The CFPB released its annual Fair Debt Collection Practices Act report covering the CFPB’s debt collection activities in 2021. The report incorporates information from the FTC’s latest annual letter to the CFPB outlining its 2021 activities in the debt collection market. debts, including information about the FTC’s debt collection activities. enforcement actions involving collection practices aimed at small businesses.
It should be noted that in his blog post on the CFPB report, Director Chopra highlights the FTC’s “multiple actions to combat illegal collection practices that target small businesses.” He comments that “[i]It is essential that policy makers pay particular attention to wrongdoers targeting small businesses and consider whether there should be additional debt collection rights and protections for small businesses and entrepreneurs to protect them. The CFPB also highlights debt collection involving small businesses in a section of the report titled “Small Business Debt Collection.” In this section, the CFPB comments that the data it has reviewed suggests “a level of resources and expertise for most small businesses comparable to that of consumer borrowers rather than what might be the general perception of commercial businesses having readily available financial resources and expertise”. According to the CFPB,[t]The result is the potential for exploitation compared to what consumers encounter, without any of the consumer protections afforded by the FDCPA. The CFPB indicates that it “monitors the legal actions of [FTC] and state agencies regarding the abusive practices of certain financial institutions towards small businesses. »
CFPB report. In addition to a description of FDCPA-related findings from the Bureau’s Summer 2021 and Fall 2021 Surveillance Highlights, the report includes the following information:
- According to the complaints section of the report, the CFPB received approximately 121,700 debt collection complaints in 2021 (39,000 more than in 2020). As with all previous years since the Bureau began accepting debt collection complaints in 2013, the most common complaint in 2021 involved attempts to collect a debt that the consumer claimed was not owed. The second and third most common complaint issues were, respectively, written notifications regarding debt and taking or threatening negative or legal action.
- In 2021, the CFPB announced a new FDCPA enforcement action. He resolved two pending lawsuits with FDCPA claims and filed an action to recover a fraudulent conveyance to enforce a prior judgment based on FDCPA violations. These actions resulted in judgments for $2,260,000 in consumer relief, which were stayed due to defendants’ demonstrated inability to pay, $882,200 in civil monetary penalties, and permanent collection industry bans. . As of the end of 2021, the CFPB had three FDCPA enforcement actions pending in federal district court. It also conducts a number of nonpublic investigations of companies to determine whether they have engaged in collection practices that violate the FDCPA or the CFPA.
- In a section of the report that discusses CFPB research projects, the CFPB indicates that in 2021, CFPB economists published an independent research paper that analyzes the effect of changes in state debt collection laws. Based on recent laws and regulations in four states that have instituted debt collection conduct restrictions, they reportedly found that “these restrictions reduce access to credit card accounts and increase interest rates, but that this effect is very weak”.
- The CFPB concludes the report by stating that in 2022 it will “continue its work to enforce the [FDCPA] using all the tools at his disposal. These include supervision and enforcement, regulatory and legal measures, research and market surveillance activities, and consumer education.
FTC Annual Update. Enforcement activities highlighted by the FTC in its annual letter (and described in the CFPB report) include the following:
- The FTC has settled three lawsuits filed under its nationwide “Operation Corrupt Collector” initiative dealing with “phantom debt collection” and abusive and threatening debt collection practices. Phantom debt collection (also known as false debt collection) covers a range of practices, including attempts to collect obligations that consumers never incurred or received, as well as efforts to collect loans without the authorization of the creditor. In all settlements, the defendants were permanently banned from the debt collection industry.
- The FTC has filed an amended complaint in a lawsuit filed against two companies engaged in financing small businesses and several of their executives and owners. The amended FTC complaint alleges that the defendants misled small businesses by misrepresenting the terms of merchant cash advances, made unauthorized withdrawals from small business bank accounts, violated the Gramm-Leach-Bliley Act by making false statements to induce consumers to provide information about their bank account. , and used unfair collection practices, including judgment admissions that defendants unfairly used to seize personal and business assets in circumstances not intended by clients and not authorized by financing agreements.
- The FTC, joined by the Commonwealth of Pennsylvania, filed an amended complaint in a lawsuit brought against the operators of a telemarketing program and debt collection operation. Amended FTC Complaint Alleges Telemarketers Charged Small Businesses for Books and Newsletter Subscriptions They Never Ordered and Sent Unpaid Bills to Debt Collection Company Who Illegally Threatened Businesses if they did not pay for the items not ordered.
The CFPB report and the FTC letter discuss the FTC’s efforts to advance legislation that would amend Section 13(b) of the FTC Act to expressly give the FTC the power to request, and to a court to award equitable monetary relief such as restitution or disgorgement. In 2021, in AMG Capital Managementthe US Supreme Court ruled that Section 13(b) confers no such power on the FTC.