CFPB Issues Annual FDCPA Report to Congress with Focus on Complaints

The Consumer Financial Protection Bureau (CFPB) Thursday presented its annual report to Congress on the administration of the Fair Debt Collection Practices Act (FDCPA) in 2013. While 2013 was the most active year of debt collection regulation ever, the report focuses heavily on an analysis of debt collection complaints the agency has received since July 2013.

Under the FDCPA, the executive branch agency charged with primary enforcement of the law must issue an annual report on its activities to Congress. Although the Dodd-Frank Consumer Protection Act, which created the CFPB, does not subject the Bureau to Congressional appropriations, it still must comply with the reporting requirement in the FDCPA.

The 2013 FDCPA report focuses on three key, industry-changing initiatives launched last year: the beginning of supervisory examinations among larger market participants (January), the opening of the CFPB complaints system to debt collection (July), and the beginning of the rulemaking process for debt collection (November).

But an analysis of the 30,300 debt collection complaints the Bureau received from July through the end of the year gets the most space.

The CFPB said that the top three debt collection complaints in 2013 were about:

• Collectors hounding consumers about a debt they do not owe: More than one-third of the complaints the CFPB handled were about a debt collector continually attempting to collect a debt that the consumer does not believe is owed.

• Aggressive communication tactics used by debt collectors: Nearly a quarter of the complaints received by the Bureau were about debt collectors using inappropriate communication tactics.

• Taking or threatening an illegal action: About 14 percent of consumers report that a company is taking or threatening an illegal action. Most of these complaints are about threats to arrest or jail consumers if they do not pay.

The CFPB said it sent approximately 11,000 (36%) of the about debt collection complaints it received to companies for their review and response. The Bureau referred some of the remaining debt collection complaints to other regulatory agencies (35%), while other complaints were found to be incomplete (13%), or are pending review by the consumer or the CFPB (16%).  Companies have already responded to approximately 9,000 complaints or 82% of the about 11,000 complaints sent to them for response. Consumers have disputed approximately 1,500 company responses (17%) to their complaints.

The report also contained a lengthy discussion of debt collection complaints received by the FTC, although the two agencies report vastly different numbers.

Debt collection industry trade group ACA International released a response late Thursday to the complaints analysis.

“As an industry that takes complaints and their resolution with consumers very seriously, the CFPB’s report offers helpful perspective but isn’t valuable for setting public policy. As important as these raw data are, it seeks to justify the CFPB’s existence but falls short in looking at the underlying causes that better explain this information,” ACA International CEO Pat Morris said. “We will continue to conduct our own quarterly analysis of the data and encourage consumers to communicate with debt collectors because avoiding contact does not make a debt disappear.”

The 2013 FDCPA report also discussed the debt collection supervision program, including the examinations it began in early January. While giving no specifics on the exams, the CFPB did note that “Based on the data currently available, entity size is one of the main risk factors [to consumers]. This is because, as a general matter, larger companies engage in a larger number of transactions and, therefore, have a greater impact on consumers.”

In 2013, the CFPB also issued two bulletins in 2013 that were focused on debt collection. The first bulletin addresses unfair, deceptive, or abusive acts or practices (UDAAPs) in the collection of consumer debts. The second bulletin on debt collection provides guidance to creditors, debt buyers, and third-party debt collectors about complying with the FDCPA and the Dodd-Frank Act when making representations to consumers about the impact that paying debts in collection may have on credit reports, credit scores, and creditworthiness

The CFPB noted that it launched two debt collection-related enforcement actions in 2013, both against payday lenders. But the agency said that the FTC still has primary law enforcement duties in the debt collection market and highlighted that group’s 2013 actions provided in a formal letter sent in early March from the FTC to the CFPB.