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On July 10, 2013, the CFPB notified all companies under its jurisdiction that they will be held accountable for unlawful conduct in collecting a consumer’s debts and issued Bulletin’s on Debt Collection.

Bulletins:

“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.”

In the first of two bulletins, the CFPB stated that any entity under its jurisdiction, 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 bulletins noted that the following practices may be illegal:

• Debt collectors and creditors should not make false threats of lawsuits, arrest, prosecution, or imprisonment for non-payment of 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 status.
• 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.
• 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 second bulletin warns companies to avoid deceptive statements concerning the impact of paying a debt on 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 bulletins on unfair, deceptive, and abusive practices are available at: http://files.consumerfinance.gov/f/201307_cfpb_bulletin_unfair-deceptive-abusive-practices.pdf.

Action Letters:

The CFPB is also publishing five action letters that consumers can consider using when corresponding with debt collectors. These letters may help consumers obtain valuable information about claims being made against them or may help consumers protect themselves from inappropriate or unwanted collection activities. The letters address the following situations when the consumer:

The first letter is for consumers who need more information about a debt the collector has told them that they owe. The letter states that the consumer is disputing the charges until the debt collector answers specific questions about what is owed. This letter may be useful, for example, for a consumer who may not immediately recognize the debt as their own or for those who want to find out more about the debt before they pay it.

This next letter tells the collector that the consumer is disputing the debt, and instructs the debt collector to stop contacting the consumer until they provide evidence that the consumer is responsible for that debt. For example, consumers who do not want to discuss the debt until they have additional information verifying the debt might use this template.

The Fair Debt Collection Practices Act prohibits debt collectors from contacting a consumer about a debt at a time or place they should know is inconvenient. With this letter, the consumer is able to tell the debt collector how they would like to be contacted. This may be a useful option for a consumer who wants to work with a collector to resolve their debt.

If a consumer has hired a lawyer, generally, the debt collector should be contacting the lawyer instead of the consumer. This letter template provides a way for the consumer to give the debt collector the lawyer’s information and instruct the collector to contact only the lawyer.

Consumers have the right to tell a debt collector to stop all communication. It is important, however, to note that stopping contact from a debt collector does not cancel the debt or prohibit the collector from potentially pursuing other remedies, such as filing a lawsuit. This letter template could be beneficial for those consumers who feel they are being harassed by a collector’s communications.

Complaints:

As of July 10th, the CFPB is accepting complaints from consumers with debt collection problems related to any consumer debt, including credit card debt, mortgages, auto loans, medical bills, and student loans.   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.

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