers had at least one debt in collections for amounts that averaged approximately $1,400.
The CFPB says the following actions may be illegal:
- Threatening the consumer with an action that the debt collector does not have the authority to pursue. This includes false threats of lawsuits, arrest, prosecution or imprisonment for non-payment of debt.
- Falsely representing the amount or legal status or character of the debt.
- Misleading statements that a consumer’s debt would be waived or forgiven when the company is not forgiving or waiving the debt.
- Failing to properly post payments or credit to a consumer’s account with payments and the charge late fees.
To submit a debt collection complaint, consumers can go online, call (855)-411-CFPB, fax the CFPB at (855)-237-2392 or mail a letter to Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, Iowa 52244.