Consumer Complaint Data Shows Possible (and Preventable) UDAAP Issues

The debt collection industry is still reeling from the Consumer Financial Protection Bureau’s “data dump” on November 6, when it added consumer debt collection complaints to its 155,000-strong Consumer Complaint Database. When reviewing that data, one quickly finds that a lot of the consumer complaints could be categorized under the broad umbrella of UDAAP - Unfair Deceptive or Abusive Acts or Practices. It’s a catchall term for the CFPB that collectors need to understand now.

For instance, of the more than 5,000 complaints relating specifically to debt collection, 83 of them claimed that the collector “used obscene/profane/abusive language.” Also, in 43 cases, consumers reported that the person attempting to collect a debt impersonated an attorney or other official. And in 71 cases, the consumer complaint indicated that a call from a collector was “not disclosed as an attempt to collect.”

Obviously, these are the extreme cases that would get a collection agency in trouble with the CFPB and UDAAP. But companies should still be aware of a growing focus on UDAAP compliance. In July 2013, the CFPB released a bulletin to clarify the legal obligations of covered persons and their service providers under the Dodd-Frank Act with respect to UDAAP violations in consumer debt collections. It essentially imposed the principles of the Fair Debt Collection Practices Act on creditors. Although creditors are generally exempt from the FDCPA, the bulletin asserted that creditors and their service providers must abide by the the law, and by proxy through UDAAP principles and guidance when engaged in collection practices.

The CFPB crackdown on UDAAP means that it’s no longer enough to just have a compliance management system in place. Collectors must be able to prove that their practices don’t harm consumers.

Our latest insideCompliance webinar, Navigating UDAAP Compliance: What’s Fair, What’s Not and Why it Matters. This 60-minute webinar with FDCPA expert John Bedard will explain the meaning of the CFPB’s bulletin, and how it specifically applies to ARM. Get real-world examples of debt collection practices – such as convenience fees and disclosures – that must be adapted to achieve UDAAP compliance. You’ll also have the chance to ask Mr. Bedard questions during the live Q&A portion of the webinar.

Registration is open now. It’s an event you won’t want to miss!