The CFPB and Debt Collection Office of Regulations Consumer Financial Protection Bureau. By Kristin McPartland

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1 The CFPB and Debt Collection Office of Regulations Consumer Financial Protection Bureau By Kristin McPartland

2 Debt Collection Background Debt collection serves important role in consumer creditor markets: Reduces creditor losses by increasing amounts collected on debts and increases likelihood that consumers will not borrow unless they can and will repay Consumer benefits from reduced losses More credit available Credit available at lower prices 2

3 Debt Collection: A CFPB Priority Large number of consumers affected Limited consumer choice High level of consumer complaints received historically by the FTC Third party debt collection Creditors collecting on their own debts 3

4 Debt Collection Complaints Debt collection industry regularly garners the most consumer complaints of any industry in the FTC s Consumer Sentinel database 2012: 125,136 total complaints about collectors, representing 24.1% of all complaints received 2011: 142,743 total complaints about collectors, representing 27.2% of all complaints received 2010: 141,285 total complaints about collectors, representing 27.2% of all complaints received 4

5 CFPB Enforcement Authority FDCPA UDAAP Third party debt collectors and debt buyers Joint authority with FTC Dodd Frank Act UDAAP Creditors, third party debt collectors, and debt buyers Exclusive CFPB authority 5

6 Enforcement Amex CFPB s first public enforcement action involving debt collection practices Required three American Express subsidiaries to refund an estimated $85 million to approximately 250,000 customers Debt collection counts were brought under Dodd Frank Act, not FDCPA, because American Express engaged in first party collection Alleged debt collection misrepresentations: If consumers paid off the old debt, the payment information would be furnished to credit bureaus and could improve their credit scores Companies were not furnishing payment information and, in some cases, the debt was too old to be included in the credit report in any event A portion of debt would be waived or forgiven if consumers accepted certain settlement offers Debt was not forgiven if consumers applied for a new card with the company 6

7 CFPB Supervision and Examination Authority Who is subject to CFPB exams? Large bank and non bank lenders collection operations Larger participants among third party debt collectors What can the CFPB evaluate in exams? 7

8 CFPB Supervision and Examination Activities Issuance of larger participant rules for third party debt collectors Release of examination procedures that CFPB staff uses during exams Supervisory tool to conduct exams focusing on debt collection practices Two supervisory bulletins issued in July

9 CFPB Consumer Assistance Consumer complaints CFPB began accepting debt collection complaints in July 2013 Consumer Complaint Database does not yet include debt collection complaints Ask CFPB offers answers to commonly asked questions Includes debt collection questions/answers Consumers may submit questions to Bureau Provides letter templates for consumers to use when communicating with collectors 9

10 Rulemaking and Guidance Authority FDCPA Implementation Third party debt collectors and debt buyers UDAAP Dodd Frank Act Creditors, third party debt collectors, and debt buyers UDAAP and Disclosures 10

11 Debt Collection Rulemaking Process CFPB anticipates issuing an ANPR for debt collection in the Fall of 2013 ANPR will be broad based to reflect the many issues in debt collection ANPR will provide an opportunity for consumers, consumer advocates, and industry to provide experience and expertise CFPB encourages interested parties to engage with the Bureau 11

12 Debt Collection Rulemaking Process Some major consumer protection concerns: Transfer of information between debt owners/ debt buyers and debt collectors Communications issues, including phone calls and messages Debt collection litigation Other tools: statutory change and guidance 12

13 Debt Collection Rulemaking Process ANPR will be followed by one or more Notices of Proposed Rulemaking (NPRs) Bureau could issue a single rule or could issue separate rules under FDCPA and Dodd Frank Act CFPB is exploring how to address consumer protection concerns regardless of the type of party conducting collections 13

14 Questions 14

Date: July 10, 2013 Subject: Prohibition of Unfair, Deceptive, or Abusive Acts or Practices in the Collection of Consumer Debts

1700 G Street, N.W., Washington, DC 20552 CFPB Bulletin 2013-07 Date: July 10, 2013 Subject: Prohibition of Unfair, Deceptive, or Abusive Acts or Practices in the Collection of Consumer Debts Under the