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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.

Copyright 2019 K & L Gates

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About this Author

Andrew Glass, KL Gates Law Firm, Financial Litigation Attorney
Partner

Mr. Glass is a partner resident in K&L Gates’ Boston office, and a member of the firm's Consumer Financial Services Litigation and Class Action Litigation Defense groups, with extensive experience in complex commercial litigation. Mr. Glass's practice focuses on the defense of federal and state class action litigation brought against consumer financial services, mortgage lending, and consumer credit institutions. These class actions concern challenges under federal statutes, including the Fair Housing Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Real...

617-261-3107
Brian M. Forbes, KL Gates, mortgage lending attorney, consumer financial services institutions lawyer
Partner

Mr. Forbes is a partner in the Boston office of K&L Gates with extensive experience in complex commercial litigation. Mr. Forbes is a member of the firm’s Financial Institution and Services Litigation group and the Class Action Litigation Defense group. He regularly represents banking, mortgage lending and consumer financial services institutions in consumer class actions and individual litigation matters in federal and state courts throughout the United States. These actions typically concern challenges under federal statutes, including the federal Real Estate Settlement Procedures Act, the Truth in Lending Act, the Fair Debt Collection Practices Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, and the Racketeer Influenced and Corrupt Organizations Act, as well as state unfair and deceptive acts and practices statutes, and common law claims.

617-261-3152
Gregory Blace, KL Gates Law Firm, Class Action Litigation Attorney
Partner

Mr. Blase is a partner in the Boston office of K&L Gates where he is a member of the firm's Class Action Litigation Defense group. Mr. Blase has experience in complex commercial litigation, and has represented mortgage lenders, servicers and other financial institutions in class action and individual suits under the Telephone Consumer Protection Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, Truth in Lending Act, Fair Housing Act, Equal Credit Opportunity Act, Real Estate Settlement Procedures Act, and various state unfair and deceptive practices...

617-951-9059
Roger Smerage, KLGates Law Firm, Commercial Disputes Attorney
Associate

Roger Smerage is an associate in the commercial disputes group of the Boston office of K&L Gates. He concentrates his practice in class action litigation and financial institutions and services litigation. Mr. Smerage’s experience includes representing mortgage lenders, banks, loan servicers, and other consumer financial services institutions, as well as wireless telephone companies, computer software developers, and energy providers, in class action and individual litigation matters. He has represented a variety of corporate and individual clients in contract, tort...

617-951-9070
Hollee M. Watson, KL Gates, federal antitrust claims lawyer, grey market suppression attorney
Associate

Hollee Watson is an associate in the firm’s Boston office focusing her practice on complex civil litigation in the areas of antitrust, distribution, commercial disputes, and financial services. Ms. Watson’s antitrust and distribution experience includes assisting in the prosecution of federal antitrust claims brought under the Sherman and Clayton Acts and advising clients on grey market suppression and distribution matters. Additionally, Ms. Watson’s financial services and commercial disputes experience includes representing businesses, national banks, mortgage lenders,...

617-951-9087