On October 8, the Consumer Financial Protection Bureau (CFPB or Bureau) published is Semi-Annual Report for Spring 2019, which covers the period between October 1, 2018, and March 31, 2019. While there has been a lot of debt collection related activity at the Bureau recently, the report—covering a time period prior to the release of the Notice of Proposed Rulemaking for debt collection—makes only a few mentions of debt collection practices.
Below are two areas of interest from the report regarding debt collection.
Credit Reporting Complaints Far Surpass Debt Collection Complaints
The report contains a snapshot of complaints received by the Bureau through its complaint portal as well as complaints forwarded to the Bureau from other regulators. The complaint snapshot reporting period, covering April 1, 2018, through March 31, 2019, is slightly longer than that of the Semi-Annual Report. In this time frame, the Bureau received 321,200 complaints, which is a 2% decrease from the prior reporting period. Companies had a 95% response rate for the complaints that the Bureau forwarded for review and response.
Most notably, credit reporting complaints are noted as the clear frontrunner, making up 39% of the consumer complaints—compared to 24% for debt collection complaints.
Editor’s Note: Previously, insideARM wrote about how certain credit repair organizations are flooding debt collectors with mass disputes and how a jury found one credit repair organization liable of fraud in relation to such practices. Through communication with industry members, it is believed that credit repair organization might also be flooding the CFPB complaint portal with similar disputes.
Bureau Enforcement Actions Related to Debt Collection Practices
The only other area of the report that makes substantial mention of debt collection is the section outlining the Bureau’s enforcement activities. Below are a few of the actions mentioned, including the alleged problematic practices.
In re CMM/Cash Tyme (File No. 2019-BCP-0004): Making collection calls to third parties that risked disclosing information about debts. See insideARM article about the settlement of this matter here.
In re Cash Express, LLC (File No. 2018-CFPB-0007): Collection letters threatening to take legal actions on time-barred debts despite the company policies against filing lawsuits on such accounts. Also, misrepresenting that the company might report negative information to the credit bureaus regarding late or missed payments when the company did not actually report this information. See the consent order here.
In re Bluestem Brands, Inc. (File No. 2018-BCFP-0006): Delaying consumer payment transfers to debt buyers, causing consumers to undergo collection activity on accounts that are already paid. See insideARM article about the consent order here.
In re National Credit Adjusters, LLC (File No. 2018-BCFP-0004): Using a network of debt collectors who represented to consumers that they owed more than they actually did and threatening consumers with visits by process servers and arrest. See the consent order here.
In re Security Group Inc. (File No. 2018-CFPB-0002): In-person collection visits where consumers were physically blocked from leaving their homes, and placing collection calls to consumer’s workplaces and references. See the consent order here.
[Note: While not related to debt collection practices, the enforcement action against Freedom Debt Relief is also of interest to the industry, so it is included below.]
In re Freedom Debt Relief, LLC (N.D. Cal., Case No. 15-cv-6484): Debt relief company that allegedly misled consumers about its ability to negotiate settlements and charging consumers without settling debts as promised. See the consent order here.
While this report has only several mentions of debt collection, it is anticipated that the next semi-annual report—which will cover a period including the release of the NPRM as well as the comment period—will contain significantly more information. It is also encouraging to see that debt collection complaints are declining. With that said, debt collectors and creditors who furnish data to the credit bureaus should be aware that the Bureau might be honing in on credit reporting. Not only is it now the most complained about “product, but” credit reporting was also front-and-center in the Bureau’s most recent Supervisory Highlights.