CFPB Report Provides Further Insight Into Forthcoming Debt Collection Regulations
The Consumer Financial Protection Bureau (“CFPB”) recently released a report detailing the results of a first-of-its-kind survey on consumer experiences with debt and debt collection. The CFPB conducted the survey in connection with its ongoing effort to promulgate the first-ever federal debt collection regulations. The agency sent the survey to nearly 11,000 consumers, of whom only a little over 2,000 (just less than 20%, roughly) responded. The CFPB explained that “[t]o ensure that the survey included a sufficient number of responses from consumers who had experienced debt collection,” it targeted consumers with recent debt collection experiences at a higher rate than other consumers. Of the approximately 20% of consumers who responded to the survey, 30% were consumers with long-term debt whereas only 15% were respondents with more recent debt. The survey was comprised of 67 questions ranging from the consumers’ general financial experiences and preferences for the ways in which collectors could contact them to questions about specific debt collection attempts in the year preceding the survey (which was conducted between December 2014 and March 2015). The latter category inquired about the types of debt in collection, the manner and frequency of contacts, whether there were any erroneous attempts to collect a debt, and whether the consumer paid the debt after being contacted. Notably, the CFPB did not release the results for all 67 questions.
According to the CFPB’s report, the survey found that, among other things:
27% of consumers contacted about a debt in collection felt threatened by the collector;
42% of consumers with collection experience asked at least one debt collector to stop contacting them, but three-in-four said the debt collector did not honor that request;
36% of consumers contacted about a debt in collection reported that the collector contacted them at times known to be inconvenient (e.g., between 9 p.m. and 8 a.m.);
37% of consumers contacted about a debt were contacted four or more times in a week; and
53% of consumers contacted about a debt believed there was an error with the debt being collected, including that either the consumer did not owe the debt, the amount being collected was wrong, or the debt was owed by a family member.
Yet, the CFPB report also notes that only approximately one quarter of consumers that had been contacted about a debt had felt the need to dispute a debt. And, CFPB Director Richard Cordray noted in his prepared remarks at a CFPB Debt Collection Event that the survey “indicate[s] that many debt collectors and creditors respected the laws governing their industry and have good practices in place.”
Nonetheless, in the press release accompanying the report, the CFPB claims that the survey is part of its ongoing effort to “clean up abuses” in the debt collection industry and “to see that all consumers are treated with fairness, decency, and respect.” More than that, though, the survey’s results and the release of the report presage the areas within the debt-collection industry that may be the subject of the CFPB’s forthcoming regulations under the Fair Debt Collection Practices Act.
The CFPB released its “Outline of Proposals under Consideration and Alternatives Considered” (the “Outline”) in the summer of 2016. The Outline provided a first glimpse into the areas the CFPB viewed as requiring regulation, including, among other points, its concerns arising from the exchange of inaccurate information relating to consumer debt, consumer understanding of the rights and restrictions of debt collectors, debt collection communication practices, and restrictions on the types of entities to which businesses may sell debt. The regulatory approach detailed in the Outline aligns largely with the findings of the survey because, although not released to the public until recently, the results of the survey formed the basis of the CFPB’s development of the Outline. The industry must now await the Notice of Proposed Rulemaking (the “NPRM”) to see the full extent and scope of the proposed debt-collection regulations. It is unclear at this time what effect, if any, the Trump Administration’s recent regulatory freeze will have on the timing or content of the NPRM or any of the CFPB’s other proposed regulations. In the meantime, the CFPB’s release of the report detailing the survey results provides further insight into the type of purported activity the CFPB is most likely to target with its forthcoming regulations.