Former CFPB Employee: Debt Buyers in the Bureau's Crosshairs

As the Consumer Financial Protection Bureau continues to increase its investigations and enforcement actions against big banks and creditors, it’s pretty safe to assume that debt buyers are one of the next targets. In fact, at our June insideCompliance webinar, Ronald Rubin – partner at Hunton & Williams LLP and former CFPB employee – argued that debt buyers are probably on the Bureau’s radar more than any other type of business.

“The CFPB is very much aware that there are different business models in which companies buy huge amounts of debt very cheap and then just basically go about suing lots of people without really worrying so much whether the people they’re suing actually owe the debt or owe the correct amount,” Rubin said. “While I was at the CFPB, I saw presentations and heard horror stories of companies or lawyers walking in with hundreds of lawsuits at once; they’ve got stacks of affidavits, and either they’re not correct or they don’t say what they should say.”

Obviously, the majority of debt buying companies don’t engage in these types of practices. In fact, in its comments to the CFPB on its Advance Notice of Proposed Rulemaking earlier this year, DBA pointed out that even the Federal Trade Commission had found that “consumers disputed 3.2 percent of the accounts on which debt buyers … attempted to collect.” What’s more, CFPB examiners already check for compliance with certain laws when examining companies that collect their own debt, additional laws when examining third-party debt collectors and even more laws when examining debt buyers.

Still, Rubin said that when it comes to the CFPB, the top three compliance challenges unique to debt buyers are: the basis for collecting debt, time-barred debt and litigation. Learn how to face these issues head-on in our newest report, To the Point: CFPB Audits – Debt Buyers. You’ll also get Rubin’s firsthand advice on when and how to report the consumer complaints you receive to the CFPB. If your company purchases any kind of debt, this is a resource you need!

For more information on “how to survive a CFPB audit,” be sure to enroll in ARM-U (October 14-15 in Washington, DC), where former CFPB enforcement attorney Allyson Baker will share her exclusive knowledge on how the CFPB carries out investigations, and how collectors need to conduct a horizontal review of their policies writ large in order to prepare.