The CFPB Has a Back-to-School Reading List for You

LAS VEGAS — During the panel discussion on Impacts of Regulations, Greg Nodler, an enforcement attorney for the Consumer Financial Protection Bureau, suggested that those in the debt industry should spend some time making themselves acquainted with three CFPB Bulletins:

CFPB Bulletin 2013-08 (Fair Debt Collection Practices Act and the Dodd-Frank Act)
Date: July 10, 2013
Subject: Representations Regarding Effect of Debt Payments on Credit Reports and Scores

In this bulletin, the CFPB wants to reacquaint those in the debt industry with the FDCPA (as if any of you could forget the FDCPA) and sections 1031 and 1036 of the Dodd-Frank Act.

The issue here that the Bureau wants to see addressed is deceptive claims regarding debt payment and credit scores. The quick answer, for those who don’t want to read the whole document: Stop advising consumers that paying a debt will result in an improved credit score. Your collectors may have the best of intentions in counseling this way; however, it is deceptive: it is not a given that payment of a debt will boost a credit score at all.

The CFPB’s conclusion: “Debt owners and third-party debt collectors should take steps to ensure that any claims that they make about the effect of paying debts in collection on consumers’ credit reports, credit scores, and creditworthiness are not deceptive.”

CFPB Bulletin 2013-07
Date: July 10, 2013
Subject: Prohibition of Unfair, Deceptive, or Abusive Acts or Practices in the Collection of Consumer Debts

This bulletin provides a refresher for those in the debt industry about the variety of unfair, deceptive, and/or abusive acts that can potentially afflict a consumer.

An unfair act or practice:

1. Causes or is likely to cause substantial injury to consumers;
2. Inflicts an injury that is not reasonably avoidable by consumers; and
3. Is not outweighed by countervailing benefits to consumers or to competition.

A deceptive act or practice:

1. Misleads or is likely to mislead the consumer;
2. Confuses a consumer into believing his interpretation is reasonable under the circumstances; and
3. Is material — by which the CFPB means money has entered the picture.

And here are a few examples (the Bulletin lists 10) of UDAAPs the debt industry should be mindful of:

• Collecting or assessing a debt and/or any additional amounts in connection with a debt (including interest, fees, and charges) not expressly authorized by the agreement creating the debt or permitted by law.
• Failing to post payments timely or properly or to credit a consumer’s account with payments that the consumer submitted on time and then charging late fees to that consumer.
• Taking possession of property without the legal right to do so.
• Revealing the consumer’s debt, without the consumer’s consent, to the consumer’s employer and/or co-workers.
• Falsely representing the character, amount, or legal status of the debt.

CFPB Bulletin 2013-06
Date: June 25, 2013
Subject: Responsible Business Conduct: Self-Policing, Self-Reporting, Remediation, and Cooperation

A personal example to give the flavor of what the CFPB is suggesting here. When my mom appears unhappy about something, and if you think that something might be related to something else you’ve done, she will answer your query with, “Well, what do you think you did wrong?” One will then find oneself admitting to a host of things one was planning on never admitting to in the world’s worst game of Guess the Infraction.

This bulletin from the Bureau is simply this: if you’ve done something wrong, and you know you’ve done something wrong, then you should contact the CFPB and report yourself. Agencies who self-report stand a better chance of coming out of the experience in better shape than an agency who thinks, “I…’ll just cross my fingers and hope.”

There is no hope. Make the call.