WASHINGTON, D.C. — This week, the Consumer Financial
Protection Bureau (CFPB) put companies on notice through bulletins
advising that all companies under bureau’s jurisdiction will be held
accountable for unlawful debt-collection activities. The CFPB also
announced it is now accepting complaints related to debt collectors. It
also published action letters consumers can use when corresponding with
“These bulletins make clear that it doesn’t matter who is collecting
the debt — unfair, deceptive, or abusive practices are illegal,” said
CFPB Director Richard Cordray at a field hearing in Portland, Maine.
“Consumers need options to help them secure fair and respectful
treatment from those debt collectors that fail to abide by the law. They
can protect themselves by using our action letters to communicate with
debt collectors and by submitting a complaint to us if they believe they
are harmed by illegal conduct.”
Debt collection is a multi-billion dollar industry. It is estimated
that there are more than 4,500 debt collection firms in the U.S.
According to the Federal Reserve Bank of New York, as of the first
quarter of this year, almost 15 percent of all credit reports — covering
an estimated 30 million consumers — show collection items from debt
collection. These consumers had at least one debt in collections for
amounts that averaged about $1,400.
The bureau also published two bulletins on debt collection this week.
The first makes clear that any entity subject to the Consumer Financial
Protection Act of 2010, whether a third-party collector or a creditor
collecting its own debts, can be held accountable for any unfair,
deceptive, or abusive practices in collecting a consumer’s debts. The
second warns companies to avoid deceptive statements concerning the
impact of paying a debt on a consumer’s credit score, credit report, or
According to the first bulletin the following practices, among others, may be illegal:
• Threatening action that the debt collector does not have the
authority to pursue: Debt collectors and creditors should not make false
threats of lawsuits, arrest, prosecution, or imprisonment for
non-payment of debt.
• Falsely representing the character, amount or legal status of the
debt: Debt collectors and creditors should not falsely represent who
owns the debt, the amount of debt that is owed, or the debt’s legal
• Misrepresenting that a consumer’s debt would be waived or forgiven:
Debt collectors and creditors should not misrepresent that a debt would
be waived or forgiven if a consumer accepted a settlement offer when
the company is not, in fact, forgiving or waiving the debt.
• Failing to properly post payments or credit to a consumer’s account
with payments: Debt collectors and creditors should not fail to
properly post payments or credit to a consumer’s account and then charge
late fees to that customer if the customer paid on time.
The CFPB is also releasing a second bulletin
today that warns companies about statements they make about how paying a
debt will affect a consumer’s credit score, credit report, or
creditworthiness. The bureau is concerned that some of these statements —
like telling consumers that paying a debt would improve their credit
score — may be deceptive. The bulletin highlights examples of
potentially deceptive claims debt collectors may be making to consumers
about their credit reports and credit scores.
The CFPB also announced it is now collecting complaints about debt
collection as of this week. The CFPB can accept complaints from
consumers experiencing debt collection problems related to any consumer
debt, including credit card debt, mortgages, auto loans, medical bills,
and student loans.
The CFPB has been taking consumer complaints since launching on July
21, 2011, beginning with credit card complaints. The Bureau requests
that all companies respond to complaints within 15 days with the steps
they have taken or plan to take, and expects all but the most
complicated complaints to be closed in 60 days. Consumers are given a
tracking number after submitting a complaint and can check the status of
their complaint by logging on to the CFPB website.