The Fair Debt Collection Practices Act (FDCPA) makes it illegal for debt collectors to employ “abusive, unfair or deceptive practices.” The FDCPA applies to collection agencies, firms that buy delinquent accounts and attempt to collect the obligations and attorneys who attempt to collect debts.
When the U.S. Congress passed the FDCPA in 1977, it gave the primary responsibility for FDCPA enforcement to the Federal Trade Commission (FTC). The FTC also submitted an annual report to Congress. In July 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act (Franks Dobb Act) created the Consumer Finance Protection Board (CFPB)
In general, the CFPB has oversight of matters related to credit cards, student loans, mortgages and other powers as granted by Congress. As the primary agency responsible for consumer financed-related affairs, the Dodd-Frank Act requires the CFPB and FTC to work together in the administrative, and enforcement responsibility of the Fair Debt Collection Practices Act (FDCPA).
Duties of the two agencies include the following items:
- Develop debt collection rules
- Guideline for how to meet the requirements of regulations
- Collect complaint data
- Inform and educate consumers and debt collectors
- Conduct research and policy
In January 2012, the CFPB and the FTC agreed to a Memorandum of Understanding, which organizes work between the two agencies to “protect consumers and avoid duplication of federal law enforcement and regulatory efforts.”
This year, the CFPB released its first report to the Congress. The report provides a summary of the FDCPA relate activities and the agency efforts in the debt collection market in general. The report also contains a breakdown of the consumer complaints received by the agency.
Consumer Complaints
According to the FTC, they receive 142,743 complaints regarding in-house debt collectors and third-party debt collection companies. These complaints equated to more than 27.16 percent of the total complaints received by the FTC. In 2011, the total number of complaints increased, compare to 2010 when the FTC received 141,285 debt collection complaints.
Following are the nine types of complaint categories, number of complaints and the percentage of total FDCPA complaints received in 2011:
- Harassing the alleged debtor or others, 47,362 complaints – 40.4 percent
- Demanding an amount other than is permitted by law or contract, 46,482 complaints – 39.6 percent
- Failing to send required written notice of the debt to consumer, 30,742 complaints – 26.2 percent
- Threatening dire consequences if consumers fail to pay, 27,624 complaints – 23.0 percent
- Failing to identify self as a debt collector, 20,781 complaints – 17.7 percent
- Revealing alleged debt to third parties, 20,519 complaints – 17.5 percent
- Impermissible calls to consumer’s place of employment, 16,895 complaints – 14.4 percent
- Failing to verify disputed debts, 10,000 complaints – 8.5 percent
- Continuing to contact consumer after receiving “Cease Communication Notice,” 5,922 complaints – 5.0 percent
In 2011, third-party debt collectors increased to 117,374 in 2011 or 22.3 percent of consumer complaints. In 2010, 21.1 percent or 109,254, or 21.1 percent of all complaints related to third-party collection firms. Complaints regarding in-house debt collectors comprised 4.8 percent of total complaints recorded – 25,569. In 2010, the FTC received 32,031 complaints about in-house debt collectors – 6.2 percent of the total.
Other Items in the Report
The Dobb-Franklin Act gives the CFPB power to supervise a variety of creditors or third-party debt collectors. It also has in the works to oversee the activities of nonbank firms involved with offering financial products or services to consumers.
Last year, the FTC had it highest number of “brought or resolved” debt collection cases with a total of seven. Actions including a civil suit against a payday loan company for garnishing wages without the proper court order and advocating for consumers in enforcing the Fair Debt Collection Practices Act.