On March 22, 2021, through a press release, the Consumer Financial Protection Bureau (CFPB) announced that it released its annual report to Congress regarding the administration of the FDCPA. The 55-page report makes it clear that the CFPB and Federal Trade Commission (FTC) remain steadfast in their efforts to protect consumers, particularly those who have suffered profound financial impacts due to the COVID-19 pandemic. Further, the challenges of 2020 did not stop the CFPB from filing enforcement actions or weighing in on matters it found important.
After a letter from Acting Director Uejio which stresses that the CFPB remains locked-in on helping consumers through the Covid-19 pandemic, the report outlines the steps taken by the CFPB to protect consumers despite the challenges of 2020. In May of 2020, the CFPB rescheduled about half of its planned examination work. Instead of examinations, the Bureau conducted prioritized assessments (PAs) designed to obtain real-time information from a broad group of supervised entities that pose an elevated risk of consumer harm due to pandemic-related issues. Examiners reviewed the potential for FDCPA compliance risk associated with temporary restrictions on wage garnishment and bank attachments.
Additionally, the CFPB's focus on consumer interaction with debt collectors and consumer complaints has not faltered. Per the report, consumer debt and non-housing debt reached an all-time high in the first quarter of 2020, and 26% percent of consumers have a third-party collection tradeline on their credit report. From January 1, 2020, through December 31, 2020, the CFPB received approximately 82,700 debt collection complaints, which increased roughly 10 percent compared to 2019. The most common complaint from consumers (49% of all complaints) was that they were being pursued by a debt collector for a debt they do not owe; the second-highest group of consumer complaints (20%) related to written notifications about the debt. Complaints regarding threatening someone or sharing information improperly were the least complained about debt collection issue in 2020.
The Bureau continues to look for ways to educate consumers. Many of the CFPB’s materials are available in multiple languages, including “Ask CFPB,” an interactive online consumer education tool that logged 1.9 million pageviews and/or downloads in English and 220,000 in Spanish for its debt collection questions. In November 2019, the Bureau released a video with useful tips to spot debt collection scams and steps that consumers can take to protect themselves from scammers; since its launch, it has been viewed more than 4,500 times.
Finally, to better understand debt collection and its impact on consumers and credit markets, before publishing Regulation F, the CFPB conducted a quantitative online survey of over 8,000 respondents to test several versions of disclosures to support consumer understanding of certain concepts. The intent of this research is to help the Bureau better understand the benefits, costs, and impacts of potential rules.
Despite the challenges of 2020, the CFPB filed four new enforcement actions, which include:
- A complaint against Encore Capital Group (Encore) in which the CFPB alleged Encore and its subsidiaries violated its 2015 consent order with the CFPB by suing consumers without possessing the required documentation, using law firms and an internal legal department to engage in collection efforts without providing required disclosures, and failing to provide consumers with required loan documentation after consumers requested it. The case was settled in October of 2020.
- A complaint against JPL Recovery Solutions (JPL) in which the CFPB alleged that from at least 2015, JPL participated in a debt-collection operation that has used deceptive, harassing, and improper methods to induce consumers to make payments to them in violation of the FDCPA and the CFPA.
- A consent order with RAB Performance Recovery (RAB), in which it was established that RAB threatened to sue, sued, and demanded payment from consumers in Connecticut, New Jersey, and Rhode Island even though RAB did not hold the licenses that those states required to sue to collect debts.
- A complaint against BounceBack, Inc. (Bounceback) in which the CFPB alleged that in the course of administering bad-check pretrial-diversion programs, BounceBack used district-attorney letterheads to threaten more than 19,000 consumers with prosecution if they did not pay the amount of the check, enroll and pay for a financial-education course, and pay various other fees.
Amicus Briefs Filed by the CFPB
Worth noting, the CFPB filed two amicus briefs in 2020. In DeGroot v. Client Services, Inc., the Bureau argued that the debt collector did not violate the FDCPA when it accurately disclosed the total amount of the consumer’s debt and correctly specified that $0.00 in interest and other charges had been added to a charged off debt. On October 8, 2020, the Seventh Circuit agreed with the CFPB’s reasoning that such a breakdown cannot be construed as forward-looking and therefore misleading. In Hopkins v. Collecto Inc, the CFPB argued the Third Circuit should follow the Seventh Circuit’s decision in Degroot. The Hopkins case remains pending.
Further, two cases wherein the CFPB filed amicus briefs in 2019 were decided in 2020. In Bender v. Elmore and Throop, P.C., the CFPB argued consumers are not time-barred from challenging FDCPA violations that occurred in the prior year and that the contrary reading of the statute is inconsistent with its plain language, the weight of case law, and the express purposes of the FDCPA. The Fourth Circuit agreed, holding that the FDCPA’s statute of limitations establishes a separate one-year limitations period for each discrete violation of the Act.
In Preston v. Midland Credit Management, the CFPB argued that there is no “benign language” exception to the provision of the FDCPA that prohibits debt collectors from using any language or symbol, other than the debt collector’s address, on an envelope. However, the CFPB added that the provision does permit language or symbols that facilitate making “use of the mails,” such as a USPS barcode. The Seventh Circuit agreed, holding that there is no “benign language” exception; however, section 1692f(8) does not prohibit markings required by the United States Postal Services such as stamping or affixing language or symbols to ensure the successful delivery of a communication.
The CFPB’s report indicates the Bureau remains laser-focused on protecting consumers during the Covid-19 pandemic. Although we may be rounding the corner and close to returning to some sense of normalcy in daily life, accounts receivable entities should exercise caution when considering the right time to remove or alter Covid-19 procedures. Further, the 2020 CFPB enforcement actions reaffirm the CFPB’s mission to pursue accounts receivable entities for unfair practices. There is never a wrong time to review policies and procedures for efficacy and the impact on consumers, particularly those impacts which may be unintended.