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The debt collection industry is gearing up for a major shake-up as the Consumer Financial Protection Bureau looks to revamp rules that will likely cover every player in the market, from first-person creditors down to the buyers of others' debts.
November 6 -
The Consumer Financial Protection Bureau is considering new rules to govern debt collection practices that could for the first time include banks and other creditors that are collecting their own debt.
November 6 -
The Consumer Financial Protection Bureau and four state attorneys general on Monday announced a series of lawsuits against CashCall Inc., a California-based online loan servicer accused of usury and deceptive collection practices through its affiliation with the online lender Western Sky.
December 16
WASHINGTON The Consumer Financial Protection Bureau released a report Thursday showing consumers are being "hounded" by debt collectors, adding more fuel to the fire in the agency's efforts to crack down on the industry's bad actors.
The annual report to Congress said about one-third of the more 30,300 complaints the agency reviewed were about a collector repeatedly trying to collect debt that the consumer said they did not owe. Nearly a quarter of the other complaints were about collectors using "aggressive communication tactics" like repeated calls to the wrong number, calling the work place or using "abusive language." The report includes complaints about first-parties such as banks collecting on their own debt and third-party collectors.
"Consumers should never be hounded about debts they do not owe," said CFPB Director Richard Cordray in a press release. "We will not tolerate companies harassing consumers or threatening illegal actions in the debt collection market. We will continue to work hard to ensure that consumers are treated with dignity and fairness."
The CFPB has already begun cracking down on debt collectors by finalizing a rule in January 2013 to supervise the largest such firms. It released an early proposal in November seeking comment on what new consumer protections it should put in place. It also issued two enforcement actions last year against debt collectors.
The agency began accepting complaints about debt collectors last July and the report looks at complaints through December. Complaints on debt collectors are now the largest source of complaints the agency receives each month, with an increasing concentration in student loan and medical debts, the report said.
Still, the CFPB said debt collectors have responded to about 82% of the 11,000 complaints that the bureau received and then sent to the company for a response. Other complaints not sent to companies were either delivered to another regulatory agency (35%), were incomplete (13%) or are pending (16%).
Almost 60% of those complaints sent to the company were closed with explanation while 17% were closed with nonmonetary relief. Only 2% were closed with monetary relief. Others were closed without explanation, a reported administrative response or were still being reviewed.
The CFPB estimates that there are more than 4,500 debt collection firms in America. And about 30 million Americans had an average of $1,400 in debt subject to collection last year.
